Mortgage cheaper than council rents?

[poppet2 13]

I've heard people on this forum say that when Right to Buy was first introduced, they discovered the mortgage payments were cheaper than their council rent! How could that really be so, especially when you factor in insurance and interest? 

[ez8004 10]

Weren't the properties not sold at market value but at significantly less?  That is probably how.

[Resident 1,193]

2 minutes ago, ez8004 said:

Weren't the properties not sold at market value but at significantly less?  That is probably how.

Quote

You get a 35% discount if you've been a tenant for between three and five years. After five years, the discount goes up by 1% for every extra year you've been a tenant, up to a maximum of 70% – or £77,900 across England and £103,900 in London boroughs (whichever is lower)

Source: MoneySavingExpert 

[Jeffrey Shaw 90]

On 12/17/2018 at 3:10 PM, poppet2 said:

I've heard people on this forum say that when Right to Buy was first introduced, they discovered the mortgage payments were cheaper than their council rent! How could that really be so, especially when you factor in insurance and interest? 

Why not, though? A tenant paying rent always spends more on it than if he/she had purchased the property and were paying mortgage interest.

That's precisely why BTL landlords exist. They often fund the purchase by a mortgage advance on the basis that the incoming rent will leave a surplus over outgoings- which include mortgage payments. This is true for both ex-public sector properties sold at discount and for all private sector properties.

Edited December 30, 2018 by Jeffrey Shaw