Right to Buy Mortgages: Your Comprehensive 2025 Guide

What Is a Right to Buy Mortgage?

Right to Buy Mortgages allow eligible council or housing association tenants to purchase their rented homes at a significant discount from the market value. This is made possible through the government’s Right to Buy scheme, which supports tenants in becoming homeowners.

This discount is based on how long they’ve lived in the property and can often serve as the deposit, meaning some buyers need little or no upfront cash. The discount increases with the length of tenancy, but there is a maximum discount limit set by the government, which varies depending on the property type and location. Many lenders offer high loan-to-value (LTV) mortgages, sometimes financing 100% of the discounted purchase price.

This makes Right to Buy one of the most accessible paths to homeownership, especially for tenants who haven’t been able to save for a deposit. If more than one person is applying, the mortgage and property paperwork must be in joint names.

How the Right to Buy Scheme Works

The Right to Buy process typically follows these steps:

1. The tenant submits an application to their landlord.

2. If eligible, the landlord issues a Section 125 notice with the purchase price and the discount offered.

3. The tenant has a limited window (usually 12 weeks) to accept or appeal the valuation.

4. The buyer then arranges a Right to Buy mortgage, with the discount acting as the deposit.

5. On completion, the property becomes privately owned.

Applicants must not have any outstanding possession orders to be eligible for the Right to Buy scheme.

The amount of discount depends on how long you’ve been a tenant and whether the property is a house or flat. You become eligible for a discount after three years tenancy, and the discount increases with additional years tenancy. After five years tenancy, the discount rate increases further, allowing for greater savings.

There are maximum discounts set by the government, and the total amount of discount you can receive depends on your years of tenancy and property type. However, there are limits to how much discount you can receive, depending on your region.

Council House and Property Types

The Right to Buy scheme covers a wide range of council houses and properties, including both houses and flats, as well as self-contained units. To qualify, the property must be your only or main home, and you must be a public sector tenant, typically renting from a local authority or a housing association.

The scheme assists people who have been renting from these public sector landlords, giving them the opportunity to buy their property at a discounted price.

Scheme rules can vary depending on the type of property and its location, so it’s important to check the specific eligibility criteria for your area. Generally, the property must not be scheduled for demolition and should be self-contained, meaning you have exclusive use of the whole property.

The Right to Buy scheme is designed to help long-term tenants move from renting to owning, making it easier for most council tenants and housing association tenants to get on the property ladder.

Right to Buy Mortgage Eligibility Criteria

To qualify for the Right to Buy scheme:

• You must have been a public-sector tenant for at least three years.

• The property must be your main and only home.

• The property must be self-contained and not due for demolition.

• You must not be subject to bankruptcy proceedings, IVAs, or serious rent arrears.

• You must be a secure tenant of a council or housing association.

• If you are in self employment, you will need to provide additional documentation to prove your income when applying for a Right to Buy mortgage.

Joint applications are permitted with up to three family members who have lived in the property for at least 12 months.

Check with your local authority for other scheme rules that may apply.

Joint Application Process

The Right to Buy scheme allows for joint applications, making it possible for multiple people to buy a property together. If you share your home with family members or others who are named on the tenancy agreement, you can submit a joint application. This can be a great way to share the costs and responsibilities of homeownership, and it may also improve your chances of mortgage approval.

When you apply for a Right to Buy mortgage jointly, a mortgage and protection adviser will assess the financial circumstances, credit history, and affordability of all applicants. The process is similar to a single application, but you’ll need to provide documentation for everyone involved.

It’s essential that the names on your mortgage application match those on the Right to Buy paperwork and the property’s title deeds to avoid delays. Joint applications can help you secure a larger mortgage and make the transition from tenant to homeowner smoother.

Benefits of a Right to Buy Mortgage

• Low or no deposit needed: Many lenders accept the full discount as a deposit, allowing for 100% mortgages. The discount can also help you qualify for a smaller mortgage, making repayments more affordable.

• Instant equity: Buying below market value means you start with equity in the property.

• Homeownership stability: Fixed mortgage repayments can be more stable than rising rent.

• Government-backed support: The newly launched Freedom to Buy scheme offers guarantees on 95% mortgages, expanding options for those with small deposits. The Right to Buy is a government mortgage scheme designed to help tenants become homeowners.

• Affordability recognition: Lenders are increasingly accepting rental history in affordability assessments, helping more tenants qualify.

