Buying your home
For Tenants
This leaflet explains how to buy your home
under the right to buy scheme. It also tells
you about some of the costs of buying your
home and becoming a home owner.
Buying your home
Buying your home is probably the biggest financial
decision you will ever make. This booklet tells you
more about the Right to Buy scheme and will help
you decide whether becoming a homeowner is the
right choice for you.
The Department of Communities and Local
Government website also has several publications
about buying your home that you may find helpful.
Department of Communities and Local
Government
www.communities.gov.uk Search for “Thinking of
buying a Council fl at” and “Your Right to Buy your
home”
The Right to Buy scheme gives eligible secure
tenants the opportunity to buy their current home
at a price lower than the full market value. If your
home is managed by Tower Hamlets Homes and
you are a secure tenant, you have the Right to Buy
if you meet certain criteria.
The Right to Buy scheme
To be eligible for the Right to Buy Scheme you
must meet all of the following criteria:
1. Be over 18 years old.
2. Be a secure tenant. Most tenancies are secure,
but some are not – for example introductory
tenancies or licence agreements. You can check
what type of tenancy you have by contacting us.
3. Have spent at least five years as a public sector
tenant. Previous tenancies can count towards the
five years required. The five years do not
necessarily have to be in one continuous period.
There are many types of public sector tenancies,
including Council housing, Housing Association and
Armed Forces accommodation. A full list of public
sector landlords is included on the Right to Buy
application form if you are unsure you can also ask
our staff for advice.
4. The property must be your only and principal
home. If you are joint tenants then only one of you
has to meet this requirement.
5. You must NOT have a Court Order against you
because of rent arrears or other reasons, be an
undischarged bankrupt, or have a bankruptcy
petition pending against you.
Sharing the Right to Buy with your family
If your family live with you and have been living in
your home for at least a year before you submit
your application they may be able to share the
Right to Buy. Up to four people may
take part in the purchase, as long as at least one
of them is a tenant of the property.
Homes not eligible for Right to Buy scheme
Who has the Right to Buy?
There are certain types of property that cannot be
sold under the Right to Buy scheme, even if you
are a secure tenant:
—Sheltered housing for the elderly, physically
disabled, mentally ill or disabled.
—Certain housing, which is particularly suitable for
the elderly due to its location, size, design, heating
and other specific features.
—Homes due to be demolished.
How to apply for your Right to Buy
If you think you are eligible and are interested in
buying your home get in touch with us. We will tell
you about the steps involved in the Right to Buy
process and send you a RTB1 application form. If
you need any help or advice at any point in the
process, please get in touch with us – we’re here
to help.
Step 1
Submit your RTB1 (Right to Buy application
form)
The form is an important legal document so we
advise you to send it by recorded delivery and
obtain a receipt from us. Please note that proof of
posting is not proof of delivery.
Step 2
Assessing your application and RTB2 Notice
We will assess your application and tell you if you
have the Right to Buy on what is called an RTB2
Notice. This will happen within 4 weeks.
Step 3
Valuing your home
We will arrange to value your home and calculate
the price you have to pay after discount. The
valuation takes into account the cost of possible
future works. Page 9 tells you more about how we
calculate how much you pay.
Step 4
Section 125 – Offer Notice
We will send you a Section 125 Notice within 12
weeks of the RTB2 being issued (or 8 weeks if you
are buying a Freehold house). The Section 125
Notice gives you the price, plus all the terms and
conditions and other relevant information such as
the likely cost of future service charges and
improvement contributions that you will be
expected to pay if you become a Leaseholder.
Step 5
Responding to the offer
You have 12 weeks to respond to the Section 125
Offer. You can then decide to accept the Offer,
appeal against the price or withdraw from the
Right to Buy process.
This is an important decision, so if you would like
help to understand all the information in the
Section 125 Offer get in touch with us and we’ll get
a member of our Leaseholder team to meet with
you.
Before deciding to buy it is a good idea to get your
own independent survey carried out. This will tell
you if there are any problems with the structure of
your home. Your mortgage company can often
arrange this for you, for a fee. They may call the
survey a “Homebuyer’s Report”.
Whatever you decide to do, you need to tell us in
writing. We’ll send you a simple form that you can
use for this purpose. If we do not hear from you
within 12 weeks then you will normally be given an
extra period of 28 days. If you have still not
responded after that time we will close your
application.
