Council tenant right to buy discounts 

Discounts depend on when the tenancy was granted and the time spent at the property, with the maximum discount cap reviewed every year.

This content applies to England

Determining the property price

The price of the accommodation is the amount it is valued at less the discount that the applicant is entitled to. The value of the property is the price on the date the application for the right to buy is made.[1]

In determining what this should be, the landlord must disregard any improvements made by the tenant.

Everyone who has the right to buy is entitled to some level of discount from the market price. The amount of the discount depends upon:

  • the amount of time spent in accommodation which meets the residence requirement for eligibility for the right to buy

  • whether the property is a house or flat

  • the maximum amount of discount allowed

  • the cost floor rule

  • whether a discount has ever been given to the applicant before

The calculation of the discount is based upon the total amount of time spent in accommodation that could contribute to the qualifying period for the right to buy, subject to the maximum discount. It depends on when the tenant's first public sector tenancy began.[2]

Discount where the tenancy started before 18 January 2005

Tenants whose first public sector tenancy began before 18 January 2005[3] are entitled to a 32 per cent discount on a house or a 44 per cent discount on a flat after their first two years of residence.

The discount on a house increases by one per cent each year up to a maximum of 70 per cent after 30 years.[4]

The discount on a flat increases by two per cent each year up to a maximum of 70 per cent after 15 years.

Discount where the tenancy started on or after 18 January 2005

Tenants whose first public sector tenancy began on or after 18 January 2005 are entitled to a 35 per cent discount on a house or a 50 per cent discount on a flat after their first three years of residence.

The qualifying period for the right to buy was reduced from five to three years on 26 May 2015.[5]

The discount on a house increases by one per cent each year up to a maximum of 70 per cent after 30 years.[6]

The discount on a flat increases by two per cent each year up to a maximum of 70 per cent after 15 years.

The Your right to buy your home guide explains how discounts are calculated.

Maximum discount

Under the formula given in regulations, the maximum discount is adjusted on 6 April each year in line with changes to the consumer prices index (CPI).[7]

As of 6 April 2018, the maximum discount is:

  • £80,900 for people living outside London

  • £108,000 for people living in London

See Gov.uk: Right to buy for more information.

Discounts on newly built or improved properties

A special limit on the amount of discount may apply if the property is newly built or acquired, or where there have been improvements, repairs or maintenance work on the property. This is known as the 'cost floor rule'.

If a total of £5,000 or more has been spent in the 10 years (15 years for properties built or acquired by the landlord on or after 2 April 2012)[8] before the right to buy application, the discount must not reduce the sale price below the amount that has been spent.[9]

Ongoing repairs and maintenance work to existing properties (as opposed to work on recently acquired dwellings) can only be counted if the cost of the work exceeds £5,500.

Prior to 11 February 1999, the period was eight years and ongoing repairs and maintenance were not counted at all.

Footnotes

  • [1]

    s.127 Housing Act 1985.

  • [2]

    ss.119(2) and 129 Housing Act 85, as amended by Housing Act 2004.

  • [3]

    s.180(5) Housing Act 2004.

  • [4]

    art. 2 Housing (Right to Buy) (Maximum Percentage Discount) (England) Order 2014 SI 2014/1915.

  • [5]

    see s119(A1) Housing Act 1985 as inserted by s.28 Deregulation Act 2015.

  • [6]

    art. 2 Housing (Right to Buy) (Maximum Percentage Discount) (England) Order 2014 SI 2014/1915. (SI made under s.129(2A) Housing Act 1985).

  • [7]

    Housing (Right to Buy) (Limit on Discount) (England) Order 2014 SI 2014/1378.

  • [8]

    art.2 Housing (Right to Buy) (Limit on Discount) (England) Order 2012 SI 2012/734. Note that Housing (Right to Buy) (Limit on Discount) (England) (Amendment) Order 2014 SI 2014/1865 corrects an error in SI 2014/1378 so that art.2 of SI 2012/734 is not revoked.

  • [9]

    s.131 Housing Act 1985; Housing (Right to Buy) (Cost floor) (England) Determination 1998.