Buying mothers council property

MattLG · 21 March 2005 at 2:30PM

An idea I'm toying with at the moment is buying my mother's council house. She's rented all her life so is due a huge reduction if she chose to buy her house. She's now retired and pays no rent for it. I could easily afford to buy the property and pay for the mortgage with my left over income if I could buy it for the price she would get it for. Is it possible to do this? I've heard third hand of people doing it but I'd like to know some of the legal aspects. Would it have to be in her name? Would the actual mortgage have to be in her name with me as a guarantor (however you spell that).

Now that the kids have left the nest she has a couple of spare double bedrooms just begging to be rented out once the house is bought. Are there likely to be any terms and conditions preventing that in the sale of the house?

Cheers for any advice you can give.

MattLG

lisyloo · 21 March 2005 at 2:34PM

I'm not an expert on these schemes but the council will probably only let her have the discount so she will have to buy it.
If it's in her name the mortgage will also have to be in her name.

I would however want it in my name ASAP.
If it's in her name it can be used to pay for long term care, whereas if it's in your name it's can't be.

Perhaps she has to buy it and then you buy it off her.

A bit complicated but you don't want to lose the whole thing in care fees.

MattLG · 21 March 2005 at 2:50PM

She's only recently retired and still very healthy so there shouldn't be any problems that way. I remember there being some clause that she'd have to own the house for at least 3 years. I guess we'd have an agreement to sign the house over after three years.

MattLG

cattie · 21 March 2005 at 3:18PM

With lots of councils now under the right to buy scheme, if you wish to sell within 10 years of the purchase, you must give the council first refusal to buy the property back.

They changed the rules & regs on right to buy last year & the discounts are not as generous as they once were either. The days of 75% discount are behind us, as a friend of mine found out when hoping to buy his place last year.

Spendless · 21 March 2005 at 3:34PM

Does this depend on your Local Authority though?

My gran bought her flat last year with a 70% discount. She had initially enquired about it in June 2002, it took till March 2004 to go through (long story!!!!!!).

So i don't know if the rules which apply to her was due to what they were in June 2002 or March 2004.

If she sells her flat within the first 3 years she pays the council the discount back reducing by a third each time. ie if she sells up to year 1 all discount back between years 1 and 2 two thirds back, between years 2 and 3 one third back and nothing after year 3.

Since she had just had her 80th birthday when she bought we queried what would happen if she died before 3 years was up, the solicitor advised that owing money back only comes into play if property is sold. The property could either be left empty or rented out until 3 years were up and then no money would be owed back.

Don't know if this is of any use to you.

andrewbrittain · 21 March 2005 at 5:48PM

I went some way towards doing exactly this sort of thing a few years ago. My grandmother lived in a council property for 50 years so was entitled to the full discount. We came to an arrangement where I would stump up the money - but 'give' it to her so she could buy the place in her name - and keep on living there. However, she would just continue paying her rent each month - but to me instead of to the council - and when she died the property would be 'officially' mine. The risk was that if she needed to go into a home, she'd have to sell the house to pay for it - so in actual fact it'd be ME paying for it as it'd be my home. We thought it was worth the risk, as she was fit and healthy and not likely to go into care - and it was a hell of a cheap house. Eventually I decided against the whole thing and abandoned it - and a year later she was struck down with Parkinson's Disease and taken into care. If we had gone ahead with it, I'd have lost my money and my house, so I'd be very dubious about any sort of right-to-buy plan unless you're actually buying your own council house yourself.

Poppy9 · 21 March 2005 at 5:58PM

I too would exercise caution. 15 years ago my in laws wanted to buy their house. The cost was just 20k (house now worth 140k). So my oh and his sibling stumped up £5k each with the agreement that a 1/4 of the house each would be signed over to each of them after 3 years. The inlaws would live there rent free - well you have to give your folks something back. Anyway 3 years up and MIL refused to sign over 1/2 the house as she said they might sell it - not at all likely. She has continued with this stance still. My oh even asked her to sign his share directly to her 1st grandchild when she was born. Nope. Now FIL is bedridden and MIL not in best of health. If something happens to her he will have to go into care.

We made the mistake of relying on trust. We knew we were making an investment for the future but we were not asking and have never had any rent from them. Fat lot of good it did us.

MattLG · 21 March 2005 at 6:58PM

Poppy9 wrote:

We made the mistake of relying on trust.

I never make that mistake, especially with family :-)

MattLG

Jockthearab · 21 March 2005 at 7:34PM

Been there & done it as they say! I did this back in 1991, as the mortgage was going to workout to be slightly less than what I was paying towards my 'board'! Plus it meant that my parents could live 'rent free', so I seen it as a way of helping them out.

The mortgage was taken out in 3 names-Father,mother & mine on an Interest Only basis with me paying towards the endowment (in my name). The DSS contributed approx £6 per week towards the interest for my parents share, with me paying the majority. My mother died in 1999. If I'd known then what I'd known now, I would have changed the deeds (for approx £150) to put it in my name only & pay the 'extra' £6 per week at this point. Unfortunately,my fathers mental health has gone downhill over the last two years, & in December 2004 he went into residential care. It was at this point I found out that he was entitled to half-doh!

I shouldn't really complain as I have profited out of the deal BUT it does irk me that majority of "my fathers" half, which I'd always thought of as going to be mine, will now pay for his Residential care costs. IF I hadn't bought the prloperty, I wouldn't have struggled financially as I've done over some periods over the last 13 years, the council would've fully subsidised their rent & the DSS would have picked up the tab for his care costs.

It is possible, but I wish I'd been made aware of this when I applied for the mortgage.

Good luck!

Buying mothers council property

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