Right to Buy Mortgages: Discounts, Eligibility and How to Apply
Right to Buy is one of the longest-running routes into home ownership for council and housing association tenants in England. The scheme lets eligible tenants buy their rented home at a discount, and in many cases that discount can act as the deposit for a mortgage. In practical terms, some tenants can buy their home with little or no cash deposit at all.
The rules changed significantly in 2024, with discounts made less generous to protect the wider public housing stock. Here’s how the scheme works now, who qualifies, how the discount is calculated, and what you need to know on the mortgage side before you apply.
Feel free to contact Heron Financial on 0203 195 1982 to speak to one of our advisor’s fee free for further information.
Right to Buy: at a glance
| Minimum tenancy required | 3 years as a public sector tenant |
| Minimum discount | 35% for houses, 50% for flats (at 3-5 years' tenancy) |
| Maximum discount | 70% of property value, capped by your regional limit |
| Regional cash caps | Typically £16,000 to £38,000, depending on location |
| Can the discount be used as a deposit? | Yes, many lenders treat it as equity, some allow 100% LTV |
| Where the scheme applies | England only, Scotland ended it in 2016, Wales in 2019 |
What is Right to Buy and how does it work?
Right to Buy is a government scheme in England that allows eligible council tenants to purchase their rental home at a discount off the market value.
The scheme has undergone major legislative changes through recent housing reforms, with discount caps made significantly less generous to protect public housing stock. Even so, for qualifying tenants, Right to Buy can still offer a genuine route into home ownership at a meaningful discount to open market prices.
Right to Buy applies in England only. Scotland ended its Right to Buy scheme in 2016 and Wales followed in 2019. If you’re renting from a council in either country, this scheme doesn’t apply.
Am I eligible for the Right to Buy scheme?
You are likely eligible for the Right to Buy scheme if you are a secure tenant of a public sector landlord and have rented from a public sector body for at least 3 years.
The core eligibility checklist:
- The property has to be your only or main residence
- You must not share a kitchen or a bathroom with people outside your household
- You need at least 3 years of public sector renting
- You must hold a secure tenancy with a council or participating housing association
The main disqualifications:
- Legal issues. Active bankruptcy or a court possession order will disqualify your application
- Sheltered housing. Properties specifically adapted or designated for elderly or disabled residents are excluded
- Anti-social behaviour. Courts can grant orders suspending your Right to Buy
How much Right to Buy discount could I get?
The Right to Buy discount currently provides a minimum of 35% for houses and 50% for flats (based on 3-5 years of tenancy), scaling up to a maximum of 70%, subject to regional cash caps.
Regional cash caps typically range between £16,000 and £38,000 depending on where you live. The final discount you receive is whichever is lower: the calculated percentage of the property value, or your regional cash cap.
How is the Right to Buy discount calculated?
How the discount is calculated by property type
Can I use my Right to Buy discount as a mortgage deposit?
Yes. You can use your Right to Buy discount as a mortgage deposit with many lenders, meaning you might not need extra cash savings for the deposit itself.
Here’s how it works in practice:
- Equity replacement. Lenders treat your discount as equity in the property rather than requiring cash savings
- Loan-to-value (LTV). A 30% discount means you’re borrowing 70% of the property’s full market value, giving you a 70% LTV ratio
- 100% borrowing. Some mainstream and specialist lenders will let you borrow the full discounted purchase price with no cash deposit at all
Not every lender offers 100% LTV Right to Buy mortgages, and criteria vary. A broker can identify which lenders match your specific situation.
Do I need any of my own savings for a Right to Buy mortgage?
You do not necessarily need personal savings for a deposit on a Right to Buy mortgage because lenders can use your government discount in place of one.
The key points:
- Many lenders let you use your Right to Buy discount instead of cash for a deposit
- The discount counts as equity, meaning you can borrow up to 100% of the discounted purchase price with zero cash deposit
- Not all lenders offer 100% LTV. Some may still ask for a small cash deposit, such as 5% of the property value
- Even with a zero-deposit mortgage, you’ll still need a few thousand pounds in cash savings to cover essential buying fees (legal work, valuation, survey, stamp duty if applicable)
How much can I borrow for a council house purchase?
Lenders typically allow you to borrow between 4.5 and 5 times your annual income for a Right to Buy mortgage.
- Income multiple. Most standard lenders use a cap of 4.5x your salary, though some specialist lenders stretch to 5x or slightly more based on strong affordability
- Affordability assessment. Lenders check your monthly outgoings, regular commitments, bills, and debts to ensure repayments are manageable
- The discounted purchase price. You only need to borrow the market value of the property minus your Right to Buy discount
What will lenders look at when assessing a Right to Buy mortgage application?
When assessing a Right to Buy mortgage application, lenders look at your personal financial stability alongside the specifics of the council scheme itself.
Income and affordability. Lenders check your salary and job stability to ensure you can afford monthly payments. They usually limit borrowing to between 4.5 and 5.5 times your gross annual income.
The Right to Buy discount. Most lenders allow you to use your government discount as your mortgage deposit. They’ll review the official Section 125 offer letter from your council to confirm the exact discount amount and purchase price.
Credit history. Lenders run a credit check to see how you’ve managed past borrowing, such as credit cards, loans, or missed payments.