If you decide to withdraw then you can re-apply at
a later date, but be aware that the Right to Buy
rules may change in the future.
Step 6
Arranging to pay for your home - Getting a
mortgage
For most people, once you have decided that you
want to buy your home you will need to obtain a
mortgage.
It is best to ask a few banks, building societies or
other lenders about the mortgages they can offer
you.
You can also get suggestions about a number of
lenders from an Independent Financial Advisor.
It can be hard to get a mortgage on properties in
certain types of blocks or estates. If you find
yourself in this situation then remember that
potential buyers may also have the same problem
if you later try to sell your home on the open
market.
It can be difficult to get a mortgage if you have no
income other than benefit payments or a poor
credit rating. There are some mortgage lenders
who will accept people with poor credit ratings but
these companies often apply much higher interest
rates.
Tower Hamlets Homes does not offer mortgages
and we cannot recommend lenders to you.
A note about unlicensed money lenders
(“loan sharks”)
A loan shark is an unlicensed money lender. Loan
sharks often target housing estates as they hope
to find people who are vulnerable, on low incomes
or in financial trouble, and who may be tempted to
borrow cash from them. Loan sharks target both
tenants and leaseholders.
If you borrow from a loan shark you will pay
extortionate interest rates (over 800% in some
cases), may have no paperwork, and find you have
no way out even when you have paid what you
owe. You may find you don’t know what you owe,
and that charges are added for no reason even
though you are paying every week. The loan shark
wants control of you. Some people have had their
bank card, benefits card, passport or other primary
identification taken away as security, and been
threatened with violence if they cannot pay.
Borrowing money from a loan shark is not illegal,
but if you have we do urge you to contact the
Illegal Money Lending Team or Tower Hamlets
Trading Standards. There is immediate support to
deal with your situation and the loan shark. Visit
the Directgov website for more information.
Illegal Money Lending Team Phone
0300 555 2222
Tower Hamlets Trading standards
Phone 020 7364 6886
Directgov Website
www.direct.gov.uk/stoploansharks
Step 7
Pre-sale interview
Before we instruct solicitors to proceed with selling
your property, we invite you to come in and meet
with one of our Sales and Acquisitions Advisors.
The Sales and Acquisitions Advisors explain in
detail what your rights and responsibilities as a
home owner will be when you have bought your
property, and to go over the likely costs of owning
your home.
You do not have to come for the interview if you
do not want to, but we do ask you to read all the
material we provide very carefully and complete
the checklist to ensure that you understand both
the immediate cost of the purchase and the
ongoing costs of being a homeowner.
Step 8
Conveyancing
You then need to appoint a solicitor to help you
with the final stages of the purchase, known as
“conveyancing”. You will have to pay a fee to the
solicitor for doing this work. You should therefore
shop around to compare solicitors’ fees, and
include these in your budgeting.
We will send the details of your Right to Buy
application to our solicitors and a date will be
arranged for completion of your purchase.
Sometimes basic legal services can be arranged
through your mortgage lender so it is worth asking
if this is possible before deciding to pay for a
separate solicitor.
You should ask your solicitor to explain the lease
to you. It is important that you understand what
your rights and obligations as a leaseholder will be
before you sign it.
Step 9
Completion
On the day of completion you will stop being a
tenant and become a Leaseholder or Freeholder.
However, completion will be delayed if you still
owe things such as rent or court costs.
If you have over-paid your rent when completion
takes place then you will be refunded.
Right to Buy companies
– a warning
Sometimes tenants are approached by companies
offering to help them buy their home, by
completing Right to Buy forms, negotiating with
us, and so on.
These companies often charge fees for services
that we offer for free. For example, we will help
you complete a Right to Buy form and help you
through all the stages of buying your home. Only
Tower Hamlets Homes can grant you Right to Buy
and process your application. We do this for free.
Always contact us for advice and assistance in the
first instance on any Right to Buy matters.
More information about right to buy companies is
available in the “Right to Buy Your Home” booklet
published on the Department of Communities and
Local Government.
Department of Communities and Local
Government
Website www.communities.gov.uk
Deferred sale arrangements
Sometimes companies approach tenants offering a
deal where they pay for the tenant to buy their
home, and then buy the property from the tenant.
This is not illegal, but sometimes the tenant may
not be given enough money to buy another
property and may be made homeless.
