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This is a scheme which is available to secure tenants and is detailed in the Housing Act 1985 Part 5. Through this scheme secure tenants are able to purchase either the freehold or leasehold of their house, flat or maisonette.
The Housing Act 1985 sets out certain criteria which must be satisfied for a secure tenant to be able to purchase their home.
If the secure tenancy commenced before the 18th January 2005 the qualifying period is 2 years.
If the secure tenancy commenced after the 18th January 2005 the qualifying period is 5 years.
In addition certain types of properties are excluded from the scheme, such as
In addition to the above requirements, purchasing a property is a serious commitment and consideration should be given to the following areas :-
There are also additional costs incurred when purchasing properties, these include
To help tenants with this process the council has drafted an informative leaflet entitled
“The Housing Act (Right to Buy) (Information to Secure Tenants) Order 2005”
Which is available to down load below, or a copy can be sent to you by phoning our offices on 0115 901 3652, or calling into the One Stop Shop at the Civic Centre.
Equally the Government has produced a booklet titled
“Your Right to Buy your Home.”
Which is available from their website
or Free Literature, P.O. Box No. 236, Wetherby, LS23 7NB
Tel 0870 1226236 or Fax 0870 122623
THE HOUSING ACT (RIGHT TO BUY) (INFORMATION TO SECURE TENANTS) ORDER 2005
Introduction
The Housing Act 1985 provides for information to be published from time to time regarding secure tenancies. Concerns have recently arisen that secure tenants do not have sufficient information to make an informed decision on whether or not to purchase their home. Therefore, this document seeks to provide you with information on:
The Right to Buy is the right of a secure tenant to buy the freehold or long leasehold of the house, flat or maisonette they occupy as their home. However, buying your home is likely to be one of the biggest decisions you will make. You need to think carefully before you buy. Consider all the costs of buying the property and whether it is suitable for your circumstances. Some of the issues you may need to consider are:
1.00 CAN YOU BUY YOUR HOME?
Most council tenants will have the Right to Buy. If you occupy a council house you will normally be purchasing a freehold interest in the property (unless the Council owns a long leasehold interest in the property). If you occupy a council flat you will be entitled to purchase a long lease in the property (up to 125 years). However, the Housing Act 1985, sets out certain criteria which must be satisfied if you are to buy your home:
It is the tenant or joint tenants who have the Right to Buy. However, members of your family who have lived with you for at least 12 months prior to the application may be able to exercise the Right to Buy jointly with you.
Introductory tenants - Only secure tenants can exercise the right to buy. If you occupy the property under an Introductory Tenancy you are not eligible to apply to buy the property until you are a secure tenant. However, this period will count towards the 2 year or 5 year tenancy you need to qualify to purchase your council home.
Demoted tenants - You will not have the right to buy the property if you are on a demoted tenancy and it will not count towards the qualifying period for the Right to Buy or the calculation of the discount.
Order suspending the Right to Buy – You will not be able to exercise the Right to Buy if the Council has obtained a court order suspending the Right to Buy because of anti-social behaviour.
Exceptions to the Right to Buy
In certain circumstances you will not be entitled to buy your home. As a council tenant you cannot usually buy the following types of property:
There are other exceptions relating to specific types of housing trusts, housing associations and lettings by the Crown.
If you have any doubt whether you have the Right to Buy you should either submit the RTB1 Application Form for a decision or seek advice from the Council’s Right to Buy officer.
2.00 HOW TO BUY YOUR HOME
The Application Form (RTB1)
In order to buy your home it is necessary to complete the Application Form (Form RTB1). The Form requires you to complete details of your tenancy and any previous tenancies you may have held. Applications Forms are available from the Council.
Response Notice (Form RTB2)
After receiving your completed application form the Council will send you a notice, which will advise whether or not you have the Right to Buy. If your application is refused the Response Notice (RTB2) will set out the reason why.
Valuation and Discount
Once your application to buy has been accepted the Council will arrange for your property to be valued. The valuation will reflect the open market value of the property at the date your application was received and will discount any improvements to the property you have undertaken as tenant. The price paid for your home will reflect a discount on the market value. The discount reflects how long you have held a public sector tenancy but is subject to a maximum level of discount set by the Government. In the East Midlands the maximum discount is £24,000 (as at 31st August 2005).
