Right to Buy Mortgages > Right to Buy Mortgage Discounts

Right to Buy Mortgage Discounts

If you are a public sector tenant and are eligible for the Government’s ‘Right to Buy’ scheme, you could be entitled to a discount on the market value of your property.

Exactly how much you money you could save will depend on a number of factors, including:

  • The length of time you have spent as a tenant - discounts through Right to Buy are only available to individuals who have been a public sector tenant for at least five years (continuous or not). This period could have been in different homes with different landlords. The longer you have lived in the property, the higher the discount you will receive.

    *Note; if you are buying your home jointly with someone else, the discount on your purchase will be based on the person with the most years as a public sector tenant.

  • Location – the maximum level of discount you can receive is determined by the region in which your property is based

  • The type of property - discount levels differ for houses and flats.

Regional discount levels

The following are the maximum discount levels for the different regions of England and Wales:

  • £16,000 in London – except Barking and Dagenham or Havering, where the maximum discount is £38,000
  • £16,000 in Wales
  • £22,000 in the North East of England
  • £24,000 in the East Midlands, Yorkshire and the Humber
  • £26,000 in the North West of England and the West Midlands
  • £30,000 in the South West of England
  • £34,000 in the East of England – except Watford, where the maximum discount is £16,000
  • £38,000 in the South East of England – except the following areas, where the discount limit is £16,000:

    • Chiltern
    • Epsom and Ewell
    • Hart
    • Oxford
    • Reading
    • Reigate and Banstead
    • Tonbridge and Malling
    • Vale of the White Horse
    • West Berkshire

If you are not sure which limit applies to you, ask your landlord.

Discount levels for houses and flats

If you live in a rented house and have been a public sector tenant for a minimum of five years, you will receive a 35% discount off the value of your property. This rises by 1% for every extra year you’ve been a public sector tenant, up to a maximum of 60%.

For flats, the discount level is 50%, with an extra 2% available for every further year spent as a public sector tenant (up to a maximum of 70%).

Remember, the actual value of the discount you get will depend on the region you live in, as each area of England and Wales is subject to a maximum discount level.

What is the ‘cost floor’ rule?

The ‘cost floor’ rule protects your landlord from losing the money they have invested on repairs and maintenance of your home during the last 10 to 11 years. If their spending exceeds the value of your home, your discount will be reduced - or you may not get a discount at all.

Repaying the discount when you sell

If you are considering exercising your right to buy, you must take into account that any discount you receive will have to be partly or fully repaid if you sell your home within five years of owning it. You’ll have to pay back:

  • 100% of the discount if the property is sold in your first year of ownership;
  • 80% of the discount if sold in the second year;
  • 60% of the discount if sold during the third year;
  • 40% in the fourth year; and
  • 20% if sold in the fifth year.

However, the actual value of your repayment will be based on the resale value of your property and not the original discounted price.

For example, if you purchased your home for £200,000 with a 25% discount (£50,000) and then sold it within 12 months for £250,000, you would have to pay back 25% (all of the discount) of the new sale price, which in this case would be £62,500.

*Note, repayment of the discount may not apply if you transfer ownership of your home to a member of your family. You will need to agree this first with your landlord and then get a solicitor to carry out the transfer.

Right to Buy & third-party agreements

If you agree to transfer your property to a third party – e.g. a private landlord - within five years, you will have to pay back a certain amount of the discount based on the date you signed the transfer agreement. For example, if you agree to a transfer before you buy your house or flat, you’ll have to repay the discount in full.