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If you’re the owner of a freehold or leasehold former council home and you would like to sell the property, one solution could be attempting to sell it back to the local authority. But this process does have some complications and drawbacks, so this guide explains those issues and also outlines other ways that you might be able to get a speedy and fair offer on your home.
- How to sell your house or flat to the local council
- Benefits of selling your property to a council
- Disadvantages with selling a home to the council
- Preparing your home for sale to a council
- Capital Gains Tax and selling your home to the council
- Alternative methods for selling your house or flat
- Questions about selling your home to a local council
How to sell your house or flat to the local council
Council houses in the UK have a long history dating back to the early 20th century, when local authorities invested millions in constructing properties that were then rented out to people who could not afford to buy or rent a typical home, with the rent based on what they could afford, as Wikipedia explains.
Whilst construction of council houses continued at a steady pace from the 1910s through to the 1980s, it then fell off in the following decades. The result is that there are constant news reports about local authorities throughout the UK facing a shortage of available housing stock such as flats, detached houses and semi-detached homes. Some councils are therefore looking to purchase private residential properties to help build the portfolio of homes they own.
One way that they are doing this is by sometimes offering to purchase former council properties that people have purchased through "Right to Buy" schemes that allow them to eventually make an offer to buy their council home and become the outright freeholder or leaseholder of that property.
A freehold property is one where you are the owner of both the land and the building constructed on that land, whereas a leasehold is someone who owns the property for a set number of years and in exchange they pay an annual ground rent to the freeholder.
If you own a former council house or flat, whether it is freehold or leasehold, and are looking to sell it empty, one option could therefore by contacting your local council to ask whether they are interested in making an offer, and seeing what price they might be willing to pay for the property.
The rest of this guide explains the pros and cons of selling your home back to a council, and also offers alternative suggestions for how to find a buyer for the house or flat, including some methods that might help you make a faster sale and at a more competitive price.
Please note that selling your property to the council can be quite a complex process with differing rules and terms around the country. Be sure to consult with your local authority / lawyer directly for the latest guidance and do not rely on this guide as anything definitive.
Benefits of selling your property to a council
Selling your home to the local council can have a few advantages compared to other methods, and these can be useful to know when you are trying to decide how to find a buyer.
Because many local authorities have a significant shortage in housing inventory, they could be eager to move quickly on purchasing your property, which could help with speeding up the sale. That could be ideal if one of your top aims with selling is to find a buyer as fast as possible.
As the UK government’s website explains, the property will also usually have to be sold at whatever market price was agreed with the council. This can help you to have some certainty about the price that you might be able to get for selling your home, if you decide to sell to the council.
However, as the next section of this guide explains, there are unfortunately some disadvantages associated with selling your flat or house to the council compared to the potential benefits.
Disadvantages with selling a home to the council
The concept of local authorities allowing people living in council housing to buy those properties at a discounted rate compared to the market value for similar homes can create some complications when you’re trying to sell the property, as finance website HuutiMoney notes.
You are often legally allowed to sell your council home immediately after purchasing it, but one of the major drawbacks of this process is that for five years you’ll have to pay the council back the amount (or part of) that you were able to discount from the purchase price when buying the property. In the first year, for example, you may have to pay back 100 percent of the discount, and this could increase your selling costs, particularly compared to other ways of finding a buyer.
And for 10 years from the day that you become the owner, you typically must give the council the right of first refusal – meaning you have to offer the home to them to purchase before you try and find a buyer through other means, for example using an estate agent or selling to a fast home buyer.
That means if you own a former council house and you want to sell it back to the local authority, you could have to potentially accept a much lower asking price depending on your situation.
When selling to a council, there’s also always the risk that there could be complications and the house sale might fall through for one or more reasons. Indeed, the council typically has the legal right to revoke their offer without any penalty just up until before contracts are exchanged on the property.
This uncertainty can create a lot of extra stress for you in trying to find a buyer, as well as adding many months to the overall timeline. If a sale to the council does fall apart at the last minute, it will effectively reset the schedule for selling, potentially for a very long time.
Preparing your home for sale to a council
If you offer your house or flat for sale to the local authority, they will likely send one of their representatives to inspect the interior and exterior before making an offer. That’s why it’s imperative that you get the home looking in its best condition before attempting to sell it.
With the inside of your property, this means giving each room a deep clean, opening up the curtains to make rooms brighter and removing any clutter that can have the effect of making your home appear smaller. If you have any pets it’s also a good idea to keep them secured away whenever the council representative is inspecting your home ahead of making an offer.
