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How time as a tenant affects Right to Buy discount

You’ll only get a discount through Right to Buy if you’ve been a public sector tenant for at least five years. These five years don’t have to be continuous and could have been in different homes with different landlords.

If you are buying jointly with someone else, the discount is based on the person with the most years as a public sector tenant. So if you’ve got ten years as a tenant but your partner has 15, the discount will be based on 15 years.

You are a public sector tenant if you rent your home from the council or other public bodies like an NHS trust. Follow the link below for a list of Right to Buy landlords and other public sector landlords.

Maximum discount levels for Right to Buy in each region

There is a limit to how much money you can get off the value of your property through Right to Buy. The maximum discounts available by region are:

• £16,000 in Wales
• £16,000 in London (unless your home is in Barking and Dagenham or Havering, where the maximum discount is £38,000)
• £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 (unless your home is in Watford, where the maximum discount is £16,000)

In the South East of England, the maximum discount is £38,000, unless your home is in one of areas listed below. In these areas the maximum discount 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 don’t know which limit applies to you, ask your landlord.

How to work out your Right to Buy discount

There are different discount levels for houses and flats.

For houses you get a 35 per cent discount if you’ve been a public sector tenant for five years.

This discount increases by 1 per cent for every extra year you’ve been a public sector tenant. No matter how long you’ve been a tenant, the most you can get off your home’s price is 60 per cent.

For flats you get a 50 per cent discount if you’ve been a public sector tenant for five years.

This discount increases by 2 per cent for every extra year you’ve been a public sector tenant. No matter how long you’ve been a tenant, the most you can get off your flat’s price is 70 per cent.

Remember, the actual discount you will get depends on where you live. For example, if you wanted to buy your flat in Yorkshire and had been a public sector tenant for ten years, you would qualify for a 60 per cent discount. But the maximum discount for Yorkshire is £24,000. This means if the flat was worth £124,000, you could buy it for £100,000.

How the ‘cost floor’ rule affects Right to Buy

Your discount may be reduced by the ‘cost floor’ rule. This rule protects your landlord from losing the money they have spent on repairs and looking after your home in the last 10 to 11 years. If they have spent more money than your home is worth, any discount will be reduced. You may not get a discount at all.

For Preserved Right to Buy, the cost floor rule covers work that has been carried out on your home in the last 15 to 16 years. You may have a Preserved Right to Buy if the council sold your home to another landlord, eg a housing association, while you were renting it.

Paying back the Right to Buy discount when you sell

If you sell your Right to Buy home within five years of owning it, you’ll have to pay back any discount that you got. You’ll have to pay back:

• all of the discount in the first year
• 80 per cent of the discount in the second year
• 60 per cent of the discount in the third year
• 40 per cent of the discount in the fourth year
• 20 per cent of the discount in the fifth year

How much money you have to pay back depends on the value of your home when you sell it.

For example, if you bought your home for £100,000 with a £20,000 discount, your discount is worth 20 per cent. If you then sold your home for £110,000 in the first year, you would have to pay back £22,000 (20 per cent of £110,000).

You may not have to pay back the discount 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 do this for you.

If you can’t afford to pay back the discount, eg because the bank is selling your home, you should talk to your landlord. They may not ask you to pay back all of what you owe.

Right to Buy and third-party agreements

You'll also have to pay back the discount if you agree to transfer your property to a company, eg a private landlord, within five years. The amount you have to pay back will be worked out from the date you signed the transfer agreement. For example, if you enter into an agreement before you buy your flat, you will have to repay the full discount.