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Right to acquire

This content applies to England

The right to acquire for tenants of private registered providers of social housing.

What is the right to acquire

The Housing Act 1996 introduced the right to acquire for tenants of private registered providers of social housing (PRPSHs).[1] Not all tenants of PRPSHs have the right to acquire. The right to acquire is available to tenants whose property was provided using a social housing grant or certain other types of grant. The right to acquire applies to all PRPSHs, including non-charitable, charitable, housing trusts and non-public funded, but excluding co-operative housing associations.[2]

The provisions governing the Right to buy scheme apply in relation to the right to acquire except where regulations specify otherwise, for example in relation to the available discounts.[3]

Qualifying

In order to qualify for the right to acquire:

  • the tenant must be an assured tenant or a secure tenant. This include tenants who hold fixed-term assured shorthold tenancies (ASTs) of at least two years started on or after 1 April 2012,[4] but does not include those who have a periodic AST or a fixed-term AST of less that two years, long leaseholders or tenants of shared accommodation[5]
  • neither the tenancy nor the tenant must fall into one of the exclusions to the right to buy (see 'exclusions from exercising the right to buy' on the page on the Right to buy scheme for details), unless the exclusions relates to lettings by charitable registered providers of social housing or trusts, PRPSHs that have not received grants from certain public funds, and some properties specifically for older people[6]
  • the tenant must meet the residence requirements as for the right to buy (see the 'qualifying period for the right to buy' on the page on the right to buy scheme) such as having been a public sector tenant for at least two years if the tenant's first public sector tenancy began before 18 January 2005,[7] or five years if the tenancy began on or after 18 January 2005[8]
  • the property must have been built or acquired wholly or in part on or after 1 April 1997 with a social housing grant, using money in the disposal proceeds fund of the registered social landlord or bought from a public sector landlord (eg a local authority)[9]
  • the property must not be in a designated rural area: the Secretary of State may designate certain rural areas as ones where the right to acquire does not arise - this has been done on a number of occasions[10]
  • the property must not be due to be demolished within two years.[11]

Joint tenants and members of the tenant's family can exercise the right to acquire in the same way as for the right to buy (see 'eligibility for the right to buy' on the page on the right to buy scheme).[12]

A tenant who has the right to acquire may, with the consent of the landlord, exercise it to buy another property from the same landlord.[13]

Property valuation

The mechanism for calculating the property value and the discount is the same as for the right to buy - see the page Right to buy discounts. However, the Secretary of State has specified a different amount or rate of discount.[14] The discount varies between £9,000 and £16,000 according to the local authority area.[15] The discount is also limited by the provision that the maximum discount is less than 50 per cent of the market value of the property.[16]

Procedure for exercising right

The procedure for purchasing property under the right to acquire is similar to the procedure for the right to buy - see the page on the Right to buy procedure.

Tenants first need to complete form RTA1, which should be available from their landlord. The landlord should then reply to the tenant, telling her/him whether s/he has the right to acquire. This should be done within four weeks, or eight weeks if part of the tenant's qualifying period for the right to acquire has been spent with another landlord. If the landlord denies the tenant the right to acquire, then reasons must be given.

Tenants who have been granted the right to acquire may be offered an alternative property to purchase from their landlord. Landlords do not have a duty to offer an alternative property, and tenants do not have to accept one.

The landlord should then send the tenant an offer notice on form RTA3,[17] within eight weeks of notifying the tenant that they have the right to acquire, or 12 weeks if the property is a flat or maisonette. The offer notice should contain certain information, such as the sale price, an estimate of the next five-years' service charges for repairs and improvements, and the tenant's discount entitlement. Tenants may appeal against the landlord's valuation within three months of receiving the offer notice.

A tenant has 12 weeks to write to the landlord to let it know whether s/he wishes to go ahead with the right to acquire purchase, or to withdraw the application. Tenants must complete the purchase within three months of receiving the offer notice.

