Right To Buy - Repayment of Discount Exemption

hoglet

Hi All,

I've spent the last couple of days online researching RTB (including plenty of useful posts on this site!)

A quick summary of the situation regarding family:

My girlfriend’s dad (Bob) has lived in a council house for over 30 years. He’s 65 in May. Also living in the same council house is my girlfriend’s younger sister (Charlotte) who is 21. She has lived with her dad in the same council house all her life. The girlfriend’s mother has passed away. Bob is considering moving out soon to live with his girlfriend – but is undecided. No mortgage would be needed to purchase the council house (my girlfriend and I would put up all the cash). My girlfriend and I own our own home outright and have been together for 14 years.

From the site:

http://www.communities.gov.uk/pub/286/YourRighttoBuyYourHome_id1151286.pdf

The “Your Right to Buy your home” guide states on page 10 (under the Repayment of Discount section) “Certain sales or transfers are exempt from the requirement to repay discount, e.g. transfers between certain family members.”

On investigating further, the site:

http://www.opsi.gov.uk/acts/acts1996/96052--c.htm#15

Section 15 of the Housing Act 1996 (Relevant and exempted disposals) appears to state that the discount would not need to be repaid if the house was transferred from Bob to Charlotte.

I understand the right to buy is not ours (i.e. me and the girlfriend), but Bob’s as he is the tenant. After completing the RTB, the idea is then to transfer ownership to Charlotte (without repaying the discount).

I realise from reading a lot of posts on this site that there are a myriad of potential problems with relatives fronting the cash for family to exercise RTB. Bob could marry, or (god forbid) need local authority care. Hence the intention to transfer ownership to Charlotte. As my girlfriend points out – what’s to stop Charlotte marrying? The list of potential questions goes on.

The other relevant point is that Charlotte earns minimum wage, and cannot currently get on the property ladder/snake. The girlfriend and I would be more than happy to let her stay in the house for minimal rent. Of course, the girlfriend and I would need some legal document drawn up that would ensure title passes to us from Charlotte and of course that Charlotte’s interests are protected too in terms of tenancy.

There are so many potential “What ifs?”, I realise there’s an element of balancing risk/reward/trust – not to mention seeking legal advice AND making sure all family members are open and honest about intentions before signing any legal documents.

I’m certainly no solicitor, and would certainly seek the advice of one before proceeding. I’d be very interested to hear any advice or of any similar experiences.

Thanks,

Hoglet.

cattie

From Charlotte's point of view I would think the most secure option would be for her to stay as a tenant in the flat. If her father does move out then as it's her home she should have the right to have the tenancy transferred. Then as & when she is ready to buy she can apply for the rtb.

As a tenant & someone on a low income she would qualify for housing benefit to help with the rent.

You yourself have mentioned what's to stop Charlotte marrying, well there is nothing & one assumes she will eventually marry or at least settle down with somebody. If the house is in her name but paid for by your cash then you risk leaving yourself wide open for problems in the future. What do you do if her bf wants to move in with her, try to evict her?

You've either got to decide whether your real motive is to provide a home perhaps indefinitely for Charlotte & any family she may have, or if you are hoping she will move on in a few years so you can sell the house you bought at the discounted price & see a healthy profit from your outlay.

hoglet

Hi Cattie (and all)

I need to find out (probably from the CAB) how much housing benefit Charlotte will be eligible for if her dad moves out. Despite her low income, it may turn out that Charlotte will receive little or no housing benefit.

As a previous poster noted on RTB, it may help to separate the ethical/moral aspect from the financial/legal aspect.

As far as the financial/legal aspect goes, I'm particularly interested in knowing if anyone else has managed exemption from repaying the discount by transferring the tenancy from the current tenant (in this case, the father Bob) to a non-dependant child (in this case, the daughter Charlotte). Ownership would then pass jointly to my girlfriend and myself. Does anyone have any successful experience of this?

I’ll comment on the ethical/moral aspect of this too. I’m a little reluctant to do this, as this has been well explored in previous threads already – but here goes! After the discount, my girlfriend and I are expecting to pay approximately £55K for the house. Now, forgive me, but our altruism does not quite extend to benefiting Charlotte with a home indefinitely at that much expense. Our collective conscience is quite clear for two reasons. Firstly, we realise that some parents are helping their children financially onto the property ladder – and we applaud that. Insofar as the girlfriend and I helping her sister onto the property ladder to the tune of £55, it’s just too much for us. Secondly, Charlotte would be protected (legally if necessary) that she will be able to live in the house for several years (5 or more) for very minimal rent. I wont deny that the girlfriend and I expect to profit from RTB in the long term, although Charlotte will not lose out short/medium term.

I realise that getting involved in a discussion on the rights and wrongs is highly contentious. It’s the legal/financial aspect I’m interested in. Therefore, I’d be interested in other peoples’ experiences of RTB discount exemption when transferring tenancy as described above.

I can fully understand that what I’m proposing can irk people. I hardly think the intentions of the girlfriend and myself are what the RTB scheme was put in place for. The practicality/reality is that my girlfriend used to live in the council house (for 21 years), Charlotte has been living there (also for 21 years) and Bob for over 30 years. In all that time, Bob has paid rent to the local authority and Charlotte (now) and my girlfriend (during her time there) pay/paid rent to their father. We are now attempting to recoup.

Thank you,

Hoglet.

PS No doubt I’ll get clobbered from someone on the moral aspect, but hey, that’s fair enough.

hoglet

Hi All,

We've now had confirmation from the council that the tenant is eligible for RTB at the maximum discount (subject to a 26K cap). We're now waiting for the valuation, which could take up to another 8 weeks.

I'll update when the situation develops further as I think interested readers in a similar situation will be keen to know how it pans out...

Thanks,

Hoglet.

hoglet

Hi All,

We've decided not to pursue the RTB. We'd have too much money tied up in it, aside from the issues regarding the discount repayment. I realise this resolution isn't helpful for those researching RTB with a view to exemption from repayment of discount. Still, I've posted this for thread closure.

Martin.