For tenancies in existence before 18th January 2005 the discount would be:
House – After the minimum qualifying period of 2 years you would be entitled to a 32% discount. You are eligible for 1% more discount for each additional year you have been a tenant, up to a maximum of 60%
Flat or maisonette – After the minimum qualifying period you would be entitled to a 44% discount. You are eligible for 2% more discount for each additional year you have been a tenant, up to a maximum of 70%
For tenancies which commenced on or after 18th January 2005 the discount would be:
House – After the minimum qualifying period of 5 years you would be entitled to a 35% discount. You are eligible for 1% more discount for each additional year you have been a tenant, up to a maximum of 60%
Flat or maisonette – After the minimum qualifying period you would be entitled to a 50% discount. You are eligible for 2% more discount for each additional year you have been a tenant, up to a maximum of 70%
If you have previously bought a property under the Right to Buy, this will affect the amount of discount you will receive if you apply again on another property.
Section 125 Notice
Once the Council receives the valuation you will be sent a separate offer notice, known as the Section 125 Notice, which sets out the following information:
The Section 125 Notice should be sent to you within 8 weeks of the Response Notice (RTB2) if you are purchasing a freehold (usually a house) or 12 weeks if you are purchasing a leasehold (usually a flat or maisonette).
What to do next?
You will need to arrange any legal or mortgage advice and within 12 weeks of receiving your Section 125 Notice you should inform the Council in writing of your decision to:
If you consider that the valuation of your home is incorrect, you can appeal against the valuation by telling the Council within three months of receiving the Section 125 notice that you want a determination of value under Section 128 of the Housing Act 1985.
Proceeding with the purchase of your home
To proceed with the purchase of the property you will need to notify the Council of the name and address of the solicitor or licensed conveyancer who is acting on your behalf in the purchase of the property. On receipt of this information the Council’s solicitor will forward the legal documentation to your legal adviser.
3.00 DELAYS WITH THE PURCHASE PROCEDURE
Delays on your part
Section 125 Notice - If you do not let the us know what you intend to do within 12 weeks of the Section 125 Notice we will send a reminder asking whether you wish to proceed. If you do not respond within 28 days of this reminder we will cancel your application.
Completion of the sale - After a period of three months from the date of the Section 125 Notice the Council may, under the Housing Act 1985, send you a Notice to Complete. If a Notice is sent it will ask you to complete the purchase of your home within 8 weeks. If the purchase is not completed within this time a Final Notice to Complete will be sent to you. If you don’t comply with this Final Notice, your application will have been deemed to be withdrawn and your application will not be taken any further.
Delays on the Council’s part
Most Right to Buy will go through smoothly within the prescribed time limits. However on occasions problems or delays may emerge. If the Council does not send within the prescribed period the RTB2, or the Section 125 Notice or it is considered that delays on the part of the Council are preventing you from exercising expeditiously your right to buy you may serve a notice on the Council. This may result in the rent you pay whilst the delay continues being taken off the purchase price.
MAKING AN INFORMED DECISION
1.00 HOME OWNERSHIP COSTS
There are a number of on-going costs associated with owing your home which, need to be taken into account when making a decision whether to buy your home. These may include the following:
Mortgage Repayments - If you have taken out a mortgage to purchase the property you will need to meet the regular payments. There are a number of different types of mortgage but basically you will have to pay a regular sum in relation to the repayment of the sum lent together with interest. If you fail to meet the repayments you risk losing your home as the lender can repossess the property.
Mortgage Protection Insurance – If you lost your job or fell ill could you keep up your mortgage repayments? If not, you should consider insuring against these possibilities.
Building Insurance – Buying a home is probably the biggest financial investment you will make, consequently, it is important you protect that investment by insuring your house. You should make sure your house is fully insured against such risk as fire, explosion, flood, and storm damage. You should insure against the cost of rebuilding (this is likely to be different from the market value). The insurance premium will depend on how much it would cost to rebuild your home.
