Buying Gran's Council House?

stuart30

Hope you dont mind me asking a couple of questions in your thread Dave.

Im considering doing something similar to Dave...My mother is a council tenant in a nice flat and can see the benefit of buying,would you need a special mortgage to allow myself and my mum to buy together (i dont live there) and would the council have any objections to the joint mortgage.?

Assuming mortgage company agree"s to joint mortgage would an interest only mortgage be more likely to be approved than a typical repayment type....just thinking of ways of keeping the initial monthly payments low as possible,not long took a mortgage out on my first house (august 2006) so this is still new and a little bewildering too me.:o

DaveHemmerman

No problem Stuart ask away the more the merrier, they are probably people reading this thinking the same as me but just have not asked the question.

With regard to the discount then if this is the maximum £26k i would not be able to afford it as that would be around £550-£600 p/m and that is just not feasible My own mortage is only £60k at £414 p/m. I know my mum spoke about buying it some years ago and is currently going through the courts getting a divorce and if all been well she will have a large lump sum at the end hopefully around £60k-£70k, her home is bought and paid for. she might decide to invest it (not sure where though?) but like i said bricks and mortar are probably safest place to invest over a long period of time. If we all had £50k 10 years ago how many would have bought 2 houses and what would they be worth now i doubt any other investment would have been that good.

So to sum up, if the discount is £26k i wont be buying so they will still be one more council house us tax payers will be paying for and if you live near Hull you might be living in a village called Burton Pidsea in my grans 2 bed bungalow in some years to come:-)

stuart30

I could be wrong but im sure my mum has paper work (from when she was notified of the right to buy) stating she would receive 50% due to time lived there.

Think i"ll check as im in same boat as you Dave if its only 26k its a non starter.

Gold_Shogun

seven-day-weekend wrote: »

Right, in answer to your original question - if your Grandma buys her house she will lose any entitlement to Housing Benefit (as this only pays rent). She may still qualify for Council Tax Benefit - depends on family income.

Not strictly True ... HB can also be claimed for the INTEREST portion of a mortgage (but NOT the Capital).

Also, I don't know if the situation has changed in recent years or is different in England (my Mum bought hers in Scotland several years ago), but it was a legal requirement that the Council HAD to offer & provide the mortgage IF the buyer was not acceptable to normal commercial lenders (due to age / disability / etc) ... So this MAY be helpful to Dave Hemmerman.

As to "the moral argument" that seems to be raging, my personal views were :-
A) ... That after 30 years of paying Council Rent, my Mum had already "effectively paid (over) the original value of" the house anyway, and her purchase merely "formalised" & completed matters.
&
... In the grand scheme of things, any "benefit from purchase" would be more useful for my Mum INSTEAD of the grasping politicians that squander vastly greater sums on their wars & entertainment lunches, etc.
&
C) ... The "Social Benefit" of the house HAS been passed down to another generation, as her house is in trust for the benefit of her Grandchildren who (EVEN MORE SO than the current generation of "woe is me whingers") would NEVER otherwise be likely to be able to buy a place of their own.

Mine is (perhaps) a somewhat different view to many, but it IS EQUALLY as valid, logical, & reasonable as those of the "More Communist/Socialist" variety.

DaveHemmerman

Nice post there Gold Shogun, some very good points mentioned.

Errata

Excellent points. My council property - now Housing Association - would have cost something in the region of £500 for both land and materials when it was built. Which means that I more than cover the cost each year.

Ellie2005

as I used to work for a Council selling under the RTB I have seen many people take advantage, what used to outrage me was the tenant that tried to buy the house when he no longer lived there & was renting it out or the tenant that had bought the house for peanuts & then split the garden & built a house on it. However, my thoughts are that unless RTB comes to an end (which would be a good thing) "you can't beat them so why not join them"!

as far as buying it goes only you gran & aunt can buy it, things have changed since I used to do it but I think the following it correct:
as someone has already said she will lose her housing benefit. The max discount is approx 34K, if the house has to be sold within the first 5 years then a percentage of the market value of the property will have to be paid back. The council now has the right of first refusal to buy the property if it is sold within the first 10yrs. Also if a deferred sale agreement is entered into i.e. an agreement that you will buy the house from you gran at the end of the discount period & the Council find out then you may have to pay back the full amount of the discount.
Also final point, if a house is suitable for elderly people the council has the right to refuse the RTB application. As this is a bungalow this may be the case

hope this helps

leftieM

Ellie2005 wrote: »

The council now has the right of first refusal to buy the property if it is sold within the first 10yrs.

That's a bit mad. Why would they sell it and then buy it back?

stuart30

Ellie you say things have changed but what if the prospective buyer had the original offer of RTB.?

My mum has and its vastly different to what you've stated...