If you make an agreement to sell your flat in the
future, before you have completed your Right to
Buy, you will be liable to repay the whole Right to
Buy discount and not just the amount left when
you sell your property.
Do not agree to sign a contract with a
company before talking to us.
How the price is calculated
To work out how much you will pay we work out
the value of your home and then subtract your
right to buy discount.
Working out the market value of your home
A valuer will visit you to assess the value of your
home. The valuer will take any anticipated future
service charges or improvement contributions into
account when calculating the price. They will not
take into account any improvements you have
made or any failure on your part to keep your
home in good repair.
Your Right to Buy discount
The discount is based on how long you have been
a public sector tenant.
The maximum discount available in London is
restricted to £16,000. This is the most that anyone
can have, no matter how long they have been a
tenant.
Almost every eligible purchaser in Tower Hamlets
will get the £16,000 maximum.
If you have previously purchased a home under
the Right to Buy scheme, then the amount of
discount you got at that time will usually be
subtracted from your discount this time around.
Appealing the value of your home
If you feel the valuation of your home is too high,
you have the right to appeal to the independent
District Valuer (DV).
You have to do this within three months of the
Section 125 being issued to you. The District
Valuer will carry out a new inspection of your
home and make a decision on its value.
This new value replaces our original value, whether
it is higher, lower or the same. We will send you
the new value in a Section 128 Notice, which
replaces the original Section 125 Offer Notice.
In certain limited circumstances it is also possible
for the District Valuer to review their valuation
Delays in the process by Tower Hamlets
Homes
The Right to Buy scheme is governed by time
limits which
we are required by law to observe.
If we do not send you the RTB2 Notice within 4
weeks or Section 125 Notice within 12 weeks, or if
you feel that we are delaying your purchase in
some other way, you have the right to serve
Notice of Delay on us.
You can get further advice and copies of Delay
Notices from the Right to Buy team or the
Department of Communities & Local Government.
Department of Communities and Local
Government Website
www.communities.gov.uk
Delays in the process by you
You need to respond to the Offer Notice within 12
weeks or your application could be withdrawn.
Once you accept the Offer you need to make
progress towards completing your purchase. If you
do not complete your purchase within three
months of the date shown on your Offer Notice we
will send you a warning notice. This is the First
Notice to Complete and gives you eight weeks to
either complete your purchase or address any
issues that are preventing you from completing.
If you do not respond to this Notice then a second
and final one may be sent. The second Notice will
require you to complete within eight weeks or the
application will be withdrawn.
Suspending your Right to Buy application
Your Right to Buy can be suspended or ended if
you, your family or visitors to your home carry out
anti-social behaviour.
You may also lose the Right to Buy if we obtain a
Court Order against you because of rent arrears or
other reasons.
Rent payments
While your Right to Buy application is in progress
you must continue to pay your rent regularly. You
will not be able to complete your purchase if you
owe rent or other amounts, such as court costs or
Housing Benefit overpayments.
If you pay by Direct Debit or Standing Order then
remember to cancel the instruction at your bank. If
you cancel before you complete your purchase
then you may need to make a final manual
payment.
Selling your home
If you sell your home within 5 years of buying it
you will have to repay some or all of your discount.
The amount you will have to pay is calculated in a
way that takes into account any increase in the
value of your home since you bought it.
If you wish to sell your home within the first 10
years you must offer it back to us first. However at
this time we do not have a policy of buying back
homes, except where this is necessary for estate
regeneration or where we have a need for a
certain type of property.
The costs of buying your home
Buying your home is probably the biggest financial
decision you will ever make. Take time to consider
whether it is the right choice for you. Below are
some of the common costs of buying a home.
Legal fees
You will need a solicitor to look after the legal side
of buying your home. Your mortgage lender may
recommend a solicitor. Alternatively your library or
Citizens’ Advice Bureau should have a list of local
solicitors.
Stamp Duty
Is a Government tax levied on the purchase of
property. At the time of writing (July 2010),
certain designated areas of the country – including
all of Tower Hamlets – are exempt from Stamp
Duty for properties costing up to £150,000. You
should check carefully the position on Stamp Duty
with your solicitor before deciding whether to buy,
as regulations may change.
Survey fees
We recommend that you have a survey of your
home carried out by a qualified structural surveyor
so that you are aware of any defects to your
home. They should be a member of the Royal
Institution of Chartered Surveyors (RICS). You
may find that your mortgage lender can arrange
for its own valuer to carry out the survey, which
may save you money.
