Taking a first step onto the property ladder has been a significant challenge for Hopeful Homeowners for quite some time now.

Today, even though the property market has slowed, the lack of supply of properties coming onto the market is bolstering prices. At the same time, potential first-time buyers must contend with the cost-of-living crisis and rising rents. According to Rightmove, average rents for properties across Britain hit a record high in April, with the average rent in London hitting £2,500 per month. 

This is why, at Pepper Money, we are so committed to helping Hopeful Homeowners through our Affordable Home Ownership proposition that supports schemes like Shared Ownership, Help to Buy remortgages (purchases option only available in Wales) and, most recently, Right to Buy. 

Our launch into Right to Buy recognises that this scheme, where local authority tenants have the right to buy the property in which they live at a discount on the open market value, continues to offer an accessible route to home ownership. Furthermore it directly addresses two barriers highlighted in our Specialist Lending Study. Over half respondents 51% of potential first time buyers identified saving a deposit (36%) or having poor credit record (15%),  as the biggest barrier to owning a home. 

This makes Right to Buy an attractive option as it’s available to people who have rented a property from the public sector for three years or more. The maximum discount available on Right to Buy is £96,010 across England, except in London boroughs, where it is £127,940 and this increases each year in line with the consumer price index (CPI). The discount is based on how long someone has been a tenant with a public sector landlord, the type of property they’re buying and the value of the home. 

The discount on a Right to Buy property means customers do not always have to put down a deposit to buy the property and some lenders, including Pepper Money are able to lend up to 100% of the purchase price. Our exact criteria is that we lend up to 100% loan to purchase price (including fees) and 75% LTV up to £750,000 and we are currently on lending on Right to Buy houses. 

However, options for those customers who want to borrow 100% are limited if their circumstances are anything but straight forward, which is why it’s so important that lenders like Pepper Money support this sector, which we do with our usual criteria that can consider customers with adverse credit, those who need to account for more than one job as part of their affordability calculation, and the self-employed who want to use their latest year’s accounts. 

Brokers should be aware of minor potential stumbling blocks 

Placing a Right to Buy case should be as straightforward as any other application. Occasionally, however, there may be a couple of stumbling blocks that are unique to this sector. For example, one of the common challenges with Right to Buy is if the property is held in the name of parents on the local authority paperwork, but it’s the children who want to buy the property, so it’s worth talking to your customers at the outset. 

Another issue can sometimes be if the valuation comes back lower than expected if the condition of the property isn’t comparable to other properties on the market, often because the potential buyers are living in it already and haven’t presented for sale. Some lenders will also be cautious about Right to Buy homes on developments where fewer than half of the properties are already owned. 

However, these potential challenges don’t detract from the opportunity in Right to Buy to turn Hopeful Homeowners into First Time Buyers. It continues to present a chance for tenants living in local authority housing to invest in an asset and potentially improve their wealth over time. At Pepper Money we firmly believe that this shouldn’t just be reserved to those who are able to meet the standard criteria of high street lenders. It’s important that customers with all circumstances are able to access this opportunity, which is why it’s vital that specialist lenders continue to support the sector. With our latest launch, we are showing our support to the Right to Buy sector, with our clear criteria, consistent underwriting and excellent service. 

Ryan Brailsford Pepper Money


Ryan Brailsford
Director of Business
at Pepper Money