Tricky situation

mattrgee

Hi all,

I'm 26 and live at home where there is just me and my mum. The house we live in is a council house which we obviously pay rent for. We had the house valued last year by the council and we could buy the property for 90K, it's a 3 bedroom semi, big garden, double glazed, central heating etc... everything you would expect. Houses on the same street are selling for around 160K So it's quite a bargin.

I'm keen to move out and get my own place, but there is a temptation to buy the council house as it's such good value for money and there's a huge profit to be made when the time to sell the house comes. However, doing this will tie me down and limit my options for a house of my own. I don't want to be living at the home for the rest of my life!!!

I thought about buying the house, renting it to my mum but she would have to seek help from the goverment in order to pay the rent.

Does anyone have any bright ideas on how to take advantage of this situation? Or should I just walkaway and cocentrate on getting just the one house sorted for myself?

Thanks in advance!

Stewboy1978

What is your income?

What is your mums income?

Do you have any debt etc?

mattrgee

I currently pay the rent on the council house at £250 per month.

I also have around £600 'left over' each month which I stick in an ISA, but this could be increased to £700 if I was more careful.

I'm also due a pay rise in the next few months, which should give an extra £200 per month.

The only debt I have is a student at around 12K

My mum is 62 and due to retire sometime this year so probably isn't worth considering.

Stewboy1978

A 15 year mortgage for £95k at 5.5% is about £750 per month...This is just an example.

All really depends on how long you want to live at home. Would be a sound investment but you really don't know how things change, ie if you have kids etc in a few years.

Might be best to discuss with a mortgage advisor on what to do although I would defo look into it.

Good luck.

prudryden

I haven't given much thought to how you do it, but I can say that opportunities to make £70K profit on a £90K investment don't come very often.

peterg1965

Are you not obliged to stay in the house for a certain period of time if you buy under the 'right to buy' scheme? If so this limits your options further. I would say it is worth buying the house though.

silvercar

"right to buy" generally has a restriction on selling for 3 years; sometimes 5.

Are you on the rent book or just your Mum? If it is just your Mum she may have to buy the property in her name. In which case you will need to safeguard your investment. If you are buying in your name, I doubt whether you could charge your Mum rent and expect the benefit system to pay it. Firstly because you are related and secondly because the home was bought as hers.

There may also be restrictions on you letting your property, if bought under the right to buy scheme.

On the face of it, the discount sounds too good to turn down. (I did think of saying too good to be true, isn't there a maximum discount of £38,000?).

Worst case scenario, you buy it and your Mum lives there rent free, still a good return on your investment.

The downside is that once you sell it and release the profit, your Mum still neds somewhere affordable to live. This council home comes (presumably) with a right to live there forever with housing benefit payable when your Mum has no income. Buying the house reducs this security.