Mortgage arrangement
Unless you are going to buy your home with cash,
you will need a mortgage. Your bank, building
society or independent financial adviser can tell
you about the various types of mortgage available
to you. If you take out a mortgage loan you may
have to pay the lender for the cost of arranging it.
You may also have to pay a fee for their valuer to
survey your home.
Deposit
Most mortgage lenders will expect you to pay a
certain percentage of the property value up front,
as a deposit.
The costs of home ownership
If you exercise the Right to Buy you will become
responsible for the cost of maintaining your home,
which may involve major repairs. If you become a
Leaseholder you will have to pay service charges
each year and contribute to the cost of major
repairs and improvements throughout your block
and estate. Freeholders living in a neighbourhood
managed by Tower Hamlets Homes will have to
pay some service charges too.
Benefits and financial help
As a tenant you may have been able to claim
Housing Benefit, but as a homeowner you will not.
If you are elderly and buy your home through the
Right to Buy, its value may be taken into account
when assessing whether you can have financial
help with costs of residential care at a later time.
Mortgage costs
You will have to repay the mortgage, plus interest,
by instalments (usually monthly). If you cannot
keep up your mortgage repayments the lender
may go to court and ask to take over (repossess)
your home. If you have trouble paying your
mortgage you should talk to your lender as soon
as possible.
Service charges
Service charges are worked out so that everyone
pays a fair share of the cost of providing services
to your home and neighbourhood. Service charges
vary depending on the services we provide to your
home and block and the terms of your lease. Your
lease will also tell you how your share of these
charges is calculated.
Leaseholders (and some Freeholders) will have to
pay ground rent and service charges towards the
upkeep of the block and estate their property is
situated in. Ground rent is £10.00 per year and
does not change. Service charges, however, can
go up or down. They may be several hundred
pounds and possibly much more if major works,
repairs or improvements are carried out.
If you become a Leaseholder and don’t pay your
ground rent and/or service charges the Council
may seek repossession of your home. It is very
important that you don’t let this happen.
Council Tax, water charges and other utilities
As a homeowner you will need to pay water
charges and Council Tax. You will also need to
consider how much you’ll regularly need to pay for
sewerage, gas, electricity and other utility services
provided to your home.
Insurance
You will need to take out insurance for your home.
Always shop around for the best insurance to suit
your needs.
Building insurance
This is needed to cover the cost of rebuilding your
home if it were to be destroyed by fire or some
other incident. If you are buying a Freehold
property you need to arrange this cover yourself.
If you are buying a Leasehold property, the Council
arrange the insurance and you contribute towards
it in your service charges.
Contents insurance
You should adequately insure the contents of your
home against theft and other risks.
Mortgage protection insurance
You need to consider how you would meet your
mortgage payments if you lost your income, say
through unemployment or ill-health. Mortgage
protection insurance can give you some security
against these risks.
Repairs and maintenance
If your home is a house you will be responsible for
the cost of all repairs and maintenance, regardless
of the condition it was in when you bought it.
Costs of major works
Major works are usually large ‘one-off’ projects
designed to prolong and improve the life of your
building. Examples of major works include the
replacement of old windows, a leaking roof or a
broken lift. Unlike minor repairs, major works are
not covered in your annual service charge.
We try to set out all the major works we are doing
to our blocks and estates in our 5 year plan so that
leaseholders can prepare themselves for the works
in advance.
Your Offer Notice will include an estimate of the
costs of major works planned for your block. In the
first five years after you buy your property we will
only charge you the costs of the major works
included in your Offer Notice, plus an inflation
allowance. However, after the five year period
ends you will pay your share of all major works
carried out to your block.
You can pay for major works up front, or by
instalments of 12, 24 or 36 months depending on
the size of the bill. If you cannot afford to pay up
front or by instalments you may have to borrow
money or extend your mortgage to pay for the
works.
Can you afford to buy?
If you buy your home it is very important that you
are able to afford your mortgage
payments, bills and essential day-to-day living
expenses. You will also need to have enough
money up-front to cover the deposit and other
one-off costs associated with buying. The table
below will help you work out if you can afford to
buy your home.
