Right to Buy

Brenster

Hi

Me and my wife are considering buying my mother in laws house under the right to buy scheme, which will allow a significant discount based on the fact she has lived their for a long time.

However, if the property is purchased it has to be purchased in the tenants name (my mother in law).

We should be able to borrow the money against our existing house so that wouldnt be an issue, however to enable the purchase we would need to give the money to our mother in law so she could buy (Although we would own the property just not in name). I have had discussions with the housing association and they are not worried how the buyer gets the money, but reiterated the buyer has to be the tenant. We would get some kind of legal agreement in place to document that the property would be handed back to us (after 5 years), and their is no issue with regards trust.

Once the purchase is made, the rent that is currently paid would cover the mortgage payments and all would carry on as normal, apart from the fact we would own the property and not the council.

My main question is, could we get a mortgage based on the fact we wouldnt be buying the property, and giving the money my mother in law to buy.

Thanks in advance

betmunch

You just need to check the lenders criteria to make sure this is an acceptable reason for capital raising, if it is then crack on, if its not then consider another lender.

Doesnt seem to be a problem from a common sense point of view.

kingstreet

Worth remembering, your mother in law isn't currently responsible for repairs and renewals. She will be if she buys the property.

In addition, she will have an asset which would count against any care fee requirements later on. She would also be unable to claim housing benefit, which she could now, if needed.

As you said, you need to consider carefully how you protect her and yourselves against these issues and how to properly document the purchase.

This is fairly simple from a mortgage viewpoint, as betmunch has intimated.

McKneff

Brenster wrote: »

Hi

Me and my wife are considering buying my mother in laws house under the right to buy scheme, which will allow a significant discount based on the fact she has lived their for a long time.

However, if the property is purchased it has to be purchased in the tenants name (my mother in law).

We should be able to borrow the money against our existing house so that wouldnt be an issue, however to enable the purchase we would need to give the money to our mother in law so she could buy (Although we would own the property just not in name). I have had discussions with the housing association and they are not worried how the buyer gets the money, but reiterated the buyer has to be the tenant. We would get some kind of legal agreement in place to document that the property would be handed back to us (after 5 years), and their is no issue with regards trust.

Once the purchase is made, the rent that is currently paid would cover the mortgage payments and all would carry on as normal, apart from the fact we would own the property and not the council.

My main question is, could we get a mortgage based on the fact we wouldnt be buying the property, and giving the money my mother in law to buy.

Thanks in advance

It wouldnt be handed back to you it was never yours in the first place.

You would not own the property. Your mother in law would own the property.

She would not ever be able to claim means tested benefits if she owned a property.

If she needed council care, she would have an asset which could be sold to pay for it.

She cant just 'give this away' after 5 years.

My personal opinion which you wont like is that you are trying to make a quick buck at the expense of taxpayers and taking a house that a needy family could live in when mil no longer needs it.

McKneff

Brenster wrote: »

I have no intention of making a quick buck, its just a sensible financial decision, which I will not personally benefit from for many many years !

The government are encouraging the private purchase of council owned properties, so surely that is benefiting the tax payer.

Your first sentence just endorses what I said. Fast buck, slow buck, makes no difference.

Yes, selling to tenants, not greedy relatives, with £ signs in their eyes. How on earth you can say it is benefitting the tax payer is ludicrous.
Whatever I say you do it anyway, but there are pitfalls which i have pointed out. I have nothing more to say on the matter but I'm sure there will be plenty who do.

McKneff

Yes, selling to tenants, not greedy relatives, with £ signs in their eyes.

Repeat............

Anyway, it could come back and bite you in the butt if MIL needs social care/benefits, will you put your hand in your pocket to make up her benefits, repair the house, you wont have any choice.

Enough said by me. I'm off, but I'll be reading further posters contributions.

poppy10_2

This will not be in your mother in law's best interests. You might be blinded by the potential £ signs now, but in a few years when she loses entitlement to means tested benefits, has to pay for repairs and maintenance, and potentially has the house sold by the council to fund care home fees, you will be regretting this decision.

beecher2

You say that your mother in law isn't interested in buying the property, so shouldn't you abide by her wishes?

Mara69

Unfortunately, it is people like the OP who abuse the right to buy scheme. This scheme was intended to give tenants of council housing the legal right to buy the home they are living in. This gives a family (usually) a helping hand onto the housing ladder. It was never intended for greedy, grasping relatives to view it as a way to make money. The OP will buy it (on his unwilling relatives behalf) and will sell as soon as possible for a vast profit. Make no mistake, the only person benefitting from his plan is himself.

It is truly heartbreaking, the number of older people who ring up saying that their son/daughter wants them to buy the house/flat. They don't want to buy it; they are elderly and it really scares them; the thought that they will owe all this money and could lose their homes. Their relatives don't care though.

Brenster wrote: »

Thanks Betmunch, the Mother in law isnt interested in buying and probably couldnt get a mortgage anyhow at her age. I just need to convince the wife that its worth doing now.

Brenster wrote: »

It is the tenant, my mother in law would rather pay the mortgage towards her children and grand children in the future rather than rent to the government

Brenster wrote: »

to enable the purchase we would need to give the money to our mother in law so she could buy

So which is it?