With the outside of your property, steps you can take to improve the appearance include applying a new coat of paint to window ledges and doors, fixing any broken glass or missing roof tiles if applicable, mowing any garden or other green space and removing any weeds.
None of this work should be very costly or time-consuming or require much effort, but it can have a dramatic impact on how valuable your property appears to potential buyers. A home that does not look well maintained can appear less valuable to anyone viewing, and this could lead them to make a reduced offer compared to what they’d pay for a home in better condition.
One issue you’ll have to consider is whether to fix any major physical problem that your home might have, which can cover a wide range of issues including a vandalised property, one with an infestation, a home with a bad roof, a flat with a poor Energy Performance Certificate rating, a house that has extensive damp, and many other situations. It will be your decision whether to invest time, money and hard work into fixing this problem first or instead leaving the home "as is" and trying to find a buyer.
The advantage of investing in corrective work to fix any problems with your home is that it eliminates the scenario where the council or any other buyer might reduce their offer price significantly by the amount of money that they think it would cost them to fix the problem as the new owner, which in turn could reduce the potential profit you might make from the sale.
But many people simply do not have the often lengthy amount of time or large amounts of money that will be needed to fully correct an existing problem with their property.
If that’s your situation then you can still get a fast and fair offer for your home, as a later section of this guide explains. Instead of selling to the council, you could sell to a quick home buyer like LDN Properties because these companies are used to buying many houses and flats as is without any work being done to correct a problem that might turn off other buyers.
Capital Gains Tax and selling your home to the council
Whenever you sell a home, whether it’s to the local council or anyone else, you should be aware that you might have to pay Capital Gains Tax on the sale proceeds.
This is a charge that the UK government can impose on the profit, or sometimes called the gain, that someone makes when they sell a tangible valuable asset such as a home, artwork or a car, as MoneyWeek explains. The tax, if it applies, will typically be charged on this profit and not on the overall sale price of your home.
However, there are certain ways that you might be able to reduce the amount of Capital Gains Tax that you owe, or possibly even wipe out the requirement to pay altogether, so it can be a good idea to consult with a financial expert about whether these options are feasible.
Alternative methods for selling your house or flat
If you’ve decided that you would prefer to not sell your home to the council and instead pursue another option for finding a buyer, there are several different methods available. Some of these selections have notable advantages like completing the sale in just a handful of weeks, whereas others have major disadvantages such as requiring that you pay costly commission.
Your choices will typically be among selling to a quick home buyer, trying your luck with an auction, selling on your own, or using an estate agent. To find the best option for your situation, first write down your top aims with selling, like your goal sale price, whether you can accept paying any fees, and how long you are willing to wait to find a buyer. Then compare this information against the specifics of the four methods below to find the best match.
Selling to a quick home buyer
Quick buyers, such as LDN Properties, are companies that have the financial resources on hand to make immediate purchases of almost any freehold or leasehold property, regardless of its age, condition, location, shape, size or type. They can finalise the process of buying a home within weeks because they don’t have to wait for months to first get approved for a mortgage.
Not only is this usually the speediest way to sell a home, it is also free of any fees, because honest quick buyers will never make owners pay any commission when buying their properties. This can help significantly with keeping your overall expenses low with selling.
These companies are also a great choice if you own a property that would be considered to have some kind of problem, whether that’s a physical flaw like dry rot or another potential negative factor like having noisy neighbours or the house not having a structural warranty.
If you agree with the initial offer, the company will then have one of their team members visit your property in order to view the interior and exterior before they make a final offer. This is the only such viewing you would need to have, which can also help reduce your stress.
And if you accept the quick buyer’s final offer, they’ll then work with your solicitor to swiftly complete the remaining steps to exchange contracts and complete the purchase. The entire timeline will be completed within a few short weeks, including you receiving the sale proceeds.
Trying your luck with an auction
Property auctions can take many months to complete, because there’s a wait between the day that you decide to sell your home and the day on which the auction happens. And then if your property does find a buyer at the auction, they typically have about 28 days to sign all their required legal documents and other steps necessary to finalised the purchase.
You might find that some auctioneers are willing to set a shorter deadline for the buyer to finish all of these tasks, so it can be a good idea to inquire about this with specific companies.
Auctioneers will also require that you pay them commission if they are able to sell your house, flat or other type of property. Generally, this fee is charged at about 2.5 percent of the property’s auction sale price, and the fee will be taken out of the sale proceeds immediately. This will add to you total selling costs, so is not a good match for those owners looking to lower expenses.