1. What you earn
Income
Salary / wages (After tax etc),
benefits, tax credits, pension
Other income
Total earnings (A)
Monthly
2. What you’d spend
Expenses
Mortgage
Other loans
Council Tax, TV licence, service
charges, internal repairs
Contents insurance
Mortgage protection insurance
Other insurance (pets, electrical
appliances, boilers)
Food, cleaning products
Clothing
Public transport fares
Gas
Electricity
Water, sewerage
Phone, TV, internet
Dentist, optician, prescriptions
School dinners, uniform, clubs,
activities, school trips
Childcare, nursery
Dining out, theatre, cinema,
hobbies, sport
Total other expenses
Total expenditure (B)
Monthly
3. Your net position
Totals
Monthly
Total earnings (A)
Total expenditure (B)
Net position (A minus B)
A negative net position indicates
that it is unlikely you can afford
to be a homeowner at this time
4. Your savings after purchase
One-off costs (due before
Amount
completion)
Mortgage deposit
Legal fees
Mortgage arrangement fee
Valuation fee
Survey/homebuyer’s report
Land Registry fee
Stamp Duty
Other costs
Total one-off costs (D)
Your savings Amount
Total savings (C)
Savings remaining after
purchase (C minus D)
Want to know more?
Here’s how to find out more about the services we
provide and what we can offer you.
Talk to your housing advisers
They can answer most of your questions or put
you in touch with people who can.
Pick up our range of leaflets and publications
They give you more information on all of our
services. You can find these in our reception areas,
on our website or by contacting a housing adviser.
Read our service standards
They set out what we do so you know what to
expect. We have a service standard for each of the
services we provide. These are available on our
website and in our offices, or you can ask a
member of staff for more information.
Visit our website
You can find lots of information about what we do,
how we are performing, and our latest news and
information. Also available online are our leaflets
and publications as well as local information such
as neighbourhood inspection timetables.
Check out your newsletters
They contain news and information about our
service and are delivered straight to your door.
Look at your local noticeboard
It has information about your Neighbourhood
Housing Team, neighbourhood inspection
timetables and useful information for where you
live.
If you need help, here’s how to get in touch
with us
Contact us
Website
www.towerhamletshomes.org.uk
Find answers to your questions, learn about our
services, find out what we can do for you and view
all of our leaflets.
Phone
020 7364 5015
Text-phone
Call us with the help of BT Text Relay
18001 020 7364 5015
Email
For general enquiries
contactus@towerhamletshomes.org.uk
For rents
rents@towerhamletshomes.org.uk
Write to us
PO Box 66355
London E14 1GU
Repairs Helpline
For when you need to report a repair or ask us
about the progress of a repair that has been
already reported. Someone is available 24 hours,
every day.
Phone
0800 376 1637 (free from landlines) or 020 7364
7070
Bengali/Sylheti
call between 9am and 5pm on 0800 376 1638 free
from landlines or 020 7364 5151
Email
repairs@towerhamletshomes.org.uk (not for
emergency repairs)
Anti-social behaviour
For when you need help or advice on anti-social
behaviour
Phone
0800 917 5918 (free from landlines)
Your local Housing Office
1 Rushmead
Bethnal Green
London, E2 6NE
Open
——9am to 5pm Monday to Friday (except the last
Wednesday of every month 10am to 5pm)
——9am to 1pm Saturday
——Closed Bank Holidays
Access
Wheelchair access, hearing loop in reception area
Cheviot House
227-233 Commercial Road
London, E1 2BU
Open
——9am to 5pm Monday to Friday (except the last
Wednesday of every month 10am to 5pm)
——9am to 1pm Saturday
——Closed Bank Holidays
Access
Wheelchair access, hearing loop in reception area
542 Roman Road
London, E3 5ES
Open
——9am to 7pm Monday
——9am to 5pm Tuesday to Friday
——9am to 1pm Saturday
——Closed Bank Holidays
Access
Wheelchair access, hearing loop in reception area
Every care has been taken to make sure that
information contained in this leaflet is correct as at
May 2010.
Tower Hamlets Homes manages homes and
estates owned by Tower Hamlets Council.
Tower Hamlets Homes is a trading name of Tower
Hamlets Homes Limited. Registered in England and
Wales.
Registered Office:
Jack Dash House
2 Lawn House Close
Marsh Wall
London E14 9YQ
Company No. 06249790.
VAT Registration No. 912 4819 30.