What is the Voluntary Right to Buy scheme?
Under the new Midlands Voluntary Right to Buy pilot scheme, some Staffordshire Housing Association tenants may be able to buy their home from us. You may be eligible for a discount of between 35% and 70% of the value of the property.
Some tenants and properties are excluded from the scheme. We will let you know if this applies to you or your home. The pilot is limited to a certain number of sales.
Buying can seem attractive, as you may benefit from an increase in property value. However, property values can go down and your property may be worth less than you paid for it.
Owning a property bring with it responsibilities, costs and financial commitments. These can include:
- repairs to the property (that are no longer included in your rent once you own the property)
- monthly mortgage payments
- service charge for the upkeep of the property or scheme
- insurance costs
If you fail to meet your commitments and responsibilities, you could lose your home. You should, therefore, think very carefully before buying and get plenty of advice from independent advisors before deciding to go ahead.
- You are one of our tenants and live in one of the areas selected for the Voluntary Right to Buy pilot. SHA will consider applications from the following local authority areas: Stoke-on-Trent, Newcastle-under-Lyme, Stafford and Staffordshire Moorlands.
- You don’t already have the Right to Buy. If you do have these rights and you want to apply or find out more, go to https://midlands.righttobuy.gov.uk/ or phone 0300 123 0913.
- You have been a tenant of a housing association or public sector landlord, such as a council, for a least 3 years (it doesn’t have to be 3 years in a row). It must be your only or main home.
- You have been a tenant of your current home for at least one year
- You have a full assured tenancy (you are not on a starter or assured shorthold tenancy)
- You don’t live in sheltered or extra care housing. If in doubt, please check with us before applying
- You home is not a bungalow, specifically adapted or in a rural area
- Your property is not subject to planning restrictions, which mean we can’t sell it
- You don’t have any legal problems with debt. For example, you are an undischarged bankrupt, have a bankruptcy petition pending against you or have obtained a debt relief order.
- You cannot buy your home if there has been a breach of your tenancy. For example, you have been served a notice seeking possession, there are any other tenancy or anti-social behaviour related court proceedings. Your rent account must be clear of any arrears when you apply to buy and throughout the duration of the application.
If you can answer ‘yes’ to these statements, you may be eligible. However, some properties are exempt from sale under the Voluntary Right to Buy pilot. We will be able to confirm if we can sell you your property after we have checked your application.
Discount levels for houses and flats start at 3 years of eligible tenancy, increasing every year of tenancy up to 70% of the property value or £80,900, whichever is lower.
For an idea of the discount that you may be able to get, please use the online Right to Buy calculator. Simply search ‘Right to Buy calculator’ or visit www.rightobuy.communities.gov.uk/right-to-buy-calculator.
You might get a lower discount if you previously bought another home through Right to Buy, or if we have spent some money on improving your home. If you have made any improvements to your home yourself, make sure you let us know so that we can reflect this in the valuation.
Discounts start at 35% for 3 years. Add 1% of each extra year of tenancy after 5 years, up to 70% or the cash maximum, whichever is lower.
Buying a house example
Current house value £100,000
Years as a tenant 10 years
Eligible discount 40%
Discount value £40,000
Price you pay for the house £60,000
Discounts start at 50% for 3 years tenancy. Add 2% for each extra year of a tenancy after 5 years, up to 70% or the cash maximum, whichever is lower.
Buying a flat example
Current flat value £70,000
Years as a tenant 10 years
Eligible discount 60%
Discount value £42,000
Price you pay for the house £28,000
For most people, buying a home it the biggest investment they will ever make. It’s an exciting time, but there is a lot to think about.
You need to look at all the costs involved – not just your mortgage payments. You need to work out if you afford it not only now, but in the future too, when your circumstances may be different. Bear in mind that house prices could go down as well as up. It’s a good idea to look into the costs of home ownership as early as possible, before you get too far into the Voluntary Right to Buy process. You are responsible for how you finance your Voluntary Right to Buy – we can’t arrange this for you.
