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.
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]
Find the current maximum discount on Gov.uk: Right to buy.
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.