VRtB: Frequently Asked Questions
What is Voluntary Right to Buy?
At the last General Election, the Government committed to extend the Right to Buy to housing association tenants.
Since then, Housing Associations and the National Housing Federation have voluntarily worked with the Government to agree how this offer will work in practice.
About the pilot
Longhurst Group is taking part in the Voluntary Right to Buy (VRTB) Pilot Group for the Midlands.
As a result, some of our customers who are eligible for this scheme may qualify for a discount on the purchase price of their rented home.
How long will the new pilot last?
The pilot will last for two years; however this will be subject to funding being made available from the Government.
Why is this pilot taking place in the Midlands?
The Midlands has been chosen following discussions with the National Housing Federation to identify the most effective location for the pilot. The Midlands represents a large area with diverse conditions, large and small housing associations, urban, suburban and rural areas. There is a need to know how the scheme will work in all of these situations.
Why is it called 'Voluntary'?
The voluntary aspect of the scheme is in relation to the Housing Associations taking part. It has been left up to each individual housing association whether they wish to take part in the scheme.
Why is Longhurst Group taking part?
Covering both the East and West Midlands, Longhurst Group is well-located to be part of this pilot. Working in partnership with the sector, and taking the time that's needed to design a policy that really delivers for everyone, we will be able to shape the blueprint for Government best practice.
What will the pilot do?
The new pilot will test two important factors of the scheme, which weren't tested in the original pilot undertaken in the South and North West Regions:
- One-for-one replacement: Longhurst Group will ensure that we replace every home sold with a new property through our development programme.
- Portability: in the event that a customer cannot purchase their current home, they may have the opportunity to 'port' their discount to another property.
Will Voluntary Right to Buy mean the loss of social/affordable housing?
A key part of participating Housing Associations' agreement with the Government is that they will receive full compensation for each home they sell. This in turn will be used to replace every home sold with another affordable home and continue boosting the nation's housing supply. Last year, housing associations delivered 40% of all new homes in the country.
How can I take part?
- Tenants who wish to take part in the pilot will need to check that they meet the eligibility criteria.
- Places on the pilot scheme will be allocated by ballot.
- The registration period for the Government ballot that will allocate places on the pilot scheme is NOW CLOSED. It was launched by the Government on 16th August 2018 and remained open for four weeks, until 16th September.
- Now that the registration period has closed, the Government will run the ballot and allocate Unique Reference Numbers (URNs) to successful tenants. Only tenants allocated a URN will be able to proceed and complete an application for the scheme. Please note that receiving a URN is no guarantee that you will be able to buy your property.
- As the ballot will only be open for four weeks we would advise you to register your interest at midlands.rightobuy.gov.uk as soon as possible.
- Please note that the Government will manage and implement the ballot, and Longhurst Group has no control over which tenants are successful in obtaining a URN.
If you have any further questions or require any additional information on how to register for the ballot you can contact the dedicated Right to Buy Agents on 0300 123 0913. This is a free, impartial service funded by the Government.
Homes in the pilot scheme
If I'm eligible, will I be able to buy the home I'm living in now?
Only customers who meet the eligibility criteria and receive a URN may be entitled to a Voluntary Right to Buy discount. However, there may be cases where Longhurst Group cannot sell particular homes.
Which homes won't Longhurst Group sell?
There are certain properties which are excluded from the pilot scheme, these include:
- Sheltered Housing and Supported Housing
- Alms Houses
- Adapted properties (where adaptations are no longer needed)
- Properties contained within a Rural Exclusion Area
- Homes with four or more bedrooms
- Properties built or acquired subject to planning restrictions (Section 106)
- Properties that would lead to a loss when sold
- Flats within blocks that contain communal areas
- Properties that have been identified in future disposal or demolition plans
Please note: this list is not exhaustive.
Can I buy a different home?
Where we are unable to sell your existing home and you meet all other qualifying criteria and have obtained a URN, we will work with you to identify possible alternatives where you may be offered to port your discount. Please note that you will not be able to port your discount where your current property is able to be sold.
What if I have the Preserved or Statutory Right to Buy and Right to Acquire?
Some Longhurst Group Tenants have a 'Preserved' Right to Buy because they were council tenants when their home was transferred to us. They were entitled to the original Right to Buy when they were council tenants, so when they transferred to Longhurst Group they kept this right.
If a tenant is entitled to Preserved Right to Buy they cannot participate in the Voluntary Right To Buy scheme.
If you are entitled to the Right to Acquire, you have the choice of purchasing your home using either scheme, but not both.
If I currently own my home through Shared Ownership, am I eligible for a discount?
If you are a shared owner you are not eligible for Voluntary Right to Buy.
How do I complete an application form?
Only tenants who have been successful in obtaining a URN will be able to proceed to complete an Application Form after the ballot ends on the 16 September 2018. This will be an online-only application process. The Application Form and all further information you require will be available to complete on Longhurst Group's website after the 16 September. You will need your URN number to be able to access the online application form.
The value of your home and the Voluntary Right to Buy discount
How much is my home worth?
Once we have established your eligibility for the scheme and you have made payment of the £250 administration fee Longhurst Group will arrange for your home to be valued by a RICS certified surveyor. You will have a choice of which Surveyor we appoint.
