It may be possible to sell your house to your local council and then rent it back to them – but the process is not a simple one.

This is because councils, in most cases, do not buy directly from homeowners. When it comes to renting back, as a public body, they typically only serve tenants who are claiming Local Housing Allowance (housing benefit).

In this article, the fast house sale team at Property Solvers first discusses how to approach the council about selling your house. We then look into the circumstances under which they will rent it back to you as well as some alternative options worth considering.

How Do I Go About Selling My Property to the Council?

From the outset, it’s worth noting that selling your house or flat to the council is not straightforward (unless it was a Right to Buy property).

This is because local authorities rarely look to buy properties individually from the general public. Many prefer to purpose-build their own housing and have set budgets allocated to bulk acquisitions – such as from private house developers or local portfolio owners. Any approach for a sale of a single property may therefore not be of interest.

However, it’s certainly not worth ruling out the possibility of selling your house in this way…

Much would depend on your property’s location, size, rental demand as well as the council’s own internal policies and budgets.  On this latter point – with many local authorities facing financial constraints – they may not have the ability to buy properties even if they need/want to.

Evidence suggests that council buy back prices are likely to be less than the fair open market value.  Remember also that you probably have to jump through a number of hoops.  Unlike private cash buyers, the money may not be readily available as they often have specific periods when funds can be spent.

At the same time, as the sale is direct, you won’t have to worry about paying estate agency fees. You will have to pay for your own legal costs and disbursements.  The council will also want to conduct a professional RICS survey.

How Do I Go About Selling My Property to the Council?

Selling Back Your “Right to Buy” Property to the Council

If you previously purchased the property directly under the Right to Buy or Right to Acquire schemes within the last 10 years, the council (or a local housing association) has the first right of refusal.

Note that, even so, they do not have any obligation to buy it back.

There are also specific rules if you bought the property in the last 5 years that state that you must pay back set amounts of the discount from when you first bought the property.  If the sale is within the first year, you must pay back all of the discount.  These reduce to:

  • 80% of the discount in the 2nd year;
  • 60% of the discount in the 3rd year;
  • 40% of the discount in the 4th year; and
  • 20% of the discount in the 5th year.

If They Do Buy Your House, Will the Council Then Rent it Back?

You may be thinking of renting back to the council as feels like the safest option.

They are, for example, unlikely to evict you in the same way as a private sell and rent back operator would do (as most local authorities offer secured tenancies).

Councils can rent out properties to those most in need socially, paying Local Housing Allowance (housing benefit).  They cannot rent out properties for profit as they are a public body.

Even if you do manage to sell to them directly, they will only be able to help if you’re in a genuinely vulnerable position.  For example, if you were forced to sell your house due to illness, long term unemployment or other difficult financial situation, you may be able to discuss lettings options with them.

Yet, even in these circumstances, the council may only be willing to rent back to you if you move into another property. This is because, just like private firms, they are governed by the strict “sell and rent back” Financial Conduct Authority (FCA) regulations.

Note that should they see that you have pulled out equity from the property sale, they may feel that you can simply rent on the private market and refuse to assist.

Your Options Instead of Selling and Renting Back to the Council

Given the likely challenges of selling direct and then entering into a rental agreement with the council, below are some other potential routes you may want to think about…

Sell and Rent Back to a Housing Association

Sell and Rent Back to a Housing Association

Housing Associations are not-for-profit organisations that operate independently of local councils.

Also referred to as Registered Social Housing or Private Registered Housing, they specialise in the provision of accommodation for low-income groups and those that require supported living.

As well as building themselves, similar to local authorities, Housing Associations are active buyers of properties from developers, homebuilders and private sellers.

Each housing association will have its own criteria. Most prefer 2 or 3-bed terraced or semi-detached houses with good access. Bungalows also tend to be of interest too. You may also have more luck if you bought the property from the organisation initially.

The good news is that most will pay the full market value. Some may even be willing to discuss shared ownership options with you.

Should you find a suitable organisation to sell to, your ability to rent back will depend on whether you fit within the criteria.  There is no shortage of people looking for such accommodation and you may find yourself competing to live in your own house – even though you’ve done them the favour of selling it to them!

You can find a monthly updated list of registered providers here. Some may have information on their acquisitions strategy directly on the website or it may be a case of calling to find out who the appropriate contacts are.

Although you will not need to pay any estate agent fees, you will need to cover Energy Performance Certificate (EPC) and conveyancing fees.  They will, however, pay for the survey.

Sell and Rent Back Privately

Sell and Rent Back Privately

There is a small amount of regulated sale and rent back providers out there that may be able to help. The idea is that the property is purchased and let back to you under a 5-year fixed term.

One of the downsides is that you will have to accept a reduction of the purchase price of between 15 and 25%. There are also other risks such as rental increases and the possibility of getting evicted without explanation.

With so few genuine operators in the market, you will need to make sure that you’re working with a reputable firm that adheres to the stringent criteria laid out by the Financial Conduct Authority (FCA).

Sell on the Open Market and Look for Somewhere to Rent

Sell on the Open Market and Look for Somewhere to Rent

Although you’ll be unable to remain in the property, this is arguably the best way to achieve the maximum price.

You can then take the extra proceeds of sale and use to find a decent rental property in your local area.

If you would like to get things done quicker, it may make sense to sell via auction.  Check out our post which weighs up the pros + cons of selling or renting your house.

Remortgage and Become a Landlord Yourself

Remortgage and Become a Landlord Yourself

A slightly off-the-wall suggestion, but entirely feasible if you can afford to do so…

As a way to keep the property, the idea is to remortgage the property on a buy-to-let basis.  You could then let the property out and find another property to rent yourself.

Depending on your future circumstances, you can then either move back into the property down the line or sell it and buy another.

Be mindful of all the risks and hassles that come from letting out your property in addition to the extra financial exposure.

Work With A Sell House Fast Company Like Property Solvers

Work With A Sell House Fast Company Like Property Solvers

If you’re looking for a stress-free sale within less than a month with no estate agency or legal fees, we can certainly help.

Property Solvers cannot rent back properties but we do have a wide network of landlords and lettings agent contacts across the UK.

Please contact us 24/7 for a no-obligation chat.