Mortgage or loan? You are likely to need a loan or a mortgage, which you would need to pay back with interest, usually in monthly repayments. The interest rate on your mortgage deal that you agree with your lender (usually a bank or building society) can change over time. Remember that interest rates could go up or down in the future, which will mean the money you will pay back each month could change significantly.
How much can you borrow? This depends on your personal circumstances, such as your income, your outgoings, whether you’re buying alone or with someone else. You agree with the lender how much you need the mortgage for and whether you can afford the monthly repayments. The type of property you live in can also affect whether you can get a mortgage – for example, some lenders won’t lend money on a flat in a high-rise block. Even if you don’t need a mortgage yourself, it’s worth checking whether lenders are willing to give mortgages on the type of property you are buying. You may want to sell in the future to someone who does need a mortgage.
Other costs of buying a home
Mortgage advice You may choose to get advice from an independent financial advisor or mortgage broker. Costs vary and may be a set fee or a percentage of the loan.
Survey You may want to get an independent survey done. This will highlight any problems (such as repairs) you will need to know before you buy. Costs can vary depending on the type of survey. Typically they start at around £250 for a basic valuation survey.
Legal fees You will need to hire a solicitor or other licensed conveyancer for the legal aspects of your purchase (searches, land registry fees, deeds). Costs can vary, and are typically £750 and above.
Stamp duty This is a one-off tax you pay when you buy a property. The amount is usually based on a percentage of the purchase price and varies according to the property value. Stamp duty does not apply to properties below a certain value (currently £125,000).
When you buy a home, you take on some ongoing costs and responsibilities that you might not have had as a tenant.
Maintenance and repairs As a homeowner, SHA will no longer organise repairs to your home. You will need to arrange and pay for these yourself. This could include electrical and plumbing jobs through to more expensive repairs such as a new boiler or repairing your roof. It’s a good idea to set aside some money each month for maintenance and repairs. Be aware that you may need permission for some changes (such as planning permission for an extension), so check before you get started.
Service charges If you pay us a service charge now, you will probably be required to continue to pay us service charges in the future. This is so that we can still provide services to everyone. Flats (and some houses) are leasehold properties. When you buy a leasehold property, the freeholder, usually us, will still be responsible for maintaining the building and the surrounding, communal areas – as defined in your lease. As a leaseholder, you will pay a share of these costs – known as the service charge. When major repairs and maintenance are needed in your block or estate, you’ll have to pay a share of the costs too. This can be several thousand pounds if, for example, a new lift or windows are needed. To help you budget, if we propose to charge a service charge, we will give you an estimate for the first year’s amount. If the actual cost proves more than the estimate, you will need to pay more. If the actual cost is less, we will credit your account with the overpayment. If your service charge includes maintenance of your building (usually for flats), we will also provide details of the last 3 years’ service charges, if available. After 1 year, the service charge can rise to reflect the actual costs. We will consult you before starting any major works. Before you buy, ask about any long-term plans for repairs, work or improvements to your block or the surrounding area.
If you’re eligible for the Voluntary Right to Buy pilot discount, you could be on the way to owing your own home. Here are the six key steps you need to follow.
- Check your eligibility, work out the costs and get advice
Once you’ve checked your eligibility, it’s a good idea to look into the costs of home ownership as early as possible. This will give you an idea of what it might cost and what you can afford before you get too far into the process.
- Register your interest
You will need to register your interest on the government’s Right to Buy website. Search “Voluntary Right to Buy” or go to www.righttobuy.communities.gov.uk/voluntary-right-to-buy. You will be issued with a unique reference number (URN). We cannot consider your interest until you have this. Once you have been issued with a URN, you can contact SHA to discuss your application. We will then do some quick checks and as long as you pass these we will arrange for an application pack to be sent to you. If you decide to apply, we will let you know what is required in the letter we send you with the application form. You will also have to pay an application fee of £250. We will let you know when this is payable but please make sure you have the money ready. This is refunded to you if you complete your purchase or we are unable to sell your property to you. It will not be refunded if you decide not to go ahead after applying. Once we have taken your application, we will confirm we have received it. Then we will start checking your application to see if we are able to sell the property.
