Mortgages on Ex-Local Authority Flats

Yes, you can typically obtain a mortgage on an ex-council flat. Ex-council flats are properties that were previously owned by local government authorities and were sold to private individuals or landlords under the Right to Buy scheme or other similar initiatives.

Still, some lenders are reluctant to approve mortgages on ex-council flats due to the property's perceived value. When deciding whether to approve a mortgage for an ex-authority property, a lender will usually consider:

While the lender will look at the risk of the property you want to buy, they’ll also be looking at what they consider to be the risk of lending to you, which includes income, deposit, credit history, and more.

Your Income

The more you earn, you'll be considered less of a risk to a lender. There are several specialist lenders that can accommodate unusual incomes. As an independent mortgage broker, we’ll be able to advise you of who these lenders are.

The Size of Your Deposit

From the lender's perspective, the larger the deposit, the more favourably they’ll look at your application. The ideal minimum deposit is usually around 10% for most residential properties, including ex-council flats. However, some lenders may be willing to accept 5% under certain circumstances. Being able to put up more than the minimum is a good way of encouraging the lender to offer you their best rates.

Your Credit History

If you have a poor credit history, your borrowing options may be more limited. Therefore, spending several months improving your credit score before applying for a mortgage is a good idea. This will give you more borrowing options.

Your Age

Some lenders will automatically decline applications from people above a certain age or will require proof that you can make your repayments after retirement. Most lenders have a maximum lending age of 75, while some will go to 85.

Your Expenditure

The main concern of a lender is whether you'll be able to meet your monthly repayments. Lenders will want to assess how your finances will stand up to rises in interest rates while also examining your outgoings and financial obligations.

If you lived in your council flat for at least two years and signed your tenancy agreement before 18 January 2008, you qualify for the Right to Buy scheme to purchase the property. However, if you signed the tenancy agreement after this date, you'll need to live in your flat for at least five years before qualifying for Right to Buy. An independent mortgage broker like John Charcol has access to an extensive range of lenders and will be able to help you find a lender that offers Right to Buy mortgages that are right for you.

What Is Right to Buy?

The Right to Buy scheme was introduced in 1980 and enables all council tenants to buy their homes at a discount. The levels of discount available have varied over the years, so it has not always been affordable to tenants. The government has since made significant changes to Right to Buy, including increasing the maximum discount to £84,000 in England and £112,800 in Greater London. The maximum cash cap increases in April each year, in line with inflation.

If you’re entitled to purchase your council flat under the Right to Buy scheme, you can expect to get a discount on the purchase price of up to £84,000 in England or £112,800 in some London boroughs. The amount of discount you can expect to get when buying your council flat is determined by how many years you've been a council housing tenant and the value of the council flat you want to purchase. If you've lived in local authority housing for 3 - 5 years, you may be entitled to a 50% discount on the purchase price of your council flat.

If you bought your council flat under the Right to Buy scheme, you can legally sell it any time after the purchase has been completed. But, if you try to sell it before the end of the 5 year term, you'll be required to repay the discount you received under the terms of the scheme. Likewise, if you choose to sell your local authority flat before the end of the 10 year term, you'll be required to offer to sell it to a social housing landlord or your local authority first, before putting it on the open market. If you intend to sell your council flat immediately after buying it, you may not be able to do so without wavering the discount you received through Right to Buy until you've lived in it or owned it for at least five years.

The longer you own the property, the more the discount repayment amount decreases. After the first year, the discount repayment drops to 80% and 20% after four years. Once you've owned the flat for five years, you won't have to repay any of the discounts you received from the scheme.

Some mortgage lenders will impose a maximum loan-to-value on ex-local authority flats to protect themselves in case there's a drop in house prices in the future. This means that you may be required to pay a bigger deposit than expected. For example, the lender might have a maximum LTV of 80% on flats but 75% on ex-council flats.

While the stigma surrounding ex-council flats in high-rise blocks gradually begins to fade, these types of flats are most commonly mortgaged with a specialist lender. A whole of the market broker, such as John Charcol, has access to a broad range of lenders and will be able to help you find the best mortgage for your circumstances.

If you’re looking to purchase a home and want to find out whether it's an ex-local authority property or want to check the property you already own, there are two ways you can do this. You can either ask the estate agent who should be able to tell you or by checking the details of the previous possession by buying a copy of the title deed from the Land Registry. However, you'll only be able to obtain this information if the property is either already bought by you or currently listed for sale. You can also visit the information section of the Land Registry website and enter the exact postal address to find out about the property's previous ownership.

If you're interested in buying an ex-local authority flat and looking for the right mortgage for your needs, speak to our team of independent advisers at John Charcol. At John Charcol, we have access to an extensive range of mainstream and specialist mortgage products, including those for former local authority properties, including flats in high-rise blocks. Our experienced advisers will be able to help you find the right financing option for you. Contact us on 0330 433 2927 or submit an online enquiry to learn more.