Buying house off husband

charm232

Advice has been given

Annisele

charm232 wrote: »

His mums name is on the deeds and the mortgage and she lives there for free as she claims benefits and does not work. He pays the whole mortgage.

For starters, has his mum made sure she's claiming all the benefits she's entitled to? For example, is she eligible for Support for Mortgage Interest?

I'll leave the mortgage questions to others - I have no idea.

From his mum's perspective, does she have it in writing that the council will rehouse her? I'm surprised to hear you can sell a council house you've bought through RTB and be rehoused again, but it isn't something I've researched.

She'd also have to be careful of deprivation of capital rules. If the house is "valued" at £85k and then sells for £66k to a closely related third party, the benefits agency may wonder what's happened to the missing £19k - and treat his mum as though she has some of that money, even if she doesn't.

If the house really is worth £66k, then you're not going to get a brand new mortgage for £66k on it. Transfer of equity from your MiL to you maybe - but I'm not sure how (if at all) that affects the council rehousing her.

BigAunty

charm232 wrote: »

We have done lots of research and have been told if we sell for no profit and just pay off the mortgage they will rehouse her in a council house, she is fine with this.

Been told by whom?! Who gave you the impression that so long as your MIL did not receive any equity after the sale that she would walk into a council property? Did they give you the impression that this would result from her presenting herself as homeless to the local council? Which part of the country is she based in?

The only people that are now housed by the council in social housing are Scottish homeless people who did not make themselves intentionally homeless (for example, by leaving accommodation when they did not have to and perhaps this definition might also stretch to include selling a property that wasn't going to be repossessed.!..).

In England, for example, the law changed last November which means that the council only has to offer a private tenancy to the homeless in priority need (i.e with dependents and disabilities).

See the Shelter website to understand the homelessness process, the actual and thorough assessment that your local council will undertake to determine if they have any obligation whatsoever to offer advice or accommodation once she sells up.

Also, look at the deprivation of assets section of the Age UK website to understand what could happen if she needs a care home or social care services in the future and the local council detect that she has squandered her capital.

charm232

Advice appreciated

poppysarah

If your parents will lend you money, how will you pay it back?

BigAunty

charm232 wrote: »

. The housing benefit dept have said they would rehouse if she has less than £16,000 savings/equity from the house .

Mmmmmm.

Was there some confusion here? Housing benefit department processes HB and aren't qualified to give homeless advice - the homeless department of the council will be staffed by different people. Did you conflate social housing allocation with HB entitlement - these are two separate things?

People are entitled to housing benefit (not rehousing) if their income is under 16k. I think there has been a huge misunderstanding. Capital over 6k starts to reduce means tested benefits like HB while sums of capital over 16k rule it out. That is something a HB officer will know and be able to advise right from the start - these are national benefit entitlement rules for all means tested benefits, such as HB, income support, council tax benefit and so on.

There isn't a housing officer in the country (let alone a HB officer) that would tell someone casually on the phone that they'd definately be rehoused if they had a certain level of income. