Local Authority Property is property that was built by Local Councils, to provide residents of the area with low rental, good quality housing. To apply for housing from your Local Authority, you must register with their housing scheme. If you are deemed to be eligible you will be added to their waiting list until a suitable home becomes available.
Local Authority property can include flats or houses. Flats are usually described as either low rise (approximately four stories or less) or high rise (five stories plus).
In the 1980’s, the Conservative government introduced the Right To Buy Scheme. It allows tenants of Local Authority Property to buy their home for a significantly discounted rate. For a council house, a tenant can expect to pay between 32% and 60% of it’s market value. For a flat it is likely to be slightly higher at 44% to 60% of the market price.
It is possible to buy the property outright or using the Right to Mortgage Scheme. As with private sector property sales and mortgages, it is possible to buy or enter into a mortgage with another family member, as long as they are also usually resident in the property.
Following the right to buy scheme, many properties that used to be Local Authority are now available on the open market, and are known as Ex-Local Authority Properties.
When choosing a property, one of the most important factors, if not the most important factor, is location.
Logically, the more desirable the area, the more expensive the property located in that area. For example, according to the mouseprice.net property statistics, the average value of a property in Chelsea Square, the most expensive street in Kensington and Chelsea, is over £5,000,000.
However, it is possible to find less expensive property in expensive areas, by opting for an Ex-Local Authority property. Ex-Local Authority property typically sells for approximately 70% of the price of private sector property. For example, if a private maisonette with three bedrooms and two bathrooms sold for £250,000, a Local Authority property with the same characteristics (number of bedrooms and bathrooms) in the same area could be expected to sell for £175,000.
Local Authority Properties are becoming increasingly popular amongst buy to let investors for a number of reasons. As mentioned above it is often possible to purchase Ex-local Authority Property for substantially less than property on the open market, however, rental yields are often not dissimilar to property that has always been available privately. It is also often the case, particularly where low rise council buildings are concerned, that the quality of the building exceeds that of some private builds. This makes a property desirable for its residents, as the walls are thicker meaning less heat is able to escape, plus noise from adjoining buildings is reduced. It also has advantages for the landlord, as he or she will have less maintenance responsibilities.