Conveyancing a purchase under a Right-to-Buy scheme requires a tenant to follow certain steps that are different from a standard conveyance. The Government has introduced a number of different ways which people can begin to climb the “Property Ladder” and succeed in the home buying process.
If you are a tenant in a local authority estate or non-charitable housing association, you may be eligible to purchase your home, providing you meet a number of criteria.
To begin with, you must have been a tenant for a minimum of two years and confirm whether you meet with the requirements under the scheme. You must notify your Local Authority or Landlord by serving them with a notice under the 1985 Housing Act. Upon receipt of this, they will verify your entitlement and authorise a valuation of the property.
The Local Authority will then respond by returning a notice (known as a Section 125 Notice) detailing the following:
- It will contain a description of the property itself;
- It will contain the purchase price – they calculate this by valuing the property as of the date you submitted your application, and then deduct the discount you are entitled to;
- If you are purchasing a leasehold property, it will detail any service charge costs which you will be liable for in the first five years after the completion of your purchase;
- It will inform you of any defects within the property that the Local Authority is aware of;
- It will also detail the terms and conditions of the Sale which will be attached to the Contract of Sale which will you will be required to sign before exchange of contracts – All transactions should be dealt with by a qualified person in order to deal with any complexities that may arise during the process. Please make sure you take legal advice before signing any legal document.
As a tenant, you will receive a discount off the actual market value of the property, and this will vary depending on the amount of time you have lived in the property.
When you receive your notice, you may disagree with the full market value given by your Local Authority. If this is the case, you do have the right to ask for your own independent valuation from the District Valuer.
However, the District Valuer’s valuation will stand, even if lower than the one given by the Local Authority. If you disagree with anything contained in the notice, it is advised that you take this up with your Local Authority immediately. You also have the right to go to court for a final decision if no compromise can be made, but this is of course costly, and should be considered as a last resort.
Once you receive and review your notice, you will need to make a decision whether you wish to continue with the purchase of the property, or if you want to withdraw your application and continue to pay rent to your Landlord. Your decision must then be made in writing to the Local Authority, within twelve weeks.
If you choose to proceed, then you should instruct a Conveyancing Solicitor, as you would in any regular conveyancing transaction, and they will act on your behalf to ensure all the legal work is completed in the usual way.
Once you own the property, you are entitled to sell it whenever you choose. However, if you have purchased under a Right-to-Buy scheme and you sell that property within five years of your purchase, you will be liable to repay some of the discount you received. How much will depend on the length of time since your purchase. If you sell within ten years, you are obliged to give first refusal either to the Local Authority or Social Housing Landlord in the area to buy back the property. The market value of the property sold within the ten-year period must be agreed between the parties, and if this cannot be done the District Valuer will make the final decision. If the sale is not completed within eight weeks you will then be free to sell to any other interested party.