Applicants who qualify for the Right to Buy are entitled to a discount on the market value of their home.
The amount of discount depends on the length of time you have been a tenant (with your present and previous Right to Buy landlords). The maximum discount for properties is £75,000. This limit is fixed by law.
You may also be able to claim discount if your husband or wife is a public sector tenant or lived in housing provided by the armed forces or if you lived with your parents after the age of 16 and later became the tenant of the same property.
Discount is calculated differently for houses and flats.
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Houses – the minimum discount is 35% if your tenancy is at least 5 years and increases by 1% for each additional years tenancy to a maximum of 60%
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Flats – the minimum discount is 50% if your tenancy is at least 5 years and increases by 2% for each additional years tenancy to a maximum of 70%
BUT – your discount cannot be greater than the maximum discount of £75,000.
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Your discount may be reduced if your home has recently been purchased or built by your landlord or a large amount of money has been spent on repairing or maintaining it. This means the price you pay cannot be less than what has been spent on the property in the last 10-11 years. If this amounts to more than the market value of your home then you will not receive any discount. This is known as the Cost Floor rule.
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Repayment of discount – you can sell your home whenever you like however you may have to repay some or all of the discount depending on when you originally applied to buy your home and how many years you owned it before it was sold. For further information on repayment of discount see Selling your Home.