Right to buy cost floor

could anyone tell me about the cost floor in simple terms .i understand that any acquisition costs and modernisations incurred are taken into account therefore limiting the discount. i also understand (if i have read correctly) that after 15 years the cost floor would expire under preserved right to buy therefore allowing you to purchase the property at market value less any discount you have acquired:help:

See HMG's official website advice: https://righttobuy.gov.uk/apply/things-that-affect-discount-amount/. This says:

Cost floor rule

Your discount may be reduced by the ‘cost floor’ rule. This may apply if your home has recently been purchased or built by your landlord or they have spent money on repairing or maintaining it.

Your discount could be reduced to nil if the cost floor is more than the discount. If this happens, you would pay the full market value for your home.

The cost floor period for council properties is either:

a. the 10 year period prior to receipt of the RTB application form: or

b. 15 years if your home was built or acquired by your landlord after 2 April 2012

If you are buying under the Preserved Right to Buy, the cost floor period is 15 years regardless of when it was built or acquired.

NB: the law in Wales is a bit different.

Jeffrey

Thanks for your reply.

Does that mean when the 15 years have expired then so does the cost floor.

Ie if the cost floor was 30,000 then would this figure expire after 15 years meaning aquasition costs etc can't be used in calculations.

Jeffrey

Thanks for your reply.

Does that mean when the 15 years have expired then so does the cost floor.

 

Ie if the cost floor was 30,000 then would this figure expire after 15 years meaning aquasition costs etc can't be used in calculations.

Sort-of. After fifteen years have elapsed from disallowed costs, they are disregarded. What it means in practice is that:

a. for ordinary RTB, the discount % is cut-down to reflect C's expenditures during the ten years before the RTB application form or (if the property was built or acquired by C after 2 April 2012) during the fifteen years before the RTB application form; or

b. for Preserved RTB, during the fifteen years before the RTB application form.

The only possible loophole is that any discount so lost is carried forward for use in the unlikely event that the tenant later buys another property under RTB.

Jeffrey

Many thanks I think I have got it now