Living in a council house is a more affordable housing option for families who require it. But whilst renting a council house is a good option for some, others will prefer to buy their council house. But that poses a big question – can I buy my council house while on benefit?
We’re going to answer this for you today, alongside whether you can get a mortgage while on benefit, what government schemes you can use to help you buy your council house and how much discount you could get when buying.
Ready to become an expert in all things buying a council house on benefits? Use the menu below to help:
- What is a council house?
- Can I buy my council house while on benefit?
- Can I get a mortgage when on benefits?
- Government schemes you can use to buy your council house with while on benefit
- How much discount do you get on a council house?
What is a council house?
A council house is a form of public housing in Britain, giving families who require it a more affordable housing option. Council houses are generally built near each other alongside other facilities, like shops or schools, making up a council estate.
Council houses are built by the local authorities and will be owned by the council of your area. Council houses are more affordable because the costs are subsidised, meaning all costs including rent, ground rent, service charges etc are much lower than you would normally expect.
How do I get a council house?
In order to even be considered for a council house you need to ensure you’re eligible, which will differ depending upon your local council.
Generally speaking, you will be eligible for a council house if:
- You’re legally homeless
- You’re living in overcrowded accommodation or very bad housing conditions
- You need to move because of a disability, medical, welfare or hardship reasons
- You’re a family in a low-income group
- You don’t have a large amount of savings
- You have lived in a certain area for years and have a local connection, such as a job or family there
Once you know you’re eligible for a council house, you will need to join the waiting list which, depending on your area, will take a differing amount of time.
If you’re reading this and you’re currently on the waiting list wondering how to get to the front of the queue quicker, we’ve actually written an article on this, so make sure you check it out!
Can I buy my council house while on benefit?
In short, the answer to ‘can I buy my council house while on benefit’ is yes, yes you can, and you can actually make use of government schemes to help you buy – which we will give you more information on a little later.
When buying your council house while on benefit, you won’t be able to claim housing benefit anymore and you won’t be able to use any current housing benefit to cover the costs of the mortgage.
Also, if you’ve been on housing benefit to help you pay your rent, you won’t be able to claim this once you’ve bought your council house as there will, of course, no longer be any rent to pay.
One thing to keep in mind, if you have more than £16,000 in savings you shouldn’t be claiming housing benefit and so if you have this will get discovered by your local council when it comes to applying to buy your council house.
The following are benefits which you could use to buy your council house:
- Attendance Allowance Benefit
- Bereavement Support Payment (BSP)
- Carer’s Allowance Benefit
- Child Benefit
- Child Tax Credit Benefit
- Disability Living Allowance (DLA)
- Employment and Support Allowance (ESA)
- Incapacity Benefit (IB)
- Industrial Injuries Benefit (IIB)
- Industrial Injuries Disablement Benefit (IIDB)
- Maternity Allowance Benefit
- Pension Credit
- Personal Independence Payment (PIP)
- Severe Disablement Allowance
- Universal Credit
- Widow’s Pension Benefit
- Working Tax Credit Benefit
This is not a complete list and so we recommend checking with a mortgage advisor to be sure that you’re able to buy your council house with your benefit. Also, some councils will have different stances on which benefits can be used to buy a house, so your mortgage advisor will be able to help you out.
Do I need a deposit to buy my council house?
If you use the Right to Buy scheme (which we will cover in more detail a little later on), most mortgage lenders will allow you to have a mortgage without the need for an initial deposit.
As the Right to Buy scheme was introduced to help council tenants and housing association tenants have the ability to purchase the property they live in, at a BIG discount, mortgage lenders take this into account when it comes to you applying for a mortgage, allowing you to get one without the need for the deposit.
Can I get a mortgage when on benefits?
If benefits are your only or main source of income, then you will be able to get a mortgage. When applying for a mortgage, your lender’s main concern will be the amount and stability of your income, with many happy to accept government benefits as a source of income.
If you’re on benefits to supplement a low income, then this is different to getting a mortgage with benefits being your only source of income.
You will need to ensure the mortgage lender you wish to use will accept your benefit as a form of income, as some will only consider them if you’re also employed or retired, with some mortgage lenders not wanting to consider them at all.
The best way to ensure you will be able to get a mortgage with your benefit is to go to a mortgage advisor, as they will be up to date on which lenders will allow you to get a mortgage with benefits, which makes the whole process a lot smoother for you.
