What is a Section 125 offer notice?
It is the landlord's formal offer under section 125 of the Housing Act 1985. It states the price, how the discount has been calculated, the years of tenancy counted, a description of the property and the terms of the freehold transfer or, for a flat, the lease. For a flat it also gives estimates of the service charge and any improvement contributions for the first five years, which then limit what you can be charged for repairs and for improvements during the first five years of the lease, under Schedule 6 to the Housing Act 1985. Two five year periods are in play and they do not start on the same day. The estimates cover a period beginning on a date the notice states, which can be up to six months after the notice, while the limit itself runs from the grant of the lease. Checked 19 September 2026.
Once it arrives, three clocks start. You have twelve weeks to tell the landlord whether you intend to proceed, under section 125D of the Housing Act 1985, and that twelve weeks runs from the later of the notice itself and the end of any valuation determination. If you think the price is wrong, you can require the district valuer to determine it at no cost to you, and that request must be made within three months of the notice under section 128(2). And once you have accepted, the landlord can serve notices requiring you to complete, which if ignored end the application. Our review is built around those three dates.
| What the notice contains | Why it matters |
|---|---|
| The purchase price and the discount | The discount depends on your tenancy years and on two separate statutory ceilings, a percentage and a cash cap, whichever bites first. The cash cap is set area by area, from 16,000 to 38,000 pounds, by the Housing (Right to Buy) (Limits on Discount) (England) Order 2024, in force 21 November 2024 (checked 20 September 2026); the Order names particular districts separately, so do not assume the headline figure for your region applies to your landlord. All of it is worth checking |
| The property description | Sheds, gardens and parking are sometimes omitted or wrongly included; the transfer follows the notice |
| Terms of the transfer or lease | Covenants, rights of way and, for flats, the lease term and repairing obligations |
| Service charge and improvement estimates (flats) | For the first five years of the lease they cap what you can be charged for repairs, at the estimated figure plus an inflation allowance where the work was itemised, and nothing at all is payable for improvement works that were never estimated. Other service charges, and all charges on a freehold house, are not capped (Housing Act 1985 sections 125A and 125B and Schedule 6 paragraphs 16B and 16C, checked 20 September 2026) |
| Structural defects known to the landlord | The landlord must disclose them; lenders and valuers rely on this |
| Your rights and time limits | The response period and the district valuer window run from service of the notice |
What happens if I sell within five years?
You repay part of the discount. The amount is a percentage of the discount you received, recalculated as the same proportion of the property's value at the time of the sale rather than the original figure: the whole of it in the first year, then four fifths, three fifths, two fifths and one fifth in each following year. The measure is the price or premium you actually get on that later sale, and the part of it attributable to improvements you made yourself is disregarded, either by agreement with the landlord or on a determination by the district valuer, which you have to ask for and pay the reasonable costs of. Sections 155A and 155C of the Housing Act 1985, checked 20 September 2026. After five years there is nothing to repay. The obligation is a charge on the property and appears on the register, so a buyer's representative will see it and require it to be dealt with at completion.
Separately, for ten years after the purchase the former landlord has a right of first refusal under section 156A of the Housing Act 1985: if you want to sell, you must first offer the home back to the landlord or another social landlord in the area at market value. It is noted as a restriction on the register. Certain disposals are exempt from the repayment rule, but the conditions are narrow. The whole property has to go, not a share, and it has to go to your husband, wife or civil partner, or a former one, or to a member of your family who has lived with you throughout the twelve months ending with the transfer. A vesting under a will or on intestacy is exempt, and so are transfers under specified court orders, including on divorce. What an exempt transfer does not do is wipe the slate: the obligation runs with the property against the new owner for whatever is left of the five years, counted from your original purchase, so they repay if they sell inside it. Section 160 of the Housing Act 1985, checked 20 September 2026.
Is Stamp Duty payable on a Right to Buy purchase?
Stamp Duty Land Tax is charged on the discounted price you actually pay, not the market value, and the contingent obligation to repay discount is left out of the chargeable consideration, because Schedule 9 paragraph 1 of the Finance Act 2003 switches off the contingent consideration rule for a right to buy transaction (checked 19 September 2026). Many Right to Buy purchases fall within the nil rate band of £125,000 as a result, and first-time buyer relief may apply where the conditions are met, giving a nil rate to £300,000 and no relief at all above £500,000, which is a cliff edge rather than a taper. Many Right to Buy tenants are not first-time buyers, and buying with anyone who has owned a dwelling before removes the relief for both. The relief has to be claimed on a return, so a return is needed even where no tax is due.
There is no Right to Buy carve out from the rest of the stamp duty rules, and two of them catch people. The higher rates for additional dwellings apply on the discounted price if any one of the buyers will still own another dwelling once completion day has passed, so a son or daughter joining you who owns a flat they let out, or a husband or wife who does, can put the surcharge on the whole purchase. Married couples and civil partners who are living together are treated as one buyer for that test. It is worth asking the question before the names on the transfer are settled, because afterwards it is too late. Pulling the other way, a sitting tenant who has never owned a home can qualify for first time buyer relief, because renting is not owning.
Because the Right to Buy was abolished in Wales, Land Transaction Tax, the Welsh equivalent collected by the Welsh Revenue Authority, does not arise on a Right to Buy purchase. Our Stamp Duty calculator explains the bands.