This valuation will be used to calculate the discount you receive and the offer for you to purchase your home. Longhurst Group advises that all customers gather their own information prior to application to obtain an idea of how much their home is worth by visiting such websites as Rightmove and Zoopla.
Can I use the discount as a deposit for a mortgage?
Many lenders will take the discount as a deposit, although some will not. We recommend you speak with a mortgage lender, broker or Independent Financial Advisor who can advise you on a mortgage that best suits your needs.
How is the discount calculated?
The discounts available to tenants will start at 35% or 50% for just three years of tenancy.
Houses: if your house is eligible for the scheme, you will get a 35% discount if you've been a public sector tenant for three years.
The discount remains at 35% until you have five years public sector tenancy. After year five the discount goes up by 1% for every extra year you've been a public sector tenant up to a maximum of 70% or £80,900, whichever is lower.
Flats: if your flat is eligible for the scheme, you will get a 50% discount if you've been a public sector tenant for three years. The discount remains at 50% until you have five years public sector tenancy. After year five, the discount goes up by 2% for every extra year you've been a public sector tenant, up to a maximum of 70% or £80,900 whichever is lower.
Examples of the discount being calculated:
- Lives in a two bedroom house in Northampton
- Valued at £110,000
- She has a total of 25 years tenancy
- 55% discount, this would equate to £60,500 discount
She would pay just £49,500 for the home
Please note, that other factors may reduce the discount offered, which include, the cost floor of the property (the property cannot be sold for less than what it is currently worth to the Association) and if you have already benefited from a discount under the Statutory Right to Buy or Right to Acquire Schemes.
What else will I need to apply for the Voluntary Right to Buy Scheme?
If you are eligible to take part in the scheme, and you have been provided with a URN from the Government, during the application process you will need to provide certain evidence to validate your application, this will include:
- Photo ID
- Proof of funding for the purchase
- A copy of your mortgage offer, if applicable
- you will be required to pay an admin fee of £250 before a valuation can be undertaken on your home. This fee is only refundable if the sale completes.
We would strongly request that you seek independent financial advice before completing an application to ensure that the property is affordable to you.
Please also note that if you choose to sell or sublet the property within the first five years of purchase you will have to repay some or all of the Voluntary Right to Buy discount back.
If you have already benefitted from a Right to Buy discount this will be deducted from any discount you may qualify for under the VRtB.
Additional applicants - family members
Family members may also be included on the application with you if they are not named on the tenancy, however they must be over the age of 18, a spouse, civil partner or family member as defined by Housing Act 1985, Section 186 (see appendix 1) and be able to evidence that the property is their main and only home for a minimum period of at least 12 months. Family members who don't live in the property cannot be included on the application. You cannot add or remove any family members on the application once it has been accepted. This would result in the application being cancelled and the administration fee would not be refundable.
Please read the notes on the application form carefully before submitting it for processing, to ensure you understand the terms and conditions of the scheme.
Financial considerations and your responsibilities
Can I sell or rent out my home after buying it through Voluntary Right to Buy?
You may sell or rent out your home whenever you like, however if you do this within the first five years of ownership you will be required to pay back some or all of the discount you received, based on a sliding scale.
If you decide to sell within 10 years of ownership you will have to give Longhurst Group the right of first refusal to purchase the property back.
Will I have to pay a service charge?
As a homeowner, you are still liable for a service charge on most schemes. The charge may differ to what you currently pay as a customer and so may the calculation method. Charges that homeowners incur which customer do not are Management Fees, Buildings Insurance and Reserve Fund Contributions. Not all of this shall be relevant to each property and these shall be discussed with you at the point of purchasing. Customers who pay a fixed service charge shall move to a variable charge.
Do you charge an administration fee?
All Housing Associations will ask tenants to pay a £250 administration fee when they complete their application. Longhurst Group cannot process the application and instruct a valuation of your home until this fee has been received. When you complete on your purchase, Longhurst Group will refund the fee to you. However, if you withdraw from the application you will not be eligible for a refund.
How much stamp duty will I pay?
The stamp duty you pay will be calculated on the discount price for your property. For example, if your home is worth £200,000 but you have a discount of 50% then you will be liable for stamp duty on £100,000. If you are a first time buyer then this will likely mean that there will be no cost but exact costs can be found at the following link: www.gov.uk/stamp-duty-land-tax
What other costs are involved in Voluntary Right to Buy?
If you are considering becoming a homeowner through VRTB we would like to highlight the fact there may be some extra costs you incur during your purchase. In addition to the £250 administration fee you will need to consider the cost of legal fees for conveyancing solicitors, mortgage fees, stamp duty, and disabled facilities grant repayment. You will also have ongoing costs such as mortgage payments, service charge payments, buildings/contents insurance, and will be responsible for some or all of the maintenance of the property after completion.
Who is the contact for maintenance once I become a home owner?
Once you make the application any improvements or repairs that are due to be carried out will be cancelled except where the work is required by law to keep the property safe and weather-tight. Any repairs outstanding at the time the purchase is completed will become the responsibility of the purchaser(s). You will become fully responsible for all repairs and maintenance of the property once the sale has completed.
Where can I find more information?
Government Right to Buy website: midlands.righttobuy.gov.uk
Right to Buy Agents: 0300 123 0913
Right to Buy Facebook: righttobuy
Money Advice Service: moneyadviceservice.org.uk