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    • Robbie100
    • By Robbie100 27th Jan 18, 12:46 AM
    • 10Posts
    • 1Thanks
    Robbie100
    Pooling resources with parents to buy a second property
    • #1
    • 27th Jan 18, 12:46 AM
    Pooling resources with parents to buy a second property 27th Jan 18 at 12:46 AM
    I am a 29-year-old only child who earns £40,000 a year. I have £60,000 pounds in savings. My mother is 66 years of age. She earns £28,000 a year and she intends to work until 75. In addition to her work income, she is in receipt of the basic state pension of roughly £7,000 and a private one of £7000.

    My mother is the sole owner of a leasehold flat last valued at £550,000 (probably around 600,000 now) and is the only person listed on the deeds. There is no mortgage on her flat. She has no debts of any kind.
    My mother would like to arrange her affairs in such a way that puts me in financially secure position. She would like to retire in a house with a garden and intends moving soon. Her current flat is in a very desirable part of London with a calendar rental value of around £2,500 minimum.

    We would like to buy a second property which we purchase through a combination some sort of remortgage/secured loan topped up with the £60,000 savings I currently have. If possible, we would purchase a second property outright in my name alone. At a suitable time, I would either inherit the original flat !!!8211; or we would become joint owners. If it's not possible to find a second property within our budget we may need a relatively modest mortgage/ further personal loan. Is my mother likely to have problems securing one these?

    Would a bank allow my mother to secure a loan on the flat she owns - to buy a house in my name that she would live in whilst using the rental income from her previous home to pay down that original debt? Would a prospective lender look favourably at this arrangement? Admittedly, it does seem rather odd.

    I have no idea how much my mother would be able to borrow and would like those in the know to provide a little clarity here. Whatever she could borrow I would add 60k to help purchase another property. Given the time this might take to organise I might be able to up my contribution to 70k or 80k.

    On top of that rental income, she is still working and in receipt of two modest pensions. In reality, I too would be pooling my income to assist where/if needed but given the rental income would the bank need that extra security? Would I need to formally involve myself in this arrangement? Given the large equity still left in her flat and a very secure rental income are there any big problems I might be overlooking?

    I'm not going to be living in the UK so would ideally like to avoid being part of this arrangement. I assume it would be an issue to get a mortgage if I worked abroad particularly if I'm self-employed?

    Any advice or suggestions regarding the above would be most welcome.
    Last edited by Robbie100; 27-01-2018 at 1:59 AM.
Page 2
    • Mojisola
    • By Mojisola 5th Feb 18, 9:32 AM
    • 28,829 Posts
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    Mojisola
    How do your propose that she makes the mortgage repayments if the flat is vacant and there is no rent coming in or even that she gets a tenant who stops paying the rent and it takes her a minimum of 6 months to evict them through the courts?

    If you are going into Buy to let you have to do research on Buy to let.
    Originally posted by Cakeguts
    And also take into account the emotional impact of having bad tenants trash a flat that was the family home for many years.

    If you're both planning on going into business as landlords, do it with homes that you have no attachment to.
    • Robbie100
    • By Robbie100 5th Feb 18, 3:18 PM
    • 10 Posts
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    Robbie100
    Here you go this is what people expect to get for £2,500 per month How does your mum's flat compare to that?
    Originally posted by Cakeguts
    It doesn't compare at all. The flat you linked to is a gorgeous new development. Space in this area is at an absoloute premium. The area has a 1000 years of history and you do not have a huge amount of scope to build. I think people are insane to be parting with half a million pounds plus for an ex-council flat 650 plus even. They are doing so. They are renting at these prices.

    My mother has 4 bedrooms plus a living room and a large private balcony. It is unusual to have a 4 bedroom flat here. A foor bedroom ex council flat might cost you 550/650/ in years to come 800. A 4 bedroom new apartment like the one you linked to would cost you 1.5 plus easily.

    As a new user I cannot post links. I have sevreal links of shabby council properties 850pcm for a room. 2200 for a 3bed 650pcm for a room. There are many of them in the Shadwell, Wapping, and Algate area.
    • hazyjo
    • By hazyjo 5th Feb 18, 3:34 PM
    • 10,085 Posts
    • 12,928 Thanks
    hazyjo
    You can post links without the "www."


    I'm totally with Mojisola and shout this a lot - NEVER RENT OUT A PROPERTY THAT HAS SENTIMENTAL VALUE! Soul destroying.


