Repaying Right to Buy discount

Since it began in 1980 the Right to Buy scheme has allowed thousands of residents to take out a mortgage and own their homes, aided by the discount calculated at the time of sale.

This right to buy discount, or a portion of it, is repayable if you sell or otherwise transfer within the applicable discount period.

The discount period for applications made after 18 January 2005 is five years. The amount of the discount repayable is reduced by one fifth (20%) for each complete year that passes. However, rather than being a set sum, the amount to repay increases proportionately to the percentage increase in the value of the property at the time of the sale compared to when it was purchased.

For example, if your property was valued at £100,000 at the time you purchased it, and you received a £10,000 discount (10%) then after one complete year you sold the property for £110,000, the total discount due for repayment is £11,000 (10% of the new value of the property).

This is reduced by one fifth as a complete year has passed since the purchase meaning the actual amount due to the council would be £8,800. If two complete years had passed it would be reduced by a further fifth, to £6,600 and so on.

The idea is to ensure that you and the council receive some of the profit.

The solicitor handling your sale will contact us and arrange for funds to be transferred on completion. Certain sales or transfers are exempt from the requirement to repay discount, for example transfers between certain family members.

In addition, if you would face hardship by having to repay discount, and your circumstances justify it, we can decide not to ask you to pay some or all of what you owe.

If in advance of your purchase, or within the discount repayment period, you enter into an agreement to transfer your property to a third party in the future, this will trigger the repayment of your discount. Discount repayment is triggered from the date that you enter into the agreement. So, for example, if you enter into such an agreement before you have bought the property or during the first year after buying, you will have to repay the full amount of discount you received.