RTB but exchanging to another property first

bubblegum2

Hi All

Here’s my background – I’m a Single parent with a 12 year old son living in a large three bedroom house. I have been a council tenant with the same council for Ten years but in three different properties. I have a brilliant credit record and earn £10.5k (but that figure does include child tax credits and working tax credits as well as wages)

I can not afford to buy the house I’m living in even with my ‘RTB’ discounts I’m looking at around £65k+ (way out my budget) due to the house prices rising. Plus there is a lot of outside major work to do a section of my garden is collapsing due to a suspected broken mains pipe that the council won’t fix due to the cost being £2-4k. All my garden fences and windows need replacing so there’s too much to do.

So I’m thinking about exchanging to a nearby (still the same council) two bed flat. I don’t mind downsizing or losing a garden so that isn’t a problem at all and at least I’m getting my foot on the property ladder. There’s no other way that would be possible unless I win the lottery this weekend

The flats are selling for £65-8k on the open market. Under the right to buy scheme I should get 44% automatically and 2% for each year I’ve been a council tenant so a total of 64% - So I’m looking at just over £43k I’m planning on saving £3k extra deposit and getting a £40k mortgage approx £281 a month (Halifax calculator so only approx) which I can afford.

I’m looking to move beginning of June 2007, getting some if any repairs done, start the ball rolling with the ‘RTB’ forms and hopefully start the mortgage process in Feb 2008 (should have saved £3k by then)

I know I don’t need a deposit as the discount acts as one but the £3k is just to lower the mortgage needed and in return the monthly payments. My brother, mum and step dad all think it’s a good idea, my dad isn’t sure and my best friend thinks I’m mad moving from a large house to a flat

Any comments? – Good or bad idea?

P.S What happens if I move to a flat owned by another council? Do I still get my discounts transfered from this council? - Not planning on moving to another council but just checking out my options

silvercar

Plus there is a lot of outside major work to do a section of my garden is collapsing due to a suspected broken mains pipe that the council won’t fix due to the cost being £2-4k.

If this means there is a water leak, contact the water board as they will order the council to fix it.

So I’m thinking about exchanging to a nearby (still the same council) two bed flat.

Buying a flat makes you liable for your share of the maintenance of the block. Buying a flat where the council owns the bloak could mean a big bill if the council decide on a major refurb. Sometimes blocks become unsellable if the council proposes major works.
It is harder to get a mortgage on a council flat especially if it is high rise and/or the ratio between owner occupiers and tenants is small.
This all affects the resale value when you come to sell.

The flats are selling for £65-8k on the open market. Under the right to buy scheme I should get 44% automatically and 2% for each year I’ve been a council tenant so a total of 64% - So I’m looking at just over £43k

Check this, I thought there was a maximum discount of £34,000.

You may be happy to downsize, what about your son. Personally I would rather have a garden with a teenage son. Are there any smaller houses in your area?

bubblegum2

The maximum discount in the East Midlands is £24k.

Ground rent – The annual rent for the land the block of flats is built on is £10 plus like you said any other major repairs but still sharing any cost would be cheaper than paying on my own for a repair in 'my' garden if it was a house

The flats are a block of six - 3 ground floor and 3 first floor -Two of the first floor flats are brought and I'm looking at the third one to buy - I think all of the ground floor flats are still council

My son doesn't mind moving to a flat he wasn't sure at first but yesterday I took him around to look and he’s now happy with it (downstairs owns a small dog so my son was sold on the idea)

To be truthful neither of us ever uses the gardens we have now. I only step into the back garden to have a crafty fag on the doorstep and to cut the grass when it needs doing – In summer we may sit and eat in the garden a few times but then the flat as an outside balcony leading from the lounge so we could eat there

My son doesn’t play in our garden – The football just goes over the fence and the neighbours moan so him and his mates just go to the local school field instead. I can’t even remember the last time he played in the garden

Even tho my house is three bed my son choose to move into the smallest room a few years back so the middle room is just a 'junk room'. The small bedroom in the flat is 6ft 5' x 12ft (bigger than the 6ft x 8ft box room he's in) so again he's happy because he 'thinks' he can have his PC in his room

My brother lives 16 houses away from the flat and my dad just round the corner

cattie

Think very, very carefully before you even consider exchanging your house for a flat. The maintenance charges on council flats are historically very high. If you do a search on these posts you'll see some people being billed around £1000 or more a year. You need to be aware that should any major works need doing, such as a new roof then you will be expected to pay a portion of this & the costs will run into thousands of pounds.

Even a bit of outside painting can result in bills of around £2000 for each tenant. Owing ex council flats can be a costly business & will cost you far more in charges & outgoings than your 3 bed house will do.

As you've got a 3 bedroom house & are convinced you want to move to try to do a rtb, then your most sensible option is to look for someone who has a 2 bed house who wants to exchange. I'd have thought you'd have people falling over themselves to move from a smaller house into a larger one.

A house would make owning a property much more viable proposition for you as should you want to sell in the future you may find it difficult to find a buyer for the flat, but a house should attract potential buyers.

bubblegum2

I've looked into 2 bed houses but they don't exist on this estate 1,2 and 3 bed flats and 3 and 4 bed houses only.

The estate on the other side to where I live have 2 bed houses but they sell for the same and sometimes less than a 2 bed flat would be on this estate due to the neighbouring estate being 'rough'

I've been into the small shopping centre nearby and popped into three estate agents - Twice as a 'buyer' and was told they didn't have any flats in the required area for sale and they don't have many come up and when they do they go pretty fast

The third estate agents I went in truthfully and told them my plan and asked about rental/sale prices for the future if I was to buy the flat and got pretty much the same about selling as what the first two said not many come up and when they do they go quickly in the right condition BUT the rental was £320 - £340 per month morgage is £281 approx so I don't know if thats good or bad

The other two first floor flats next to the one I want to buy are private so I'm planning on being cheeky and knocking on their doors at the weekend to ask them some questions mainly about repairs etc. I know one brought off the open market and one via RTB

I've been walking around the estate in the past few days and have noticed how little 2 bed flats there are - plenty of one beds but only 32x two beds and this is a large estate - so I do't know if thats a good or bad thing either