Right to buy - discount issue

lolaleigh

Hoping someone can help.

I bought my right to buy and was eligible for a 50% discount, but because this would exceed the cap, I received an £81,000 discount (meaning actually only an approx 37% discount (not complaining about it - just need to outline for the purpose of my query).

Now I wish to move, the council have told me that I need to base my payback on a 50% discount - so, therefore, I will actually have to pay the council more than they discounted. Is this right??

Calculation:

Flat value 220,000
Discount 81,000

Payback 

220000 
50% = 110,000

80% of 110,000 in year 2  (88,000)

My contract simply states a percentage of the discount needs to be paid back.

Would appreciate any help or confirmation that this is correct.
Zoe

lolaleigh

Should have also mentioned that I am aware that the amount I pay back would increase if the property value increases and that if there was a huge surge in property prices I could end up paying back more than I was discounted. But that isn't the case in this instance. This is a matter of whether my calculation should be based on 50% even though I did not receive a 50% discount, because of the cap.

HampshireH

Houses

You get a 35% discount if you’ve been a public sector tenant for between 3 and 5 years.

After 5 years, the discount goes up 1% for every extra year you’ve been a public sector tenant, up to a maximum of 70% or £84,600 across England and £112,800 in London boroughs (whichever is lower).

That is from the government website

As is this which details the guidance on paying back the value on resale. It is a % of the value you received as a discount not a % of the % you received.

But this was what you agreed to when you bought the house so it shouldn't be a surprise.

What you pay back should be reflective of the government guidance depending on what year you are in post RTB.

Challenge it on the basis of the .gov website stating you pay a % of the discount received back.


(I've edit my last paragraph and removed as it made no sense when I read it back)

Paying back your discount

You’ll have to pay back some or all of the discount you got if you sell your Right to Buy home within 5 years of buying it.

You’ll have to pay back all of the discount if you sell within the first year. After that, the total amount you pay back reduces to:

80% of the discount in the second year

60% of the discount in the third year

40% of the discount in the fourth year

20% of the discount in the fifth year

The amount you pay back depends on the value of your home when you sell it.

lolaleigh

Thanks for your reply.

Just to be clear are you saying, based on what you're read, that:

a) I should be charged a % of 37%

b) I should be charged a % of 50%

or 

c) I should be charged a % of £81,000

Thank you so much for taking the time to reply.

Exodi

lolaleigh said:

Thanks for your reply.

Just to be clear are you saying, based on what you're read, that:

a) I should be charged a % of 37%

b) I should be charged a % of 50%

or 

c) I should be charged a % of £81,000

Thank you so much for taking the time to reply.

It would be a percent of the discount you received - e.g. 80% of £81,000 = £64,800 in year 2.

While I don't want to pry into your circumstances, this is a money saving forum and 'saving' £16,200 every year in discount is no small sum. Is there a possibility for you to move out 3 years later? I'd probably live in a shed for 3 years if someone was offering me 50k to do it!

lolaleigh

Thanks, Exdodi, appreciate you commenting.

My problem with option c) is that this would not make the amount I pay back variable/based on property price increase - and I'm certain I've read that somewhere...

Pry away! I bought a council flat in a small block that is majority council-owned and have had an awful experience with a neighbour and anti-social behaviour; Police attending weekly and still not resolved. The council have dragged their heels and blame Covid for poor service and I'm at my wit's end. Without being cliche, money isn't everything, I want to be happy

980233

lolaleigh said:

Thanks, Exdodi, appreciate you commenting.

My problem with option c) is that this would not make the amount I pay back variable/based on property price increase - and I'm certain I've read that somewhere...

Pry away! I bought a council flat in a small block that is majority council-owned and have had an awful experience with a neighbour and anti-social behaviour; Police attending weekly and still not resolved. The council have dragged their heels and blame Covid for poor service and I'm at my wit's end. Without being cliche, money isn't everything, I want to be happy

You might struggle to sell after disclosing that information to all potential buyers.

I trust you will be declaring this 'dispute' ?

HampshireH

Exodi said:

lolaleigh said:

Thanks for your reply.

Just to be clear are you saying, based on what you're read, that:

a) I should be charged a % of 37%

b) I should be charged a % of 50%

or 

c) I should be charged a % of £81,000

Thank you so much for taking the time to reply.

It would be a percent of the discount you received - e.g. 80% of £81,000 = £64,800 in year 2.

While I don't want to pry into your circumstances, this is a money saving forum and 'saving' £16,200 every year in discount is no small sum. Is there a possibility for you to move out 3 years later? I'd probably live in a shed for 3 years if someone was offering me 50k to do it!

Exactly to this👍🏻 option C based on the rtb info on the website. They do offer help 

https://www.gov.uk/right-to-buy-buying-your-council-home/help-and-advice

HampshireH

lolaleigh said:

Thanks, Exdodi, appreciate you commenting.

My problem with option c) is that this would not make the amount I pay back variable/based on property price increase - and I'm certain I've read that somewhere...

Pry away! I bought a council flat in a small block that is majority council-owned and have had an awful experience with a neighbour and anti-social behaviour; Police attending weekly and still not resolved. The council have dragged their heels and blame Covid for poor service and I'm at my wit's end. Without being cliche, money isn't everything, I want to be happy

Sorry to ask a stupid question but why did you buy it if it's so bad?

lolaleigh

980233 said:

lolaleigh said:

Thanks, Exdodi, appreciate you commenting.

My problem with option c) is that this would not make the amount I pay back variable/based on property price increase - and I'm certain I've read that somewhere...

Pry away! I bought a council flat in a small block that is majority council-owned and have had an awful experience with a neighbour and anti-social behaviour; Police attending weekly and still not resolved. The council have dragged their heels and blame Covid for poor service and I'm at my wit's end. Without being cliche, money isn't everything, I want to be happy

You might struggle to sell after disclosing that information to all potential buyers.

I trust you will be declaring this 'dispute' ?

The council will be evicting the tenant and are 'awaiting a court day' - by the time I move into year 3 and can actually afford to leave I'm hoping this problem should be resolved, so will not need to be revealed. Having lived through the experience I have fallen out of love with the flat and the area. 

Were you going to take a view on a/b/c or did you come along just to make that point?

lolaleigh

HampshireH said:

lolaleigh said:

Thanks, Exdodi, appreciate you commenting.

My problem with option c) is that this would not make the amount I pay back variable/based on property price increase - and I'm certain I've read that somewhere...

Pry away! I bought a council flat in a small block that is majority council-owned and have had an awful experience with a neighbour and anti-social behaviour; Police attending weekly and still not resolved. The council have dragged their heels and blame Covid for poor service and I'm at my wit's end. Without being cliche, money isn't everything, I want to be happy

Sorry to ask a stupid question but why did you buy it if it's so bad?

Not stupid at all. I bought it before the tenant moved in. I thought it was a sensible thing to do, given the discount and paying rent anyway. Now I hate the flat, feel like I've been so unhappy here that even when he's gone it won't be the same.