Repayment of Discount
If you applied for the Right to Buy prior to 18 January 2005 and you sell within three years of buying your home you will have to pay back a proportion of the discount given to you at the time you bought your property.
If you sell within the first year you will need to repay all of the discount, within the second year two thirds of the discount and in the third year one third of the discount.
If you applied for the Right to Buy after 18th January 2005 and you sell within five years of buying your home you will have to pay back a proportion of the discount given to you at the time you bought your property, as well as a percentage of the resale value of the property, disregarding the value of any improvements.
Please see below for an example. Please note that this is worked out differently to applications received prior to 18th January 2005 .
If your home was valued at £100,000 at the time you bought it from the council and you received a discount of £20,000, that means your discount was 20%.
If your home is valued at £150,000 when you wish to sell it and you want to sell it within the second year of purchase, this is how your repayment would be calculated:
£150,000 (open market value) x 20% (original discount percentage) x 4/5* (due to it being sold within the second year of purchase) = £24,000
*This amount is the full amount if the property is being sold within the first year, four fifths in the second year, three fifths in the third, two fifths in the fourth year and one fifth in the fifth year.
The discount repayment rules still apply even if you do not actually sell within the three or five years, but you make an arrangement to sell the property to a third party during this time.
If you purchased your home after 18th January 2005
If you purchased your property after 18th January 2005 and you wish to sell your home within 10 years of it having been sold under the right to buy, you must first offer it back to the council or another social landlord in the area at the full market value.
The market value will be agreed between the parties and if an agreement cannot be met then the value will be determined by the District Valuer. If your offer is not accepted by the council within eight weeks, you will be free to sell the property on the open market.