Contents Insurance – It is not a legal requirement to have contents insurance but it surprising how much it can cost to replace those items. Therefore, you are advised to insure your furniture, carpets, electrical equipment and other possessions against damage by fire, flood or other risks. The costs will depend upon the terms of the policy but ideally you should insure at the replacement cost of your possessions.
Life Assurance – What would happen to the mortgage if you were to die? A life assurance policy may enable your family to pay off the mortgage in these circumstances.
Repairs to the Building – All properties need to be properly maintained and kept in good repair. Once you have bought your home you will be responsible for all repairs to the interior and exterior of the building and possibly for the boundary fences as well. Periodically, this is likely to include substantial expenditure for example, the roof may have reached the end of its life and require replacing, the windows may need replacing. In considering whether to purchase your home you will need to take account of anticipated future repairs as a cost of home ownership and whether you will be able to meet those costs.
Repairs to Services – You will be responsible for repairs to the water, drains, electricity and gas services to the building. On safety grounds gas appliances will need to be serviced at least once a year and electrical wiring on a regular basis. A number of the service providers provide care plans for gas and water/drains repairs. The monthly fee of care plans may help in giving an indicative cost in relation to these repairs.
Council Tax – Council tax will be payable on the property.
Utility charges - You will be responsible for the cost of all the utility services supplied to your home. These may include:
electricity, gas and water supplied to your home for heating, power and water,
sewerage/surface water removed from your home through the drains and sewers.
Services Charges (Flats and Maisonettes)
For a flat or maisonette the costs of occupying a property will vary slightly as the building insurance and repairs to the exterior and common areas is likely to be undertaken by the landlord. However, these will be reflected in service charges payable to the landlord. That is a payment made by a leaseholder, in addition to rent, towards the day-to-day communal expenses of the block of flats. As the holder of a long lease in a flat it is likely that you will be responsible for contributing towards:
2.00 COSTS RELATED TO THE BUYING OF YOUR HOME
There are a number of initial costs to buying your home which include:
Legal Fees
You are likely to require a solicitor or a licensed conveyancer to look after the legal side of buying your home. The legal costs will include the fees to carry out the legal work and disbursements. Disbursements include:
·Searches - undertaken to establish who owns the property, whether anybody else has any rights over the property, and to ensure that the property is not subject to any future developments.
Land Registry Fees – the recording of your ownership of the property at the Land Registry.
The solicitors or licensed conveyancer’s fees can vary, therefore you should shop around and ask for an estimate of their fees and costs. However, you should bear in mind that the cheapest is not necessarily the best to act on your behalf. A good source of information may be friends or relatives who have recently bought their house. The Law Society will be able to provide a list of local solicitors.
Mortgage
If you take out a mortgage to buy the property you will have to pay for the costs of arranging the mortgage. The lender will also require you to pay the cost of a mortgage valuation fee. For a general idea of the cost you should speak to a number of lenders. Local banks and building societies are a useful starting point or alternatively speak to a financial adviser.
Stamp Duty
Stamp duty is a Government tax on the purchase price of a property. A minimum threshold for paying stamp duty is set by the Government, which may vary over time.
Survey
You should consider protecting your investment in your home by having your own survey done. A surveyor acting on behalf of a mortgage lender will undertake a valuation. However, the valuer is simply seeking to ensure that the value of the property is sufficient to meet the sum borrowed against that property. It is not a survey and it may not identify any structural problems. A structural problem will have cost implications and once you have bought your home you will have to meet any costs arising from such problems. hartered Surveyors, structural engineers or architects can undertake surveys.
3.00 WARNING
If you are considering buying your home you should always bear in mind the following:
Mortgages - If you fail to meet the repayments on your mortgage you risk losing your home as the lender can repossess the property.
Service Charges & Ground Rents - If you breach the terms of your lease the landlord may have a right to forfeit the lease and recover possession of the property. However, where the property is lawfully occupied as a dwelling, the landlord cannot re-enter the property without a court order
Companies - You should be aware that some companies may ask you to pay for services that the Council will provide free of charge – for example help in completing application forms. Some companies will include the cost of arranging the mortgage and the legal fees in the mortgage rather that these sums being paid when the property is purchased. If these sums are included in the mortgage you will be borrowing a larger sum on which interest will be paid for the period of the mortgages
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