The UK government has opened up a pathway to purchasing council houses at a discount.
This is most commonly known as ‘Right to Buy‘.
Some choose to rent a council house for a few years before buying, while others are already eligible to make your discounted purchase.
In either case, we’ve answered all your questions in the article below.
What are the rules for buying a council house?
If you want to buy a council house at a discount (most popularly known as the ‘Right to Buy’ scheme), there are rules you need to follow.
The UK government is trying to make it possible for more people to get onto the housing ladder, and buying council houses is part of this.
However, if you want to take this route seriously, you must ensure that you meet all of the following criteria, which have been introduced in the past decade:
- The property is your only, or main, home
- You hold a secure tenancy
- The property is self-contained
- You have had a public sector landlord for at least 3 years (this period does not have to run concurrently)
- You hold no debt that has resulted in legal action against you
Where are council houses found?
Some areas are more densely populated with council houses than others.
For example, in the boroughs of London, you will find many council properties you may be interested in purchasing.
Council houses are far more common in these major urban areas than in the rural countryside.
As an aside to prove this point: in July 2022, the Mayor of London announced that he would double his council housebuilding target to 20,000 by 2024.
This shows the enormous focus on building these properties in cities.
Who gets a discount when buying a council house?
Currently, the maximum Right to Buy discount is £102,400 across England, except for London boroughs, where the discount currently sits at £136,400.
On a house, you get a 35% discount if you’ve been a public sector tenant for between 3 and 5 years. Meanwhile, if you want to buy a flat, you get a 50% discount if you’ve been a tenant for the same time frame.
If the council previously owned your property, but they sold it to another landlord while you were living in it, you may have the Right to Buy.
This is called Preserved Right to Buy. Do your research and contact your landlord to determine whether this applies to you.
How much does a council flat cost?
The price of a council house will vary based on its location, size, the housing market conditions, and the percentage discount that you can get on the purchase. There are currently no easily-accessible official statistics on the mean price of council flats.
The average flat costs £561,000 in London and £156,000 in Birmingham.
A typical council flat will cost below the average figure, meaning the mean figure can fall between 5% and 10% below the average flat price in each city.
Do I need a deposit to buy a council house?
Even with the Right to Buy discount, there is anecdotal evidence that most major lenders require a small deposit (around 5% or 10%).
This will make them feel safer about the investment and (hopefully) grant you the mortgage. You should therefore aim to save up a deposit, alongside the discount.
Do I have to sell my council house to the council when I get rid of it?
The UK government website indicates that if you sell your Council House within 10 years of purchasing it through Right to Buy, you must give first refusal to your old landlord and/or another social landlord in the area.
If you have owned the house for more than 10 years, then you have the right to immediately sell it on the open market, without giving first refusal to anyone.
No matter which option you choose, you should sell it for the full price – your old social landlord is not entitled to a discount.
Remember that if you sell your Council House within 5 years of purchasing it, you must pay back some of your Right to Buy discount. We have covered more on this below.
Paying back your Right to Buy discount if you sell within 5 years
The current UK guidelines state that if you sell your house within five years via the Right to Buy programme, you must pay back some of your discount.
The precise rules indicate that you’ll have to pay back all of the discount if you sell within the first year. After that, the total amount you pay back reduces to:
- 80% of the discount in the second year
- 60% of the discount in the third year
- 40% of the discount in the fourth year
- 20% of the discount in the fifth year
It is therefore often advantageous for you to keep your house longer than five years.
Your discount will also be correlated to the property’s price when you purchase it. So, the more expensive the house, the more of the discount you will be required to return.
Advantages and drawbacks of buying a council house
There are plenty of advantages to buying a council house – most notably, you can capitalise on the Right to Buy scheme (if applicable) and get a sizeable discount on your purchase.
Once you have passed five years from this transaction, you will then not need to pay any of the Discount back when/if you sell.
Council properties are generally less expensive, too, even without the discount. This makes them more affordable to people on a lower income or who cannot save up a sizeable deposit.
On the other hand, council houses tend to be in less desirable locations and may not have the most up-to-date features, either.
If you want to turn it into a ‘premium’ place to live, significant investment into renovations may be required.
Secondly, you can only sometimes control the external circumstances that can force you to need to sell a house.
Therefore, if something unexpected arises within 5 years that makes it necessary to offload the house, you will find yourself paying back the discount.
The pros and cons of any purchase vary with dozens of conditions, so you should speak to an expert and consider financial, social, and emotional factors before choosing.