    Jx
    2018 wins: Single Malt Whisky; theatre tickets
    • Detroit
    • By Detroit 5th Feb 18, 5:06 PM
    • 618 Posts
    • 1,931 Thanks
    Detroit
    They provided four bedroom council homes to families with one child?


    Put your hands up.
    • Robbie100
    • By Robbie100 6th Feb 18, 9:43 AM
    • 10 Posts
    • 1 Thanks
    Robbie100
    They provided four bedroom council homes to families with one child?
    Originally posted by Detroit
    'They' never provided anything the property was bought. Before it was bought it was a large family home housing 6 children and 2 adults. You have a very strange understanding of 'Right to Buy.
    • Detroit
    • By Detroit 6th Feb 18, 6:11 PM
    • 618 Posts
    • 1,931 Thanks
    Detroit
    'They' never provided anything the property was bought. Before it was bought it was a large family home housing 6 children and 2 adults. You have a very strange understanding of 'Right to Buy.
    Originally posted by Robbie100
    By they I mean the council, the original providers of the accommodation to the person who bought it through right to buy.

    Your posts indicated that this was your mother, and when two people raised issues about the scheme and your taking advantage to secure your inheritance, you did not point out that your mother had not bought through the scheme, but instead hotly defended it, as beneficiaries of it typically do.

    If your mother bought through the scheme she must have first been allocated it as a tenant, which seemed odd for a single child household.

    In fact, your whole post is odd, and I think not genuine. I think you slipped up when you couldn't risist adding in the four bedrooms part.

    Either that, or you have a very strange understanding of housing allocation policy.


    Put your hands up.
    • Robbie100
    • By Robbie100 7th Feb 18, 1:31 AM
    • 10 Posts
    • 1 Thanks
    Robbie100
    By they I mean the council, the original providers of the accommodation to the person who bought it through right to buy.
    Originally posted by Detroit


    Their assumptions were incorrect, and their tone unwarranted. I asked a simple set of questions rather than answer people started filling in the gaps themselves. You are still doing it and it makes you look silly when I correct you. How long does a post have to be to get people to answer a very simple set of questions about getting a mortgage/ buying a second home in advance years in a tax efficent way? That's all I asked. You seem to want to know who paid for what when and how - and where they might live later! Why not answer the question or ignore the post?

    Your posts indicated that this was your mother, and when two people raised issues about the scheme and your taking advantage to secure your inheritance, you did not point out that your mother had not bought through the scheme, but instead hotly defended it, as beneficiaries of it typically do.
    Originally posted by Detroit


    Why crossexamine me? Take advantage of what? The name of the scheme is right to buy! It's been bought. My questioning foucsed on buying a second property off the back of the first. Why should people who buy council properties not be allowed to do this just as other home owners do?

    I said I was an only child in the first line of my first post. My inheritance is secure. I don't need to secure it. The reason I pointed that out was to make it easyier to understand the end process. The plan involves two people a mother of son. I am trusted not to turf my mother out onto the street or dump her in a home. I'm amazed I needed stress that here.

    I defended purchasing a property that local authorities could not afford to maintain. The 'Housing Crisis' was not created by the right to buy. It was created because Councils were not allowed to replace the stock they sold and reinvest the money right to buy generated. Housing associations balance the 'right to acquire' (lower discount) with expanding their stock. They make millions of pounds profit.

    If people are interested: The original discount is irrelevant 20+ years down the road when you consider major works charges, leaseholder charges and now leasehold extension costs. All of that money goes where? To the Council who otherwise would have got what? Nothing beyond a peppercorn low soical rent. Social housing would collapse overnight without leaseholders.
    The discount has been paid back with interest and then some, particularly if you bought a flat.

    If your mother bought through the scheme she must have first been allocated it as a tenant, which seemed odd for a single child household.In fact, your whole post is odd, and I think not genuine. I think you slipped up when you couldn't resist adding in the four bedrooms part. Either that or you have a very strange understanding of housing allocation policy.
    Originally posted by Detroit


    I said this property had sentimental value. It has sentimental value because it is the property my mother was raised in along with her brothers and sisters. Is any of that relevant to the questions I asked? No – but I have to explain minutia like this to satisfy people like you. Why are you interested in this when it has nothing to do with the viability of the proposal?

