Paying for someone elses Right to Buy?

aeu97137

My father knows and elderly gentleman (90 yrs old) who has no family and who lives in a council house.

This gentleman has the right to buy his council house for £25k, but has no savings of his own. He has asked my father if he wants to exercise the right to buy in order to profit from it when he passes away (he's not in good health and has a pacemaker). This would mean my father buys the house for him and then it passes over to my father for nothing after the 3 years/upon death.

Obviously this is a kind offer but one which I am not sure of the legalities on. I believe that a tenant who buys a council house cannot sell it within 3 years of purchasing it. Is this correct?

Does anyone know what would happen if my father paid the 25k in order for the old chap to own the property in his name and

1) The old chap dies before the 3 years are up?

2) The old chap deteriorates and needs to stay in a home? As he has no savings but in effect would have a house (paid for by my father) would this be sold to pay for his care?


My father would look to get some sort of legal contract set up and get the old chaps will updated but is there anyone out there who has come across this situation before?


Thanks,
Jason

Poppy9

My oh paid a 1/4 of the purchase price for his parents council house over 10 years ago. His sister stumped up a 1/4 which meant his parents just had to find 1/2 the value. They could not be part owners at the time of purchase but agreement was made that after 3 years part ownership would transfer to them but the parents could remain in the house rent free for the rest of their lives. The only part of this agreement in effect is the rent free bit. His parents don't want to transfer over 1/2 the house to oh and his sister so there is nothing we can do. His father is very ill and if his wife died would need residential/nursing care. That'll be the end of the house and we have lost £5k.

In your case if the house is sold within 3 years then the discount (pro rata) will have to be repaid. I don't know if this will apply if he died and his estate sold it but it might.

Spendless

Hi my gran bought her council flat last year at the age of 80. If you sell within 3 years you owe the council the discount back reducing by a third each year
so

Upto Year 1 - all discount back
Upto Year 2 - 2/3 of discount back
Upto Year 3 1/3 of discount back

From Year 3 onwards nothing to pay back. Due to grans age my mum did query this with the solicitor who said the repayment only came into force if the property was sold, ie it could be rented out or left empty(until the 3rd year was up) with nothing to pay.

trafalgar_2

aeu97137 wrote:

would this be sold to pay for his care?

yes......sorry but it would be the elderly gents asset and therefore could/would be used to fund his care if he had no other means to fund them.

Bossyboots

When doing this, you need a Deed of Trust set up to protect your interest in the property.

Cardinal-Red

An interesting point... as we're in a similair situation.

How are you raising the finance? Do you have it 'lying around' or are you financing it through a credit provider?

filigree_2

Perhaps your father could lend this chap the £25K and register a charge on the property. In effect your father would be acting like a mortgage lender. If the old chap dies or tries to sell up, your father would own the property. If the house is owned on a 100% "mortgage" I don't think anyone else can force the sale and claim the proceeds. He would need to get this properly drawn up by a solicitor. My Dad did something similar when he lent his sister a large sum.

aeu97137

Cardinal red - my father has the money available in his savings so now borrowing would be involved.

Given the age of the chap, it sounds like there is real risk of the money being lent to him and then potentially being realised to pay for his long term care. At the very least it sounds like some expensive legal work, but could be worth it in the long run.

Thanks to everyone for their responses - it's helped a lot