Service charges

A tenant who buys the leasehold of a flat, or sometimes, the lease of a house, will have to pay service charges. There are restrictions on the total amount that can be recovered from the tenant in service charges for repairs, maintenance and improvements work in:

  •     the five years following the sale of the property[18]
  •     any five-year period, where specified conditions apply[19].

For information on these restrictions see the page Statutory control of service charges.

With effect from 12 August 2014, a PRPSH has the power to waive or reduce service charges for repair, maintenance or improvement works if it considers that the tenant will suffer exceptional hardship otherwise. For more information see the page Paying service charges.

Selling a property bought under the right to acquire

The rules for selling a property bought under the right to acquire are the same as those for the right to buy - see the page on the Sale of property by occupier. Tenants who completed a purchase under the right to acquire before 18 January 2005 will have to repay some or all of their discount if they sell the property within three years, and tenants who completed a purchase under the right to acquire on or after 18 January 2005 will have to repay some or all of the discount if the property is sold within five years of purchase. Deferred sale agreements (see 'sale of the property to a finance company' on the page on sale of property by occupier) will also trigger the repayment of any discount from the date of the sale agreement.

If a tenant who purchased a property under the right to acquire sells it within ten years of purchase, the landlord has the right of first refusal (see 'local authority's right of first refusal' on the page on the Sale of property by occupier).

Wales

The information on this page applies only to England. Go to Shelter Cymru for information relating to Wales.

[1] s.180 Housing and Regeneration Act 2008 (which replaced s.16 Housing Act 1996).

[2] s.17(3)(b) Housing Act 1996, as amended by s.184 Housing and Regeneration Act 2008.

[3] s.17(2) Housing Act 1996, as amended by s.184 Housing and Regeneration Act 2008.

[4] s.16(1)(a) Housing Act 1996 and s.180(2) Housing and Regeneration Act 2008, as amended by s.165 Localism Act 2011.

[5] s.180(2) Housing and Regeneration Act 2008, as amended by s.165 Localism Act 2011; reg.4 The Transfer of Tenancies and Right to Acquire (Exclusions) Regulations 2012 SI 2012/696.

[6] s.17(3)(b) Housing Act 1996, as amended.

[7] s.17(2) Housing Act 1996, as amended.

[8] s.119(1) Housing Act 1985, as amended by Housing Act 2004.

[9] s.16(1)(b) and s.16(2) Housing Act 1996, as amended.

[10] see Housing (Right to Acquire or Enfranchise) (Designated Rural Areas in the West Midlands) Order 1997 SI 1997/620; Housing (Right to Acquire or Enfranchise) (Designated Rural Areas in the South West) Order 1997 SI 1997/621; Housing (Right to Acquire or Enfranchise) (Designated Rural Areas in the North West and Merseyside) Order 1997 SI 1997/622; Housing (Right to Acquire or Enfranchise) (Designated Rural Areas in the East) Order 1997 SI 1997/623; Housing (Right to Acquire or Enfranchise) (Designated Rural Areas in the North East) Order 1997 SI 1997/624; Housing (Right to Acquire or Enfranchise) (Designated Rural Areas in the East) Order 1997 SI 1997/625; Housing (Right to Acquire or Enfranchise) (Designated Rural Areas) Order 1999 SI 1999/1307.

[11] para 12, Sch.5 Housing Act 1985, as amended by Housing Act 2004.

[12] s.17(2) Housing Act 1996, as amended.

[13] s.21 Housing Act 1996, as amended.

[14] s.17(1)(a) Housing Act 1996, as amended.

[15] The Housing (Right to Acquire) (Discount) Order 2002 SI 2002/1091.

[16] Housing (Right to Acquire) (Discount) (Amendment) Order 1999 SI 1999/3028.

[17] Housing (Right to Acquire) Regulations 1997 (Section 125 form).

[18] s.17(2) Housing Act 1996, as amended by s.184 Housing and Regeneration Act 2008; paras 16A – D Sch.6 Housing Act 1985.

[19] Social Landlords Mandatory Reduction of Service Charges (England) Directions 2014.

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