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Right of First Refusal for Councils and Housing Trusts

5 Comments 31st January 2015

s.156A of the Housing Act 1985 provides a right of first refusal to Councils and Housing Trust in relation to properties previously sold under the right to buy scheme.

The purpose of the legislation is to allow Councils and Housing Trusts to rebuild the stock of Council housing by re-buying previous Council homes if they come up for resale within a period of 10 years.

The section is implemented by two statutory instruments which govern the rules where the Council or Housing Trust decides to buy back the property.  These are:

Housing (Right of First Refusal) (England) Regulations 2005/1917
Housing (Right of First Refusal) (Wales) Regulations 2005/2680

Why does this matter?

This idea is important for a number as it creates a number of difficulties for private individuals wishing to sell their home.   These are:

1. The Council has 8 weeks under the SI to decided whether they wish to purchase the property.   It often takes several weeks to get a response from some Councils.  Throughout this time the conveyancing process cannot being.  Often  the seller will not know of the situation until they instruct a legal advisor.  If the seller has a related purchase and the Council do not respond promptly the chain may collapse.

2.  Some Councils are begining to charge for providing certificates that the property has been offered back to them.  The certifcate is necessary to comply with a restriction placed on the title at the Land Registry.  It seems inequitable that the Council’s should be able to charge for a certificate when, in fact, the seller is complying with legislation aimed to give the Council an advanage – i.e the opportunity to re-buy a previous Council home.  Another facet of this is that low cost home ownership is supposed to be an assistance to people and yet the Councils are trying to make money out of the very people they are supposed to have helped.

3.  In the vast majority of cases the Council do not wish to purchase the property due to lack of funding.  Therefore it is an administrative burden to go through the process even though the Council are unlikely to want to purchase the property.

4.  The legislation restrictts the price the seller can sell at to the market value of the property.  Therefore if the Council wanted to buy and the seller had an offer in excess of the market value from a willing buyer the seller would lose out.

5.  The right of first refusal is binding on successors in title.  This means that this right of first refusal applies even when the original Council tenant has sold on to a new owner and that new owner then wants to sell.

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5 Responses to Right of First Refusal for Councils and Housing Trusts

  1. Caro says:

    The current law is fair. People should not be allowed to buy homes off the council at tens of thousands of pounds cheaper than the market rate to re-sell privately at a huge profit. I support the council buying the homes back at or near the rate the council sold it to them.

    • James says:

      So people that are not well off buying a house they have lived in for 5 years should not be able to buy it cheap and sell for a profit? The discount takes into account the rent they have paid and the improvements they have made in the house for 5 years.

      But rich people buying houses with cash should?

      Your argument is flawed caro.

  2. Andrea says:

    The Council or HA do not buy back the property at discounted price it was sold to the tenant at, they have first refusal to buy back the property at current market value.

  3. John W Hannan says:

    Does this mean that the seller will get the market value of the house from the council should they buy it back??

    • NOSA says:

      Only if the seller sell the house/flat after 5 years of buying the property of the council/HA. If it’s before 5 years the seller have to payback some percentage of the discount offer at the time of purchase.

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