It’s always possible that some individual auctioneers may be open to negotiating a reduced rate of commission for the sale of your home, or at least to agree that the winning high bidder should pay some of your costs, so it’s worth asking auctioneers if they are open to either approach.
If you decide to sell at an auction, remember that you’ll have to pick a reserve price, and this is the lowest price at which you agree your home can sell. If nobody places a bid on your home that reaches at least the reserve price then it will be deemed unsold, and you’ll have to begin again with the process of trying to find a buyer, adding possibly several months of delay.
But if you only get a single bid and it’s at the reserve price, the home is considered sold and the buyer can sue to enforce this transaction in case you try to walk away from it. That’s why it’s important for you to calculate a reserve price that should still produce a profit from the sale of your leasehold or freehold flat or house even after paying the auctioneer their commission.
Selling on your own
This can be a slow option for selling your property, because it can often take more than a full year to find a buyer. That’s because you’ll have to find time to create and advertise a listing for your home, schedule viewings and hear offers from any serious buyers.
It can be stressful and isn’t recommended unless you have managed to sell homes in the past, or have a similarly skilled family member or friend who can help you out for free.
In exchange for all this time and hard work, the only obvious benefit of selling this way is that you won’t have to pay an auctioneer or estate agent any commission, which will help to lower your overall selling costs – a good outcome if keeping your expenses low is a main priority.
But the stress and time involved with selling can outweigh any financial benefit of selling on your own, and you might even spend more to advertise the property. Instead, you could sell to a quick home buyer, a process that won’t require you to pay any commission but that will be much speedier, typically taking a few short weeks to exchange contracts on your home.
Using an estate agent
A traditional way of selling a property is doing so through an estate agent, who will do the bulk of the work in advertising the home, organising viewings and hearing offers from buyers.
But they will charge commission for this work if they find a buyer for your flat or house. This fee will be subtracted immediately from the sale proceeds, which will add to the overall expenses associated with selling you leasehold or freehold home.
Selling via an estate agent can also be quite a slow way to sell a property, often taking many months or even more than an entire year. And there’s always the prospect that a buyer might rescind their offer and the sale will collapse, which they can do any time before contracts are exchanged. If that occurs, you’ll be back to the start with trying to find a buyer.
Top queries and answers about selling property to the council
Homeowners thinking of making a quick sale of their home may have some upfront questions to be answered, ranging from the how long they need to own the property before selling through to selling a bungalow. Here are some of the top questions we’re asked about selling property to the council:
Your top questions when selling property to the council
Yes, it’s perfectly legal to sell your former council home to the same local authority from which you purchased it (if they are offering this service). Council homes are properties that were constructed by local authorities in order to provide affordable housing, and eventually the UK government made it possible for people living in council houses and flats to buy them at a discounted price.
Yes, there are certain conditions that can reduce the potential sale price of your property when selling it back to the council. If you are trying to sell it back to the local authority within the first years of purchasing the home, you’ll have to refund all or some of the discount you got when buying it. Councils must also typically be asked to make the first offer if you’re selling within 10 years.
You have four other common ways to try finding a buyer for your property, and these are selling without any third party assistance, selling through a property auction, selling using the services of an estate agent or selling to a quick home buyer like LDN Properties. There are pros and cons of with these methods, but some offer a great way to get a fast and fair offer for your home.
Regardless of whether you sell your house or flat to the council or via any other method, you might have to pay Capital Gains Tax on the amount of profit that you make from the sale. You should consult with a financial professional to ask them how much tax you may need to pay, as well as asking them about any steps you can take to reduce your overall tax burden.
If you sell your home to the council, you won’t have to pay them commission but you may have to repay some or all of the discount you got when buying it. Selling your property to an auctioneer or estate agent will require that you pay them fees, whereas you won’t have to pay any commission if you sell on your own or sell to a quick property buyer.
Your best option could be to contact a quick home buyer such as LDN Properties, as these companies are able to finalise the purchase of almost any house, flat or other property within a few short weeks, and that includes the exchange of contracts and paying owners the proceeds. All other options for selling a property will usually take at least several months.
You should ask individual companies if they belong to an organisation known as The Property Ombudsman (TPO), which issues rules to guard homeowners against scams in the quick buying industry. All legitimate TPO members, like LDN Properties, must commit to following these rules, which should give you additional peace of mind with the sale of your home.
