"In many Right to Buy cases, property valuations carried out by the local council are often higher than those conducted by high street banks"
Since the scheme was first introduced in the Housing Act 1980, over 1.99 million social housing dwellings have been sold through the scheme since April 1980 to March 2021, accounting for one third of the stock. In total, 94% of the sales so far have been made to local authority tenants.
According to government data, there were 24,333 applications by local authority tenants to purchase their social housing property through the Right to Buy scheme in 2020-21, with the number of sales in any given year typically half the number of applications.
Over the years, various changes in government policy such as a reduction in discounts and qualifying tenancy periods as well as alterations to the eligibility criteria, has seen the number of Right to Buy purchases ebb and flow, but the scheme remains a popular route for many social housing tenants to buy their own home.
Further changes made in 2015 to extend the scheme to include housing association as well as council tenants in England has made Right to Buy more attractive and accessible to public sector tenants, accounting for approximately 4 million houses in 2021, according to figures from Statista.
As such, the scheme remains a vital stepping stone for many tenants wanting to get onto the property ladder and, as a sizeable niche of the housing sector, offers brokers the chance to expand their reach into this often underserved area of the mortgage market.
For those brokers working with clients looking to purchase their first home through the scheme, it is important they work with a lender who can easily guide them through the process. In many Right to Buy cases, property valuations carried out by the local council are often higher than those conducted by high street banks, so using a specialist lender who will lend based on the valuation, not the discounted purchase price, at a higher LTV could be the difference between a tenant securing a property or missing out.
In addition, for those clients who may have missed payments or have an adverse credit history, a specialist lender will work with the broker to assess the client’s credit history and be more accommodating when it comes to lending to those with low incomes, complex income structures or a bad credit rating, lessening the chance of an application being rejected.
The same is also true for those clients struggling to save for a deposit. With the scheme, some lenders will accept the Right to Buy discount as a deposit so it is always worth speaking to a specialist lender who will assess each case on its own merit and work to help the client buy their home.
The Right to Buy scheme remains an important part of the mortgage market and plays a crucial role in helping many social housing tenants get onto the property ladder. For brokers and clients unfamiliar with the market, using a specialist lender to help navigate the complexities could be the difference between seeing a client secure a property and or miss out altogether.
