Your right to buy your home

What is the Right to Buy?

Some tenants have a Right to Buy their home at a discount. Customers who had lived in their homes before they were managed by Aragon Housing Association may have what’s known as a Preserved Right to Buy which means they could qualify for a discount if they qualify to buy their home. 

Up until March this year the maximum discount had been £34,000 in this area. The rules have now changed and the maximum discounts have been raised by the Government to £75,000 off market value.

There are further details in the Government's new leaflet on this page.

The longer you have been a tenant, the bigger the discount. If you want to work out your discount, use the table below. 

How much discount will I get?

The table below gives some examples of the discount you could receive. 

Where can I find out more?

You can ask for a leaflet that will also help you get started – this is available from us or via www.direct.gov.uk/righttobuy along with all the forms and more detailed information you need. 

There are other schemes to help you buy your home. If you would like to find out more about the Right to Buy or any other schemes available, contact Louise Merritt on 01525  844401 or email louise.merritt@grandunionhousing.co.uk . 

What is my home worth?

We don’t know the exact value of your home without doing a valuation survey. It will depend on size and location but  typical values for three bedroom homes over the last few years have ranged from £140,000 to £190,000. We use independent valuation agents to assess the value of your home. If you are not happy with that valuation, then the matter is referred to the District Valuation Service, whose decision is final.  

What would it cost?

Well that depends on how much you have to borrow. Government estimates are that to borrow £65,000-£90,000 from a bank or other mortgage provider would typically cost around £100-135 per week * for 25 years to fully repay. This amount may go up and down with interest rates. 

To offer a loan of that size, lenders would usually need you to be earning at least £20,000 a year. 

What other costs are there?

When you buy a home, you should expect to pay for a survey and for legal fees. These could add up to around £3,000. If your home is worth more than £125,000 you will also have to pay stamp duty. 

Once you have bought your home, you will be responsible for any repairs and maintenance it needs. If you live in a flat, you will also have to pay a share of repairs and maintenance to the block – the ‘service charge’. The cost of this is set for the first 5 years and will probably be around £20 a week. We’ll give you an exact cost once you send in your form. 

What is the risk?

Home ownership is not for everyone. The weekly cost of your mortgage may go up and down with interest rates during the time you pay it off – and interest rates are currently low historically. If interest rates go back up by 3%, this could cost you an extra £40 per week.  

You should also think about how you would make payments if you or anyone you’re buying with lost some or all of their earnings. Government support for mortgage costs is limited and you may lose your home if you fail to keep up payments on it.  

What help is there for my mortgage payments if I lose my job? 

The only help available is through the Government Support for Mortgage Interest (‘SMI’) scheme and the important points of this scheme are: 

It only assists with the interest costs of a mortgage at currently a fixed rate of 3.63% irrespective of the interest rate on your mortgage. (This rate is reviewed regularly)

·         It is only paid to someone who is claiming: 

• Income Support or 

• Income Related Job Seekers Allowance or

• Income Related Employment & Support Allowance or

• Pension Credit

It is then only paid 13 weeks from the date of the claim for one of these benefits.

It is only paid on that part of the mortgage used to buy the property or for substantial improvements to the property up to a maximum mortgage of £200,000.

If the claimant is claiming Income Related Job Seekers Allowance, SMI is only paid for a maximum of 2 years.

In most cases this scheme will only help toward the interest costs on your mortgage, which means you will inevitably have to find some money yourself to cover any shortfall between the help received through SMI and the actual interest costs on your mortgage.

What help is there from my mortgage provider if I lose my job? 

This depends on the terms of your mortgage and the mortgage provider, for example some mortgages do permit a number of months of ‘payment holiday’ to be taken. The important thing is to let your mortgage provider know immediately your change in circumstances and then to see how they may be able to assist. It is always advisable to examine the Insurance options available to you when taking out a mortgage to cover such things as unemployment or critical illness but most unemployment type policies will only cover your mortgage payments for a limited period of time, normally 12 to 18 months. 

Free advice

We recommend you get independent, professional advice when thinking about buying your home. The Money Advice Service has been set up by Government to give free impartial advice about money. Give them a call on 0300 500 5000 or go to www.moneyadviceservice.org.uk.  

The Leasehold Advisory Service (LEASE) is another body set up by Government that provide free advice on buying a flat and on service charges. Give them a call on 0207 383 9800, email info@lease-advice.org or go to www.lease-advice.org

Paid advice

You can seek Independent Financial Advisors (IFAs). Always make sure that you ask what they are charging you, and check they are registered with the Financial Services Authority by looking on www.fsa.gov.uk or call 0845 606 1234. 

Find out what other tenants are saying

There is also a government Facebook page at www.facebook.com/righttobuy where you can swap information with other tenants on any Right to Buy issues and get answers to any questions.

*If you were charged 6% interest on your loan, over a 25 year period