Buying Grandparents Council House

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Hi,

I'm not sure if this is possible or how it can be done, so i'd appreciate your advice on this matter.

I'm interested in buying my Grandparents council house. They have lived there for 50 years plus, and therefore would be able to purchase the property alot cheaper than its current market value.

I'm really not sure how to go about this, as i do not have the cash available in the bank, and i would have to finance it via a mortgage or loan. I am already a homeowner and have an existing mortgage.

All your advice on this matter would be greatly appreciated.

Thanks

Ian

Bossyboots

You cannot buy their house. Only the tenants can purchase it and only the tenants are entitled to the discount.

They could buy it funded by you and you could have a document drawn up protecting your interests so that you can recover your investment at a later date but that is it.

ceebeeby

Have done this myself - can't remember the exact discount but it was based on 30+ years residency, so was something whopping! You can then actually become very cheeky about it - you have to wait 3 years before your Grandparents can officially 'sell' you the house (for £1 + costs etc.) or risk paying back the discounts, however once it becomes your property you can then "charge" your grandparents for living in the house (NO I'M NOT THAT MEAN!!!), however, if they are on a low income their 'rent' is payed by the Housing benefits - and it can be done direct to their landlords (yours) bank account. Then if you're a very lovely grandchild you do the following - you deduct the tax you will have to pay on the income you are earning from the rent, and each week you hand over the remaining balance in cash to your grnadparents (thus boosting their misely income support), additionally, you now own a property that is vastly increased in value, so all those home decor jobs that they've wanted done for years you don't mind paying for or doing yourself (and remember as a landlord these are tax deductable - which means more for the Gramps) - you quickly become the favoured grandchild and you are always guaranteed the first choice in chocolate biscuit out of the new tin! It doesn't cost you anymore than your original investment. Couple of other wee things, first, take out a fab buildings ins. policy (my gramps' worked out to be one run by age concern, then if things do start to waver, you've always got that to fall back on - we had a problem with double glazing being smashed), and second, although you can both use the same solicitor which keeps the price down, make sure that the gramps know exactly what they're agreeing too, and make sure the solicitors know that you want them to be clear to explain everything to gramps as well. And finally, bit morbid when thinking of much beloveds, but they'll need to do a will that makes it clear that the house comes to you and only you on demise (other wise there could be in-family fighting you could do without at that time) if it's beofre the 3 year sale point, and on a vice-versa, that they have tenenacy for the whole of life.

Oh, and re: the money - if it's not too much money why not try a "home improvement bank loan", afterall you do intend to improve the home ..... hmmmm ..... bit risky, but you could try it, or event club together with other family members and make it a whole family investment??

Good luck and hopefully life could get much more comfy for the grandparents! And you eventually, but hopefully not for a very long time!

Loretta

ceebeeby wrote:

Have done this myself - can't remember the exact discount but it was based on 30+ years residency, so was something whopping! You can then actually become very cheeky about it - you have to wait 3 years before your Grandparents can officially 'sell' you the house (for £1 + costs etc.) or risk paying back the discounts, however once it becomes your property you can then "charge" your grandparents for living in the house (NO I'M NOT THAT MEAN!!!), however, if they are on a low income their 'rent' is payed by the Housing benefits - and it can be done direct to their landlords (yours) bank account. Then if you're a very lovely grandchild you do the following - you deduct the tax you will have to pay on the income you are earning from the rent, and each week you hand over the remaining balance in cash to your grnadparents (thus boosting their misely income support), additionally, you now own a property that is vastly increased in value, so all those home decor jobs that they've wanted done for years you don't mind paying for or doing yourself (and remember as a landlord these are tax deductable - which means more for the Gramps) - you quickly become the favoured grandchild and you are always guaranteed the first choice in chocolate biscuit out of the new tin! It doesn't cost you anymore than your original investment. Couple of other wee things, first, take out a fab buildings ins. policy (my gramps' worked out to be one run by age concern, then if things do start to waver, you've always got that to fall back on - we had a problem with double glazing being smashed), and second, although you can both use the same solicitor which keeps the price down, make sure that the gramps know exactly what they're agreeing too, and make sure the solicitors know that you want them to be clear to explain everything to gramps as well. And finally, bit morbid when thinking of much beloveds, but they'll need to do a will that makes it clear that the house comes to you and only you on demise (other wise there could be in-family fighting you could do without at that time) if it's beofre the 3 year sale point, and on a vice-versa, that they have tenenacy for the whole of life.