- Confirm eligibility
We will check to see if you qualify to buy the property and will carry out a number of detailed eligibility checks. If you pass these checks, we will contact you and let you know. We will then make arrangements for your home to be valued so you can find out how much it will cost to buy. If you do not pass the checks, we will write to you and explain why you can’t buy your property. If you have already paid an application fee, this would be refunded to you. If you are eligible, but your home is excluded, we will explain the option of ‘porting’ your RTB application to another property.
- Receive an offer of discount
If your application is accepted, you will receive an offer of discount letter. The letter will set out the discount you will receive and the price you will pay for the property. The terms and conditions of the purchase will also be included. Please see the separate sheet sent with the application form that give general conditions that you need to know before apply and pay any application fee. There are strict timescales for accepting your offer of discount so you must act quickly. Places on the Voluntary Right to Buy pilot scheme are limited so you may lose your place if you do not reply quickly to our letters and calls, or if you cannot buy quickly.
- Over to you: mortgage, survey and advice
You have 20 working days to accept our offer of discount. If you do not accept our offer within that limit, we may not be able to hold your place on our scheme. It is during this time that you will need to arrange or mortgage or loan, get a survey and hire a solicitor for the conveyancing. Please get independent financial or legal advice (if you haven’t already) and check you understand all the costs before signing anything.
- Complete the purchase
Once you’re happy and have arranged how you will pay for your home, we will confirm when you can carry on and complete your purchase. During this time, your solicitor will explain the contract to purchase your home and you will sign the contract. Once you have completed, you will receive a refund on your £250 administration fee as a credit towards your purchase.
- DON’T delay registering. There is a limited amount of government funding available for this pilot and it is for the whole of the Midlands region. As soon as the portal is operational register at https://righttobuy.gov.uk/
- DON’T assume that you will definitely be able to take part in the pilot. Not all SHA homes will be included (see point 5) and there is limited funding which will mean that not all applications will be successful. SHA does not have any influence in this selection process.
- DON’T send in an application unless you have received a unique reference number (URN) from the Government website. SHA cannot accept an application without it.
- DO pay any arrears owed to SHA before you apply. If you have any arrears your application will be refused.
- DO be aware that some properties cannot be bought.
- Extra care and sheltered housing because it is not included in the pilot
- *Bungalow accommodation
- *Homes which have been adapted for wheelchair users
- *Properties which are built subject to planning restrictions
- * Homes in rural areas
In cases where the properties are marked * you may be able to move to another property which is available to buy.
- DO expect to pay an administration fee of £250.00 to SHA. This will be deducted from the sale price if the sale completes or if your home does not qualify for any reason. You will lose the fee if you cancel the application or do not comply with the strict timescales which apply to the scheme.
- DO make sure that you make the application in the names of only the household members who will be included in the final sale. Once the application has been agreed and verified by SHA you will not be able to add or remove applicants without cancelling the application.
- DO make sure that if your application includes additional family members, they can prove that they have lived at the property for at least 12 months.
- DO make sure that you claim all of the discount that you are entitled to. We will only be able to verify any addresses that you have had with SHA but if you would like to include years spent with other Housing Associations or Councils you will need to provide proof – either a tenancy agreement, letter from the landlord or Council Tax or copies of the electoral register for the relevant years.
- DO pay attention to time scales. The key ones are;
- The URN is valid for 4 weeks – you must make your application to SHA before it runs out.
- When your application is accepted you have 10 days to make an appointment to provide your documents (it may be worth getting these organised before you apply)
- If you qualify you will receive an offer within 12 weeks
- When you receive your offer you have 4 weeks to decide whether to accept and provide solicitor’s details
When the matter is referred to solicitors, completion should be within 12 weeks (please make your solicitor aware of this when you appoint them)
Please email vrtb@Staffshousing.org.uk for more information