Discount repayment and right of first refusal when selling a Right to Buy home

If you decide to sell your home that you bought under the Right to Buy scheme in England within five years of the purchase, you will have to repay all or part of the discount you received. When you sell within ten years, you are required to offer the property back to your previous landlord first. These rules are stated in the Government's guidance on selling properties under the Right to Buy scheme and are structured in such a way that they often catch sellers by surprise. Since these rules have a real financial impact, the following information is general and should not be regarded as legal advice.

The 5-year sliding scale

In the first year you must sell and in that case you will repay 100% of the discount; thereafter the repayment rate decreases by 20 points each year: it is 80% in the second year, 60% in the third year, 40% in the fourth year and 20% in the fifth year; after the fifth anniversary no further repayment is required.

The problem is that the amount you have to repay is calculated according to the value of your home when you sell it, not the amount you originally paid. According to an example on Gov.uk, a house that was bought for £100,000 with a 40% discount is sold 18 months later for £120,000. The discount is then recalculated as 40% of £120,000, that is £48,000, and in the second year you repay 80% of this amount: £38,400. As the market rises, so does the amount you have to pay back.

Because of this, choosing a time close to an anniversary has a real monetary value. In the case where the discount was 35% and the house is now worth £180,000, the revised discount amounts to £63,000. Selling in the fourth year involves paying 40% of that sum (£25,200); waiting until the fifth year entails paying £12,600; and waiting beyond the fifth anniversary results in paying nothing.

The 10-year right of first refusal

You are required to offer the property to your former landlord, or to another social landlord in the area, for 10 years after the date of your purchase before putting it up for sale on the open market. The price will be the one agreed upon between you, and if an agreement cannot be reached, a district valuer will fix the price without any cost to you. Once the landlord has not agreed to buy within eight weeks, you may then sell the property to anyone you like.

Include the eight weeks in your plans. Since the right of first refusal is located in the marketing department, the average time between sales increases if you only become aware of the rule after having found a buyer.

Consider the costs and the benefits of the rule. Since the offer-back price is the full market value—whether agreed by you or set independently—the right of first refusal only involves a time cost and not a monetary one, and if the landlord decides to proceed with the purchase then you will have a sale free from a chain and without having to pay an estate agent's fee.

Transfers, rural homes and tax

If you pass the property to a member of your family the discount repayment may not be required, but you first have to get your landlord's consent and employ a solicitor to put the transaction in writing. In certain rural areas, in national parks and in areas of outstanding natural beauty resale may be limited to people who have lived or worked in the area for three or more years, thus reducing the number of potential buyers and possibly making it harder for a buyer to obtain a mortgage. However, if the property has always been your main home you generally won't have to pay capital gains tax when you sell it.

In a separate article we have our information on who is eligible and the current discount rates for Right to Buy in 2026.

Confirm your dates before you list

The amount by which the fifth year differs from the fourth year in the example given is £12,600 and since the clock starts at the time of your purchase, it is important that you ask your solicitor to check with them precisely when your five-year and ten-year periods come to an end before any estate agent goes to see the property. Once you are ready, you should obtain quotations from conveyancing solicitors for the sale.