One thing to keep in mind if benefits are your main or only source of income is that you may be able to get housing cost payments alongside a mortgage to help you cover the interest on your mortgage. You’re only able to get housing cost payments if you’re eligible for universal credit.
If you do apply for housing cost payments, the amount you will receive will be decided by the department of work and pensions and you may face a situation where you don’t get the full amount you apply for.
For example, if you have chosen a home the department feel is too big for you, or overpriced, or in an area that isn’t affordable, then it’s likely you won’t be given the full amount.
However, an exception to this is if you explain why you need the full payment and why you’ve selected the property, then you may be able to get the department to change their mind.
How can I apply for housing cost payments?
To apply, you will need:
- Details about your income
- Proof of income
- Details about your expenses
- Details of your mortgage
- Any other relevant financial information
You can only get housing cost payments on mortgages and housing loans up to £200,000. You will need to contact the benefits enquiry team to get an application form to be able to apply.
Government schemes you can use to buy your council house with while on benefit
When it comes to buying your council house while on benefits, there are various different government schemes that are available to you to make buying a house more affordable. The government schemes which you’re able to make use of when buying your council house on benefit are:
- Lifetime ISA – allows you to save a maximum of £4,000 a year with the government adding a bonus of 25% of your savings each year, up to £1,000
- Help to Buy ISA – allows first-time buyers to make savings towards a deposit on their first home, with the government giving you a maximum of £3,000 on savings up to £12,000
- Shared Ownership – you can buy between 25 to 75% of the property initially and can ‘staircase’ to eventually own more, or all, of the property
- Help to Buy equity loan – the government will lend you between 15 and 40% of the property price, allowing you to put down a 5% deposit and get a mortgage to cover the rest
- Armed forces help to buy – this is essentially the same as Help to Buy but is specifically for people from the armed forces
- Right to Buy – we will get to this one in more detail, but it essentially allows you to buy your house at a discounted price
- Preserved Right to Buy – same as Right to Buy
- Right to Acquire – the same as Right to Buy but for housing associations
- Rent to Buy – you agree to lease out the property for a certain time period, with the option to buy the property before the tenancy is over
Right to Buy
We told you we’d come back to this! The reason we’re coming back to this is because it’s the main scheme that people use when it comes to buying their council house AND it’s one of the reasons the waiting list for a council house is ever-growing.
Right to Buy allows council tenants to buy their council house at a discount. You can only apply to buy your council house if:
- It’s your main or only home
- It’s self-contained
- You’re a secure tenant
- You’ve had a public sector landlord for 5 years – whether that’s a council, an NHS trust or a housing association
We know 5 years sounds like a long time, but it’s important to remember it doesn’t need to be 5 years in a row, it can be 5 lots of 1-year periods at different times.
The Right to Buy scheme allows tenants to buy their council house at discounts of £84,600, or £112,800 if you live in London boroughs. Wanting to know more about the exact level of discount you can get?
That leads us perfectly onto…
How much discount do you get on a council house?
As we have just mentioned, you can discount on the market value of the property when you buy it if you qualify for Right to Buy. The maximum discount in England is £84,600, except for London boroughs where it is £112,800. These numbers will increase in April in line with the CPI (consumer price index).
How much discount you will get is based on the following:
- How long you’ve been a tenant with a public sector landlord
- The type of property you’re buying – a flat or house
- The value of your home
If you sell your home within 5 years, you will likely need to repay some or all of the discount. If you’re buying a property with someone else, you count the years of whoever’s been a public sector tenant the longest.
To get a better idea of the discount you may be eligible for, you can use a Right to Buy calculator.
The amount of discount you get will differ depending on whether you live in a house or a flat.
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 by 1% for every extra year you’ve been a public sector tenant, with a maximum of 70%, or £84,600 across England and £112,800 in London boroughs, depending on which is lower.
You can get a 50% discount if you’ve been a public sector tenant for between 3 and 5 years. After 5 years, the discount goes up by 2% each year 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, again depending on which is lower.
Well, that’s everything you need to know about buying a council house, including the answer to the all-important ‘can I buy my council house while on benefit?’ Got some insight to give or a question to ask? Or maybe you want to have a go at writing an article like this yourself? Whatever it is, don’t hesitate to get in touch!