• Ideal for first time buyers: The scheme is especially beneficial for first time buyers and time buyers who may struggle to save for a deposit.

Risks and Considerations

• Affordability remains key: Lenders will still conduct full affordability and credit checks.

• Credit score matters: If you have bad credit, you may be limited to specialist lenders with higher interest rates.

• Resale restrictions: Selling within five years may require repayment of some or all of the discount, and the amount you repay is based on the property’s current value at the time of sale.

• Maintenance responsibilities: Once you buy, you will need to pay for all maintenance and repair costs, as these are your responsibility and not the landlord’s.

• Property value changes: As with any mortgage, house prices can go down as well as up. If you sell your home on the open market, the sale price will reflect current market conditions.

If you purchase through a shared ownership scheme, you may need to pay rent on the portion of the property you do not own, in addition to any mortgage payments on your share.

Buy Property and Additional Costs

While the Right to Buy scheme offers a discounted purchase price, it’s important to remember that there are additional costs involved in buying a property. Beyond the purchase price, you’ll need to budget for legal fees, survey costs, and conveyancing charges. Some lenders may still require a personal deposit, even if the discount covers most of the deposit requirement for your buy mortgage.

Ongoing costs are another key consideration. Once you own your home, you’ll be responsible for maintenance, repairs, and utility bills expenses that were previously covered by your landlord.

When applying for a Right to Buy mortgage, make sure to factor in these extra costs to ensure the purchase remains affordable. Careful planning will help you make the most of the right to buy scheme and avoid unexpected financial strain.

High Street Lenders Offering Right to Buy Mortgages

Many mainstream lenders support Right to Buy applicants. These lenders typically allow the discount to act as a full deposit:

For further information on Right to Buy mortgage options, eligibility, and lender criteria, please visit official government or lender websites.

Specialist Lenders for Adverse Credit Right to Buy Mortgages

If you have missed payments, defaults, CCJs, or a poor credit history, you may still qualify for a Right to Buy mortgage with bad credit through a specialist lender. Some specialist lenders also offer schemes specifically for forces personnel, such as the Forces Help to Buy initiative, which provides support for UK military personnel seeking a mortgage deposit. Additionally, there are government bonus schemes available, like the Help to Buy: ISA bonus, which can help buyers with adverse credit increase their deposit.

Improving Your Chances of Approval with Bad Credit

If you’re applying for a Right to Buy mortgage with a low credit score:

• Review and correct your credit report before applying.

• Reduce unsecured debts to improve affordability.

• Avoid missed payments in the six months leading up to your application.

• Wait out older credit issues, which drop off after six years.

• Use the RTB discount to minimise loan size and reduce lender risk.

• Consider joint applications or a guarantor if income or credit is borderline.

• Work with a mortgage broker who understands the RTB and bad credit lending space.

Why Now Is the Best Time to Apply

Recent policy changes have made Right to Buy mortgages more accessible than ever:

• The Freedom to Buy scheme has made 95% LTV mortgages safer for lenders to offer.

• Lenders are more open to rental history as part of affordability checks.

• Income multipliers are becoming more generous up to 5.5x or 6x income in some cases.

• Interest rates are stabilising, offering more affordable repayment options.

• The government’s Homes scheme is another initiative helping first-time buyers purchase new build properties at a discount.

All these developments mean that for many tenants, 2025 is the ideal year to take advantage of Right to Buy and step into property ownership. Alternatively, shared ownership is an option, allowing buyers to purchase a share of a property and pay part rent on the remaining portion, making homeownership more accessible.

Final Thoughts from a Right to Buy Mortgage Specialist

As a mortgage broker with years of experience, you’re in the best position to guide tenants through the Right to Buy process. Whether they’re dealing with affordability concerns or a complex credit history, expert advice is often the difference between a rejected application and a successful path to homeownership.

For example, a tenant with a limited deposit and a history of missed payments could still secure a Right to Buy mortgage by accessing specialist lenders who consider individual circumstances.

By combining a strong understanding of Right to Buy mortgage lenders, the Freedom to Buy scheme, and the nuances of adverse credit mortgage options, you can deliver solutions that are not only affordable, but also future-proofed for your clients.

Get help from an experienced mortgage broker.

You can speak to one of our specialist mortgage brokers who would be able to guide you through the process. They will advise if there is a lender available and the maximum loan amount based on your circumstances. We are a whole of market mortgage brokerage with access to all lenders. Call us on 01332 470400 or complete the form with your details for us to give you a call back.

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