Oh, and re: the money - if it's not too much money why not try a "home improvement bank loan", afterall you do intend to improve the home ..... hmmmm ..... bit risky, but you could try it, or event club together with other family members and make it a whole family investment??

Good luck and hopefully life could get much more comfy for the grandparents! And you eventually, but hopefully not for a very long time!

If the granparents claimhousing benefit one of the questions on the form will be is you landlord a relative

Bossyboots

ceebeeby has overlooked a number of issues, not least the issue of capital gains tax in the future. The property is also not clear of liability for any care home requirements and the local authority will allege the property was handled in this manner to avoid such costs and claim the property accordingly.

The difference between the £1 and the true market value has now become a gift, which will be subject to inheritance tax in due course, depending on the longevity of the grandparents.

ceebeeby

Hiya,

Didn't go into finite details of it all, but of course there will be capital gains if the unfortunate happened sooner than expected (but you've still made a huge profit), also the bit about local authority (can't tell you exactly what as am no legal beagle) but this was effectively dealt with in the purchasing contract (which was done under Scottish Law) not sure if that would make it different than under English law. Also the 3 year period was covered by a separate contract that was never published but was available 'just in case' that said I'd loaned the money to grandparents and therefore had first claim plus extortionate interest rate. But as mentioned before am absolutely no legally minded person, but it seems to have worked fab for us, and gramps' are the ones that are the happiest of all, and are benfitting the most financially at the mo.

Robert_Sterling_3

I am in favour of the grandparents being assisted in order that they can buy their house.
I am also interested in all interested parties having knowledge of what is proposed and being invited to join in if they wish to do so.
I am surprised that the grandparents children are not mentioned.

margaretclare

Robert_Sterling wrote:

I am in favour of the grandparents being assisted in order that they can buy their house.
I am also interested in all interested parties having knowledge of what is proposed and being invited to join in if they wish to do so.
I am surprised that the grandparents' children are not mentioned.

Robert, I agree with what you say.

And also, what do the grandparents think about all this? Is there some reason why they haven't availed themselves of the 'right to buy' since this became possible 20 or so years ago? Could it be that they're quite happy continuing to be tenants? And if the OP already has a house, why does he want another one? Is it from purely altruistic motives, helping them etc - or is it something else???

Aunty Margaret

WiseInvestor_2

ceebeeby wrote:

once it becomes your property you can then "charge" your grandparents for living in the house .... if they are on a low income their 'rent' is payed by the Housing benefits - and it can be done direct to their landlords (yours) bank account

Is this for real? Surely there must be an element of fraud in this?

I don't doubt for one moment that benefits are low and I salute you for finding a way to help out, but these are my taxes you're using!

black-saturn

My uncles bought my nans council house for £3,000 about 5 years ago. She had been in it for 61 years so the price was severely dropped. Now she rents it off her son and claims housing benefit and yes, it is legal. There is a question on the HB form about being related to your landlord but it only affects your benefit if you are living in the same property.

Spendless

WiseInvestor wrote:

Is this for real? Surely there must be an element of fraud in this?

I don't doubt for one moment that benefits are low and I salute you for finding a way to help out, but these are my taxes you're using!

I'm aware of someone who when she was a single mum was renting and claiming HB that was paid to her Dad who owned the house (a 2nd property he'd bought). They always told me it was above board (and maybe I'm a mug but I beleived them). The thing I'm not sure about with ceebeeby is the handing over of the surplus amount to implement their IS. I think this bit might be considered as benefit fraud as it is giving the grandparents an additional income.