What is Social HomeBuy?
Social HomeBuy allows you to buy your socially rented property either outright or on a shared ownership basis. This option offers some housing associations or local authority tenants the opportunity to buy a share in their rented home.
How does it work?
Tenants can purchase a minimum initial share of 25% of the home. The remaining un-owned equity is retained by your landlord. Your landlord then charges you an affordable rent on the un-owned equity. It is possible for you to purchase 100% of the property.
What are my options after buying through Social HomeBuy?
You can buy additional shares at a later date until you own 100%. This is called staircasing and is based on the current market value at the time that you purchase the additional shares. If you increase your share in the property, your rent is re-calculated and reduced proportionately. If you wish to sell your property, your share is marketed for sale through your housing association, to allow further people in housing need to benefit from low cost home ownership. The property is resold at market value at the point of resale. If you have purchased 100%, any service charges you previously paid may still be applicable. Please ask your landlord for details.
If you’re a social housing tenant, you could buy a share in your home using the Social HomeBuy scheme. You can use this scheme if you can’t afford to buy your home through the Right to Buy or Right to Acquire schemes. You’ll get a discount on any share you buy.
Buying a share in your home
The Social HomeBuy scheme gives you the chance to buy your housing association or council home through ‘shared ownership’. Your landlord may also offer you a different home through the scheme. You'll buy a share of your home and pay rent on the remaining share. The share must be at least 25 per cent, but you can buy more or even the whole property if you can afford it. You’ll get a discount so you won’t have to pay the full ‘market value’ (how much your home could fetch on the housing market). As well as the cost of your share, you’ll need to think about the rent you’ll need to pay on your landlord’s share. They can charge you up to 3 per cent of the market value of their share of your home.
Example of rent paid on your landlord's share
Your home is worth £240,000 and you buy a 50 per cent share. Your landlord charges you 3 per cent rent on their 50 per cent share. Three per cent of £120,000 is £3,600 per year. This works out at £300 per month for you to pay in rent.
What discount can you get with Social HomeBuy
You’ll get a discount between £9,000 and £16,000 on the value of your home when you use Social HomeBuy. The discount depends on where your home is and the size of the share you’re buying. If you want to buy another share in your home later on, you’ll get a discount on this too.
Example of how the discount works when you buy a share
Your home is worth £200,000. You qualify for a £16,000 discount and you want to buy 50 per cent of your home (£100,000). So you’ll get 50 per cent of the discount, which is £8,000. This means you’ll only need to pay £92,000 to buy your 50 per cent share.
If you want to sell your share of your home
If you want to sell your share within five years of buying it, you’ll need to pay back some or all of the discount you got. The sooner you sell, the more discount you will have to pay back. You may have to offer your landlord the chance to buy your home back at ‘market value’ (how much it could fetch on the housing market). Your landlord may also have the right to suggest a buyer for your share.
When you can use Social HomeBuy
You qualify for Social HomeBuy if:
- you’re a ‘secure’ or ‘assured’ council or housing association tenant (find out what tenancy you’ve got by looking at your tenancy agreement)
- your landlord is taking part in the scheme
- you live in an qualifying property (some types of homes aren’t covered by the scheme)
- you’ve been a social tenant for at least five years
You can count previous public sector tenancies, even if they weren’t one after another, to make up the five years you need to qualify. Public sector landlords include councils, housing associations and public bodies like an NHS trust. Not all local councils or housing associations have joined the Social HomeBuy scheme. You’ll need to check with your landlord if they belong to the scheme and whether your home is included.
Find your housing association
When you can't use Social HomeBuy
You can’t buy a share in your home using Social HomeBuy if you:
- have an ‘assured shorthold’ tenancy with a housing association (ie a ‘starter tenancy’)
- are being made bankrupt
- have a court order saying you must leave your home
- are facing legal action for rent arrears, anti-social behaviour or for breaking your tenancy agreement
How to apply for the Social HomeBuy scheme
You’ll need to apply directly to your landlord (your local council or your housing association). Contact them and ask for the application forms. Your landlord will look at your income, spending and any loans or debts you’re paying off to help decide what share you can afford. They’ll bear in mind the discount you’ll get when they look at your finances. See our affordability calculators for further details.