    My grandparents were the original tenants – too old to secure a mortgage – too old to take up the right to buy option. My mother who lived in the property took that on rather than move to another flat when she came of age. So, no the property was not given to a 1 parent household. It was given to an 8-person household and had it not been sold the life tenancy would have past on exactly as it has done. Ironically with no large sums being paid in tax or fees. Don't assume just ask next time.
    • Cyclemonkey1
    • By Cyclemonkey1 7th Feb 18, 10:50 AM
    • 26 Posts
    • 33 Thanks
    Cyclemonkey1
    So what happened to your mum's five siblings - did they not want to partake in a concessionary purchase of a flat in central London?
    • Robbie100
    • By Robbie100 8th Feb 18, 11:03 PM
    • 10 Posts
    • 1 Thanks
    Robbie100
    So what happened to your mum's five siblings - did they not want to partake in a concessionary purchase of a flat in central London?
    Originally posted by Cyclemonkey1
    Concessionary? A 50% discount on something not worth very much at the time which is then recouped in the form of leaseholder charges, major works contributions and lease extension? Without the latter the property is worthless. Where's the discount on that arrangement? Buying a house would have been much cheaper and more secure.

    Some opted for secure life tenancies one bought a house cheaper than my mother's actually. In fact, many houses were as cheap as the discounted ones being sold. Particularly in central London. The nice shiny buildings haven't been here long. I'm not sure you know much about the scheme but the discount wasn't the driving force behind the policy the concept of 'home ownership was'.
    • 00ec25
    • By 00ec25 9th Feb 18, 7:56 AM
    • 5,965 Posts
    • 5,447 Thanks
    00ec25
    the concept of 'home ownership was'.
    Originally posted by Robbie100
    your defence is non existent. Just admit "you" purchased THAT property because it DID have a discount.

    if home ownership was the objective then, by your own admission there were cheaper/better properties to buy, but they did not have the instant profit that you got .

    as for recouping discount in the form of charges, you purchased a flat. All flats have such charges, so you are neither better nor worse off in owning that one, but not all flats come with 50% discounts so overall you are still massively ahead.
    • Robbie100
    • By Robbie100 15th Feb 18, 10:08 PM
    • 10 Posts
    • 1 Thanks
    Robbie100
    your defence is non existent. Just admit "you" purchased THAT property because it DID have a discount.
    Originally posted by 00ec25
    There is nothing to ‘admit’ I’m not ashamed and if the discount was the deciding factor I’d say so. It wasn’t – and wasn’t for most people. Please go and read up on the history of right to buy. It wasn’t even a Conservative idea or policy. It was a Labour Party policy which Thatcher stole. Buying Council homes isn’t new and existed long before discounts of this size were introduced.
    Do your research. Of course, the discounts were icing on the cake but that’s all it was.

    if home ownership was the objective then, by your own admission there were cheaper/better properties to buy, but they did not have the instant profit that you got.
    Originally posted by 00ec25
    Make sure you have a full grasp of the issue before you say things like that. You’ve never been able to get a discount and immediately sell your property. If you do that you forfeit the discount. There is no ‘instant profit in that sense. The discount was an election gimmick and one that kept the Conservatives in power for 18 years.

    Home ownership was the objective and the main driving force. The benefit was buying the home you were already in as a family rather than moving with all of the hassle and tax implications involved in that. Take all those struggling to buy in the South East. Why struggle when you can move north or even move to Eastern Europe and live like a king?

    Would anybody here encourage their children to rent for life? If you’re paying hundreds of pounds in rent a month or the equivalent, then whether the value of the property was 50k or 25k you may as well buy it. That is why the policy was so successful. It makes absolutely no sense to rent. Many people are paying close to 1500 a month to rent a flat in London. That is far higher than many mortgage payments. With right to buy you didn’t need a deposit which was another reason it was so popular. Home ownership without a despot as long as you were working.

    as for recouping discount in the form of charges, you purchased a flat. All flats have such charges, so you are neither better nor worse off in owning that one, but not all flats come with 50% discounts so overall you are still massively ahead.
    Originally posted by 00ec25
    Do some research in to the varying levels of leaseholder charges. Creating a new structure ‘leaseholders’ gives Councils a perpetual large flow of cash which they otherwise would not have. If you were a tennent you'd be paying a pepercorn social rent. Furthemore, you're likley to be in reciept of Countil Tax benifit and Housing benifit so it would be the taxpayer paying to keep you perpetually.

    Leaseholder charges far outweigh the discount. Most flats of this category came about though the right to buy they didn’t exist in large numbers before. As for being massively ahead yes – that’s true. But that’s just a savvy investment choice just like somebody who buys a house in an up and coming area.
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