7.4 WHAT WOULD HAPPEN TO MY DISCOUNT?

Any discount you have built up would transfer with you and would continue to increase while you are a tenant of up to the maximum discount. In this is currently £16,000. The discount would depend on your number of years as a Council tenant and later as a tenant of THCH.

This is subject, however, to something called the cost floor. The cost floor is the minimum price that you could pay for your home, even if your discount would take the price below this amount.

The cost floor is the total of the amount spent by your landlord on buying, improving or building your home and includes repair and maintenance costs where these are above £5,500.

The cost floor is most relevant where a landlord has recently spent large amounts of money buying, building or improving the property or where large amounts of money have been spent on repairs and maintenance. With the Council, these costs are worked out (broadly) over a ten-year period before you buy your home.

However, would be able to take into account all costs incurred during the 15 years prior to your application to buy (starting at the point of transfer). THCH would be able to include in the cost floor the cost of the catch up repair works which would be carried out to tenants´ homes and which are referred to in this document (see Section 3.5) even if these costs have not actually been incurred at the time of your application to buy. However, would not be able to take into account costs previously incurred by the Council.

The difference is not likely to affect tenants in Tower Hamlets because the high value of homes in the Borough would normally mean that the price a tenant has to pay (even after a maximum discount of £16,000) would be significantly higher than the cost floor for their home.

Example

Mrs Brown's landlord has spent £15,000 repairing and improving her home within the last few years. This figure of £15,000 is the cost floor and Mrs Brown must pay at least this amount for her home.

Because of the number of years she has been a tenant, Mrs Brown is entitled to a discount of £16,000. Her house is valued at £80,000 and so she would have to pay £64,000 for it. As this is significantly more than the cost floor, the cost floor has no effect on her calculations.

Any discount you have built up would transfer with you and would continue to increase while you are a tenant of THCH up to the maximum discount. In this is currently £16,000. The discount would depend on your number of years as a Council tenant and later as a tenant of THCH.

This is subject, however, to something called the cost floor. The cost floor is the minimum price that you could pay for your home, even if your discount would take the price below this amount.

The cost floor is the total of the amount spent by your landlord on buying, improving or building your home and includes repair and maintenance costs where these are above £5,500.

The cost floor is most relevant where a landlord has recently spent large amounts of money buying, building or improving the property or where large amounts of money have been spent on repairs and maintenance. With the Council, these costs are worked out (broadly) over a ten-year period before you buy your home.

However, THCH would be able to take into account all costs incurred during the 15 years prior to your application to buy (starting at the point of transfer). THCH would be able to include in the cost floor the cost of the catch up repair works which would be carried out to tenants´ homes and which are referred to in this document (see Section 3.5) even if these costs have not actually been incurred at the time of your application to buy. However, THCH would not be able to take into account costs previously incurred by the Council.

The difference is not likely to affect tenants in Tower Hamlets because the high value of homes in the Borough would normally mean that the price a tenant has to pay (even after a maximum discount of £16,000) would be significantly higher than the cost floor for their home.

Example

Mrs Brown's landlord has spent £15,000 repairing and improving her home within the last few years. This figure of £15,000 is the cost floor and Mrs Brown must pay at least this amount for her home.

Because of the number of years she has been a tenant, Mrs Brown is entitled to a discount of £16,000. Her house is valued at £80,000 and so she would have to pay £64,000 for it. As this is significantly more than the cost floor, the cost floor has no effect on her calculations.