Content Writer
Mortgage Advisor & Director
If you live in rented accommodation, it can be difficult to get onto the property ladder while you have rent and bills to pay. However, if you’re a social housing tenant and happy where you are, the Right to Acquire scheme may allow you to buy your current rented home.
We look at how this scheme works, which mortgage you’ll need if you plan to use it, and how to secure the best deal for your circumstances.
What is a Right to Acquire mortgage?
The Right to Acquire scheme is a government mortgage scheme similar to Right to Buy. There are no specific Right to Acquire mortgage products, but any mortgage that can be used by applicants of this scheme may be referred to as a ‘Right to Acquire mortgage’.
How does the scheme work?
The scheme offers a discount of between £9,000 and £16,000 on the market value of your socially rented property. The size of your discount depends on where you live, this detailed list will show you the discount available in your area.
In some cases, this discount may be enough to cover or contribute towards a deposit to buy your home. However, not all lenders allow for discounts to be used in this way.
Once you’ve bought a home through the Right to Acquire scheme, there are rules in place to deter immediate resale. This is so that the scheme cannot be abused, and will only be used by those genuinely hoping to own their rented home. The rules stipulate that if you sell the property within 10 years of purchase you must:
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Offer to sell it back to the landlord before putting it on the open market - they have 8 weeks to agree to a sale, after which point you can advertise it for sale openly
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Sell it at the full market value agreed by your landlord
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Pay some of the discount back if you sell it within the first 5 years - in year 1 you would have to repay 100%, year 2 - 80%, year 3 - 60%, year 4 - 40%, year 5 - 20%
Eligibility criteria
To be eligible for the Right to Acquire scheme you must:
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Have been a public sector landlord (a housing association, an NHS trust or foundation trust, the armed forces, or a council) for at least 3 years. These do not necessarily need to have been 3 years in a row, so you could have accumulated them over several tenancies
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Have a landlord that is registered with the Regulator of Social Housing
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Live in a self-contained property that was either built or bought by a housing association after 31 March 1997 and was funded through a social housing grant - this must also be your only or main home
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Not have been made bankrupt or ordered by a court to leave your home
Deposit requirements
When it comes to mortgage deposits, the more you can afford to offer, the better deal you’re likely to get. A larger deposit generally gives you access to lower interest rates, making the repayments more affordable. Most lenders prefer borrowers to have a minimum of 5% deposit.
It may also be possible to get a Right to Acquire mortgage with no deposit. Some lenders will allow you to use the discount you receive through the scheme instead of a cash deposit, which can be helpful if you’ll struggle to save enough. Not all lenders offer this option, however, so it’s a good idea to speak to a broker, like ourselves, with experience in securing mortgages for Right to Acquire scheme applicants.
How to apply for a Right to Acquire mortgage
Before you apply for a mortgage, it’s a good idea to confirm that you qualify for the Right to Acquire scheme. Once you’re sure that you do, we can help you to find the most suitable lender for your needs.
Not all lenders offer mortgages that can be used alongside the Right to Acquire scheme, so it’s important to ensure that the lender you approach accepts this type of application. When you’ve chosen the lender that best suits your needs, the mortgage application process is largely the same as it would be to buy any other type of home.
It’s important to note that qualifying for the scheme won’t automatically mean that you qualify for a mortgage. Lenders will assess your ability to repay the mortgage as they would with any other mortgage applicant - so you’ll need to meet their individual criteria.
You can compare the latest mortgage rates available for free below or choose the option to book a free, no-obligation chat with a Right to Buy mortgage specialist:
Compare Right to Acquire mortgage rates for FREE
How much you could borrow
Most lenders will loan you between 4 and 4.5 times your annual income, but your wider financial circumstances, the size of your deposit, and the type and state of the property will also be considered and can have an indirect effect on your maximum borrowing.
For a rough idea of how much you might be able to borrow, simply input your total household income into our calculator below:
Which lenders are available?
There are no dedicated Right to Acquire mortgage lenders on the market, but there are plenty who are happy to consider applicants who are using the scheme. Criteria differ from one lender to the next, so it’s important to find the lender with the criteria most suited to your needs.
There are a mixture of high street and more specialist lenders who offer mortgages for this purpose, including:
However, keep in mind that not all lenders will allow you to use the discount as a full deposit, and some will restrict the property type to houses only, whereas many socially rented properties are flats. This is where we can help you.
Why choose Teito for your Right to Acquire mortgage?
If you’re hoping to purchase your rented home through the Right to Acquire scheme, we can help you to secure the right mortgage. At Teito, we can provide guidance with everything from completing your Right to Acquire application, to finding a suitable lender, no matter whether you want to buy a house or flat, whether you have a cash deposit or just a discount.
Other Right to Acquire applicants came to us because we:
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Offer your first, no-obligation chat with an experienced mortgage adviser, totally free of charge
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Help home ownership scheme applicants find the right type of mortgage every day
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We allow you to compare the latest mortgage rates of all relevant deals in seconds
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We maintain a 5-star rating across leading review platforms, such as TrustPilot and Google
Ready to compare the latest rates and access a free, no-obligation chat with a broker who specialises in Right to Acquire mortgages? Get started here.
FAQs
It’s possible to get a mortgage to use alongside the Right to Acquire scheme if you have bad credit. However, it will depend on the severity of your credit issues. It’s also worth keeping in mind that all lenders assess bad credit differently, so if you’re concerned, it’s a good idea to speak to a broker about which lenders may consider you.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.