Regular outgoings. They evaluate your monthly spending, including utility bills, existing debts, childcare, and general living costs.
Property type and valuation. A surveyor checks the council property to ensure it’s worth the discounted purchase price and meets standard lending criteria (for example, standard ex-local authority construction).
Rent history. Lenders will verify that you’ve been a public sector tenant for the required time and that your council rent account is fully up to date with no arrears.
Can I get a Right to Buy mortgage with bad credit or a low income?
Yes, you can get a Right to Buy mortgage with bad credit or a low income, though it’s more complex and you’ll have a smaller choice of lenders.
Bad credit could affect your application in a few ways:
- You may lose access to high street lenders
- If accepted with poor credit, you may face higher interest rates or be asked for an extra cash deposit
- You cannot use the scheme if you’re an undischarged bankrupt, have a pending bankruptcy petition, or face an active court possession order
A broker who specialises in complex or adverse credit cases can identify which lenders are most likely to accept your specific situation.
What is the five-year Right to Buy repayment rule?
Selling within 5 years: how much discount you repay
What other costs should I budget for when buying my council home?
When buying your council home through Right to Buy, you need to budget for several one-off purchase costs and ongoing homeowner expenses.
One-off purchase costs:
- Mortgage fees. Includes arrangement, booking, or valuation fees charged by your mortgage lender
- Legal and conveyancing fees. You’ll need to hire a solicitor or conveyancer to handle the legal transfer of the property
- Survey costs. Not always legally mandatory, but getting a home survey helps identify any structural problems or hidden repair bills before you buy
- Stamp duty land tax. Depending on the final purchase price after your discount, you may need to pay stamp duty
Ongoing homeowner costs:
- Mortgage repayments. These will replace your monthly council rent and may be higher depending on your loan size
- Repair and maintenance. The council will no longer fix things for you. You’re entirely responsible for all internal and external maintenance and repair bills
- Buildings insurance. If you’re buying a freehold house, you must arrange and pay for your own buildings insurance
- Service charges and ground rent. If you’re buying a flat or maisonette (which are usually leasehold), you’ll pay an annual service charge to the council for upkeep of communal areas and the outer building, plus a share of major structural repairs like new roofs
How do I apply for Right to Buy and a mortgage?
How to apply for Right to Buy
Should I speak to a mortgage broker before submitting my Right to Buy application?
Yes. You should speak to a mortgage broker before submitting your Right to Buy application to confirm you can afford the property and qualify for a mortgage.
While you don’t need a formal mortgage offer when you first submit the application to your council or housing association, getting early advice helps protect you. Speaking to a broker early lets you:
- Check affordability. A broker will look at your income, debts, and credit history to tell you how much lenders will let you borrow
- Understand the deposit. Your Right to Buy discount often counts as all or part of your deposit, but a broker can confirm which lenders accept this and if you need any extra cash
- Avoid wasted time. If your financial situation means you can’t get a mortgage, it’s better to find that out before you start the legal application process
- Plan for extra costs. Home ownership brings new expenses like maintenance, service charges, and building insurance, which a broker can help you budget for
Talk to Heron Financial
Right to Buy can be one of the strongest routes into home ownership for eligible tenants, but the mortgage side has its own quirks, not every lender accepts ex-local authority properties, and 100% LTV lending against the discount is limited to specific lenders. If you’re weighing up a Right to Buy purchase, we can help you check your realistic borrowing figure, find lenders that fit your circumstances, and plan around the wider costs before you commit.
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Frequently Asked Questions for Heron Financial
Is Right to Buy the same as Right to Acquire?
No. Right to Buy applies to secure tenants of local councils and some housing associations. Right to Acquire is a similar but separate scheme for housing association tenants renting properties originally funded through public grants after 1997, and it offers a smaller flat-rate discount. A broker can confirm which scheme applies to your situation.
Does Right to Buy apply in Scotland, Wales, or Northern Ireland?
No. Right to Buy was abolished in Scotland in 2016 and in Wales in 2019. Northern Ireland has its own separate House Sales Scheme. If you’re outside England, check the relevant local scheme rather than the Right to Buy rules in this guide.
Can I buy my council home jointly with a family member?
Yes, in some circumstances. Family members who have lived in the property with you for at least 12 months can be included on the application. Your council will confirm who qualifies.
What is a Section 125 offer letter?
The Section 125 is the formal offer notice your council sends you after accepting your RTB1 application. It sets out the market valuation of the property, your calculated discount, and the discounted purchase price. Mortgage lenders will need to see this to process your application.
Can I withdraw from Right to Buy after submitting the application?
Yes. You can withdraw at any point before completion. If you change your mind after receiving your Section 125 offer, you can simply not proceed. There’s no penalty for withdrawing.
Do I have to pay stamp duty on a Right to Buy purchase?
It depends on the discounted purchase price. Stamp duty is calculated on the price you actually pay, not the full market value. If the discounted price falls below the first-time buyer or standard stamp duty thresholds, you may pay little or nothing. Check with your solicitor to confirm.
Can I let out my Right to Buy home?
Yes, but there are practical implications. If you sell within the first 5 years, the repayment rule applies. If you let the property, some lenders will require you to move onto a buy-to-let mortgage rather than staying on a residential product. Speak to a broker before letting.