Buy our own house or stay renting with council?

achtunglady

Hi. We ( me hubby son and daughter ) live in a two bed council flat, we pay 88.13 per week in rent which is the full rent as we are not entitled to any HB as hubby earns "too much". Son is 9 in December, daughter just turned two.
I am currently at home looking after DD but am looking for work.

The council have offered us £34k to put towards our own place in exchange for giving up our tenancy and place on the housing register. I asked about my son approaching the age where he shouldnt be sharing a bedroom with his younger sister ( looking to get a 3 bed flat/house with council instead) and the housing man said to me " madam, please do not quote the law to me regarding this, there are not enough properties", so in effect go ahead and break the law as we don't give a stuff!!

After thinking about the offer of £34k to vacate, i've estimated that we have paid about £32k in rent here over 9 years. All we have to show is a clear rent balance (which it is) and some savings of between £6-9k. My mum said she will pay all our fees as she would dearly love us to have our own property. We have zero savings but are due some bank charges which i intend sticking in a bank account and also my wages from when i start to work.

We have been looking at 3 bed houses in the range of £85k-£100k as we don't want to stretch ourselves if the mortgage rates go up.

If you were in our situation,what would you do? £34k is quite a nice deposit, hubby earns about £24k a year.

A_Nice_Englishman

Are there 3 bed properties (or indeed any properties) for £85K - £100K in London?

cattie

Have a look at this post here to get more of an insight into the pro's of being a secure council/housing association tenant as opposed to having a mortgage. http://forums.moneysavingexpert.com/showthread.html?t=269170

Although £34,000 is a decent deposit, your husband doesn't have a big salary & you have no real savings. Believe you me, you need a decent amount in the bank when you are buying a property for the repairs & maintenance that constantly need doing. Also it's estimated that you should try to have enough money to see you through the next 6 months incase of unemployment.

When you pay your rent to the council it includes all repairs & maintenance to the property & you have no buildings insurance to pay. You need to have this when you have a mortgage, plus depending on the band of the house, council tax would be much more expensive.

Also you do have to bear in mind that interest rates are quite low at the moment & will be rising. I've had a mortgage long enough to remember the days of 13 & 15% interest rates & years when there were 3 or 4 rate rises over just a few short months.

I'm not trying to put you off, but just want you to be certain you make the right choice & don't end up losing the roof over your head.

Just out of interest what area are you thinking of going to where you can get a 3 bed property for between £85-£100k ?

juliedawn001

Hi have you got any mortgage promises or quotes from any of the banks or building societies or a local mortgage broker? If not I would suggest that this is your first step. Then at least you would know what you can borrow.Als look at your local area prices to see if what you want is available at your price limit. Personnally I would go for it as you would be looking at a 33% deposit with a £100,000 purchase. a really firm position as a first time buyer This also gives you a great bargaining advantage . You are wise to consider the interest rate and not to stretch yourselves but also remember that rent only benefits the landlord whereas a mortgage (paid off correctly) benefits you as you accrue equity. Best wishes with whatever you decide but I would jump at it kind regards Julie.

A_Nice_Englishman

Not picking on juliedawn001 personally, but it's also true to say that just as rent only benefits the landlord mortgage interest only benefits the bank.

Living in a property with a subsidised rent, as the OP does, means more spare cash to save / invest and this might prove more profitable than putting it into property. This is especially true if, as many believe, property is overvalued at the moment.

Having said that, I am not brave enough to sell my house and rent while waiting for prices to fall!

achtunglady

We know we cannot afford anywhere in London, we are looking in the Northampton area and hubby will be retraining whilst working, so bumping up his earnings by a further 6k a year, don't forget, that I am going back to work soon as well so will have my income as well. Have been provisionally accepted to work in a bank.

BobProperty

achtunglady wrote:

..... I asked about my son approaching the age where he shouldnt be sharing a bedroom with his younger sister ( looking to get a 3 bed flat/house with council instead) and the housing man said to me " madam, please do not quote the law to me regarding this, there are not enough properties", so in effect go ahead and break the law as we don't give a stuff!!.....

The usual age is 10. I think the local authority have the discretion to declare the place overcrowded but are hardly going to bother if they'd have to go round lots of their own property saying they are all overcrowded but there isn't anywhere for people to move to. I also don't know the detailed interpretation of the law but, if one child slept in the lounge, then is there no "mixed" bedrooms and no overcrowding because you have 1 couple, 1 child and 1 child that counts as an adult (3.5 people but 3 rooms, therefore could sleep up to 5)?

clutton_2

this decision is a numbers game, - please please calculate all your costs if you buy a house, spend some time reading all the relevant posts on here re house buying, and you might want to look in https://www.singingpig.co.uk which is an excelllent property discussion forum.

Why do the council want you out ? that is the question ? If you wait, they may offer you more - why have they said they want your house ?

have you researched house prices on https://www.rightmove.co.uk for houses in your chosen area ?

dont forget to look at SOLD PRICES as well as those prices of houses for sale now.

achtunglady

The council don't want us "out" as such, they are offering us £34k to give up our tenancy and as a deposit for our own house so they can give our flat to others in need, being as there is such a shortage of "social" housing. It is totally our decision, but we were just wondering what would be our best option. If we wait too long
a) they may withdraw the grant to vacate scheme
b) house prices may increase so much that we could not afford anything

chugalug

I bought my council house back in 1990 and lived to regret the decision. Although things were financially stable at the time several things happened to alter my position dramatically. Interest rates went up to 16%, my marriage broke down and I had to give up work to look after the children. I was lucky in a sense as income support paid the interest on the mortgage in those days. I did eventually sell my house and was rehoused by the council - very ironic!

Your position would be different should this happen to you once you had a mortgage. You wouldn't get the interest paid for at least 9 months and if you did find yourself in trouble you are unlikely to be rehoused. I was lucky as the 1996 housing act was only just coming into force when I was rehoused and house prices hadn't rocketed. So there was more property available and I wasn't found 'intentionally homeless'.

I'm not trying to be all doom and gloom, just saying that no-one knows whats round the corner and you need to consider every scenario before you give up the security of a tenancy.

You could always look for an exchange to a bigger property if you can't get rehoused. HTH