Preserved right to buy when council homes are transferred
Tenants keep the preserved right to buy if their property is transferred to a landlord whose tenants do not have the right to buy.
The preserved right to buy
If a property is transferred from one landlord whose tenants have the right to buy to another landlord whose tenants do not, then a tenant who has the right to buy retains this right. For example, if council tenants become housing association tenants as a result of a large scale voluntary transfer or a transfer of one property only.
This is called the preserved right to buy and came into effect on 5 April 1989.
The following tenants have the preserved right to buy:
the former secure tenant or each joint tenant
a person who becomes the joint tenant of a person who has the preserved right to buy
a person who succeeds to or is assigned the tenancy of a former secure tenant
a person who is transferred the tenancy under a property adjustment order under section 23A or section 24 of the Matrimonial Causes Act or section 17(1) of the Matrimonial and Family Proceedings Act 1984, or an order under Schedule 1 of the Matrimonial Homes Act 1983 or Schedule 7 of the Family Law Act 1996 or paragraph 1, Schedule 1 of the Children Act 1989
If the property is transferred to a third landlord, then the preserved right to buy is retained by the tenant, unless:
the new landlord is one that gives tenants the right to buy, in which case the transferred tenants will have the right to buy, for example if the property transfers from a local authority to a registered social landlord and then back to the local authority
there is a failure by the landlord to register the preserved right to buy as a notice on the land register at the time the property is transferred
Where the landlord fails to comply with the duty to register the preserved right, the tenant is entitled to compensation.
A former secure registered social landlord tenant who has had their tenancy demoted loses the right to buy permanently, as following the period of demotion their tenancy becomes a standard assured tenancy. They may still have the right to acquire.
The rules about the discount, the cost floor rule and so forth are the same as for the right to buy. Although there are no prescribed forms for exercising the preserved right to buy, the relevant legal rules are the same as for the right to buy.
See the Your right to buy your home guide for more information.
Preserved right to buy after moving to another property
A tenant retains the preserved right to buy if they move to another property of the same landlord or if the tenant has moved so as to take up suitable alternative accommodation in accordance with a court order for possession.
If there is a mutual exchange between tenants, then it appears that the preserved right to buy is not retained by the outgoing or incoming tenant, as there is no provision in the legislation for this eventuality.
Rights to consultation
The voluntary transfer of council stock to other landlords was made possible by the Housing Act 1985 and is subject to certain requirements. In many cases, this has involved the wholesale transfer of all or a substantial part of a local authority's housing stock to either a new or an existing registered social landlord.
For the transfer to take place, tenants must first have been consulted and the Secretary of State must have given approval.
If the majority of tenants appear to oppose a transfer the Secretary of State will not give consent.
There is no duty to consult leaseholders, and in the event they are consulted the Secretary of State does not have to give any weight to their views when considering whether to approve the transfer.
Tenant groups' transfer proposal
Regulations require local authorities to cooperate with groups of their own secure tenants wishing to propose the transfer of their social housing stock to a private registered provider of social housing.
The Secretary of State has issued statutory guidance that local authorities receiving notices to that effect from a group their tenants must follow.
s.171A Housing Act 1985.
s.171B Housing Act 1985.
s.171D Housing Act 1985.
Sch.9A, para 6 Housing Act 1985.
Housing (Preservation of Right to Buy) Regulations 1993 SI 1993/2241.
s.171B(6) Housing Act 1985.
s.171F Housing Act 1985.
s.32 and s.43 Housing Act 1985, as amended by s.6 Housing and Planning Act 1986.
CLG has published the Housing Transfer Manual to give guidance to local authorities considering stock transfers. Section 10 of the manual gives guidance on the consultation exercise itself. The CLG have also published a guide to stock transfer for tenants.
para 5, Sch.3A Housing Act 1985.
Swords v Secretary of State for Communities and Local Government  EWCA Civ 795.
Housing (Right to Transfer from a Local Authority Landlord) (England) Regulations 2013 SI 2013/2898.