Tenant’s Right To Buy

The right of secure tenants to purchase their property was established under the Housing Act 1980. The original rules have subsequently been amended, however, mainly owing to a growing number of abuses of the system.

These mainly involved speculators who made agreements with secure tenants to the effect that they would acquire their properties under the right to buy provisions, using finance provided by the property speculator who would then purchase the property and rebate to the tenant some of the discount they had received.

The discount is applicable when a tenant exercises the right to buy, and ranges from 35% to 60% in the case of flats and from 50% to 70% in the case of houses, although there is sometimes a cap on the maximum discount that can be given. More recently, the right to buy of tenants subject to an anti-social behaviour order has been limited through the establishment of a ‘demoted tenancy’.

Secure tenants will acquire the right to buy their property after 5 years but the right to buy with a discount is not without limitations. Firstly, the tenant must covenant not to sell the property within 5 years, subject to loss of the discount. The amount of discount to be repaid is calculated with reference to the value of the property at the date of resale, so that rising property prices will not produce a windfall profit for the purchasing tenant if they sell the property within the first five years.

Also, in a bid to prevent property speculators from cashing in on the discounts, a deferred agreement to resell the property to someone else, entered into before the right to buy is exercised or during the 5 year period after the purchase, will trigger a repayment of the discount. Furthermore, the right of first refusal to purchase the property remains with a social landlord for 10 years following the purchase. There are a variety of other measures which aim to prevent other abuses of the right to buy legislation.

If you wish to exercise the right to buy or have any other property query, please do not hesitate to contact us on 01526 276300 or email gemma@seatons.co.uk.