Right-to-buy: buying your council house
Right-to-Buy was introduced in 1980 under the Thatcher Ministry. It helps people buy their council or housing association homes at a discount. Discounts vary from £16,000 to up to £78,600 (£104,900 in London). You only need to be a tenant for three years before you can apply to buy your leased property.
You can own shares of your home, between 25 and 75 percent, through housing association schemes, and pay rent on the rest. You can also buy your home through shared ownership if certain criteria apply. You can also buy shares more than once; for example, you can buy 25 percent one year, an additional 15 percent the next, and so on. How much the shares will cost depends on the property prices in the area. There are also other schemes available for the elderly and disabled people.
You can read more information on how the process works on the Government website. To apply for shared ownership, you’ll need to contact your housing association.
Banks offer Help-to-Buy Individual Savings Accounts (ISAs). Your first payment into your ISA can be up to £1,200, and then you can pay between 1p - £200 per month. The government will top up your savings by 25 percent from a minimum of £400, to a maximum of £3,000. For example, you’ll need a minimum of £1,600 in your account before the government pays £400 (25 percent of £1,600). You don’t have to pay back the 25 percent the government gives you.
To see which banks offer ISAs, see the Government website.
Help-to-Buy Equity Loan
Equity loans are low-interest loans you can put towards your home deposit. You need to pay the first five percent of the home’s value, the government will then loan you up to 20 percent (40 percent in London), and you’d have to mortgage the rest. For example, if your home was worth £200,000, you’d pay £10,000 as a deposit, you’d be loaned £40,000 (£80,000 in London), and you’d mortgage the rest.
You pay fees on the loan after the first five years, which increase each year with inflation. These fees don’t count towards loan re-payment. You have to repay the loan after 25 years or when you sell your home – whichever comes first. For more information, see the Government website.