Is now a good time to buy your council house?

*collaborative post*

Well, firstly you may ask, how exactly does council housing differ from normal residential housing and how did it come about?

Council housing was first introduced in the UK in 1890 via the Housing of the Working Classes Act as a way to eradicate slums and improve the living conditions of the working classes. The very first council estate appeared on Boundary Street between Bethnal Green and Shoreditch in the East End of London shortly afterwards. In the aftermath of the First World War when there was high demand for affordable homes, the Housing and Town Planning Act 1919 provided subsidies to local councils and required that all local authorities provide council housing for rent at a discounted rate. Today, this is usually up to 80% of the market rate for a similar privately rented property, with structural, gas and electricity appliance repairs and maintenance included. There is also the option to become a secure tenant, which means you can normally live in the property for the rest of your life, as long as you do not break the conditions of the tenancy.

By 1938, public housing numbers increased at such a rate that 10% of all UK homes were now council houses. After the Second World War, a Conservative election promise to provide 300,000 new homes annually saw a further surge in council house numbers. By 1979, 40% of the British public lived in around 6.5 million houses owned by their local council.

In 1980, the Right to Buy scheme was introduced in the UK by Margaret Thatcher’s government and provided tenants of council owned properties the opportunity to buy the homes they were living in at a discounted rate, with the intention of providing a cost effective way to renovate rundown council estates. The Right to Acquire scheme offers a similar option for housing association properties built or purchased by the housing association after 31 March 1997, albeit with a smaller discount. Uptake for both schemes was very popular.

As a result, by 1997 there were less than 4.8 million council owned properties in the UK, and by 2017 around two million. Since 1981, only 250,000 council houses have been built – with most new social housing provided by housing associations rather than local authorities – and critics have pointed towards the Right to Buy scheme and this reduced supply of new properties as the reason for a severe shortage in affordable housing for those on low incomes and the displacement of long-standing communities.

So, if you currently live in a council house that you do not own, should you consider buying the property?

Whilst the dream of owning your own bricks and mortar is often touted as the ideal to aspire to, there are a number of questions you need to take into account when it comes to deciding whether now is a good time to buy your council home.

Do you meet the criteria for the Right to Buy scheme?

Firstly, and most importantly, do you meet the criteria for buying your council home?

Essentially, if you have lived in the property for 3 years (and it does not have to be three consecutive years), you’ve had a public sector landlord such as the council, housing association or an NHS trust, it is your only or main home and you are a secure tenant you will generally be able to purchase under Right to Buy.

It also depends on where you live in the UK. Whilst the Right to Buy scheme remains in place in England, it has since ended in Scotland (as of 1 August 2016) and in Wales (as of 26 January 2019) so although you can still purchase your council home in Wales and Scotland, the local authority is not obliged to sell it to you and you will also have to pay full market rate for the property.

In Northern Ireland, the House Sales Scheme has different eligibility criteria but works in a similar way to the Right to Buy scheme. However, tenants of registered housing associations will no longer be eligible for the scheme after 28 August 2022, just tenants of the Northern Ireland Housing Executive.

Will you be able to afford a mortgage?

When it comes to deciding if buying your council home is the right decision for you, you will also need to be aware of how much your mortgage repayments would be versus what you currently pay in rent. The maximum discount is currently £87,200 or £116,200 in London. If the amount between your current rent and monthly mortgage repayments will differ substantially, can you afford to make up the shortfall, particularly if you are no longer entitled to certain benefits afforded to council tenants such as universal credit? With inflation and interest rates rising, locking in a fixed rate mortgage is also a must to ensure affordability.

Is your home in a good state of repair?

Once you own the house yourself, you will be solely responsible for the cost of repairs that the council would have covered previously such as a replacement boiler, new windows, or a leaky roof, all of which can cost thousands. The cost of on-going maintenance for the house and any outdoor space needs to be factored into your regular outgoings.

Will you make your money back if you decide to sell in future?

If you live in a sought after area with good schools and amenities nearby this is always a plus point, although it is important to be aware that council houses tend to increase in value at a slower rate than other residential properties so when you value the property in comparison to other similarly sized homes in the area you need to take this into account.

If you meet the criteria to buy your council house and affordability is not an issue, how do you go about doing so?

Firstly, you will need to formally apply to purchase the property using an RTB1 application form. The council, as your landlord, then needs to agree to sell the property to you (or explain why they will not) within 4-8 weeks depending on the length of your tenancy. They also need to let you know the asking price plus any discount you are entitled to and how this figure has been established. For instance, if your landlord uses the cost floor rule whereby they seek to claim back money which has been spent on maintaining the property in the last 10-15 years before your application to buy it, you may receive a smaller discount than you expected.

Whilst the council will have provided a valuation for the property you can also dispute this amount and request an independent valuation if you feel that their valuation is inaccurate.

Finding more information and advice

The council will be able to provide more information and timescales for the purchasing process in your local area, or you can contact the housing charity Shelter for independent advice, free of charge.

 

 

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