InformationS.155-156 Housing Act 1985- Discount and statutory charge
Frequently asked questions on discount and the statutory charge (sections 155,155A, 155C & 156 of the Housing Act 1985)
1. What is a statutory charge in the context of the Right to Buy (‘RTB’)?
A statutory charge is a legal charge placed on your property by the Council to secure repayment of any discount you received when buying your home under RTB. This charge will automatically be registered by the Land Registry against your title to the property.
2. When do I have to repay my RTB discount?
If you sell your property within five years of buying it under RTB, you may have to repay some or all of the discount to the Council.
3. Are there any exceptions to repaying the discount?
Yes, if the sale is considered an “exempted transaction”, you may not have to repay the discount (see separate guidance: ‘Exempted Transactions under the Housing Act 1985 (Section 160)’).
4. How much discount do I have to repay if I sell my home?
The amount depends on how long you’ve owned the property:
- Sell in the first year: repay 100% of the discount
- Second year: repay 80% of the discount
- Third year: repay 60% of the discount
- Fourth year: repay 40% of the discount
- Fifth year: repay 20% of the discount
The repayment calculation is based on the value of your property at the time of sale, not the original purchase price.
As an example:
You bought your home worth £100,000 and got a 40% discount (£40,000).
You then sold your home after 18 months for £120,000.
40% of £120,000 is £48,000. As you’re in the second year, you would repay 80% of £48,000 (£38,400).
5. What happens if I agree to sell before I’ve bought the property or during the discount period?
If you enter into an agreement to sell your property before you buy it or during the five-year discount period, you must repay the discount from the date of the agreement.
6. Do improvements to my property affect the repayment amount?
Any improvements you make after buying your home are ignored when calculating the repayment amount.
7. How is the statutory charge ranked against other loans?
Normally, the Council’s charge is first. If you have a mortgage from an “approved lending institution” to buy your home, the mortgage takes priority and the Council’s charge is second. Any further borrowing ranks after the Council’s charge unless the Council agrees otherwise.
8. What is an “approved lending institution”?
Approved lenders include the Homes and Communities Agency and authorised deposit takers, authorised insurers and authorised mortgage lenders. It does not include loans from friends or family which would rank after the Council’s charge.
9. Can I borrow more money for home improvements?
The Council’s charge may be postponed for approved purposes. In terms of improvements these must be works of an enduring nature. In other words, they will not include white goods, carpets, or furniture. You must provide the Council with evidence in the form of written estimates/quotes and certify the borrowing is for improvements. You will also need to pay the Council, in advance, a non-refundable fee for considering such an application.
10. What about borrowing to cover buying costs (like solicitor’s fees or stamp duty)?
Borrowing for these costs will rank after the Council’s statutory charge.
11. How do I remove the restriction from my property’s title?
The Council will remove the restriction at a cost of £150 provided you have repaid any discount owed and/or the five-year period has passed. Your request should be in writing by email to Legal@eastdevon.gov.uk.
12. Is this guidance legally binding?
No. This guidance is not a definitive statement of the law. You should rely on your own legal advice regarding the statutory provisions.
Legal Services
East Devon District Council
February 2026