Everyone who buys a property ultimately sells and Right to Buy properties are no different…. except.

While everyone knows if you sell in the first five years you must repay some of the discount however it is less well known that the authority who granted the Right to Buy has a 10 year first refusal option, protected by a Land Registry restriction.

The property has to be offered to the original landlord first and if they don’t want to buy it they will issue a certificate allowing the property to be sold on the open market. This applies to all sales during the first 10 years not just the first.

A seller needs to factor this into their transaction and ensure the landlord’s consent is granted before offering the property on the open market.

A buyer needs to advise his lender or broker about the right of first refusal as some mortgage providers do not lend in these circumstances.

Seller’s should also remember a Right to Buy purchaser who buys for the benefit of someone else, sometimes known as deferred resale agreement, breaches the terms of their discount. The discount is given to enable the tenant to buy and live at the property for their own benefit and not for the benefit of those who fund the purchase. Entry into a deferred purchase agreement triggers an immediate repayment of the discount.

Finally, repayment of the discount on an early sale is charged at 1/5th of the discount for every full or part year prior to the fifth anniversary of the first purchase. If you sell one year and one day early you will repay 2/5th of the discount. Sales are caught by this provision as are transfer for no value (gifts) or transfers into joint names. A restriction on the title ensures that a transaction cannot be registered without complying with this requirement.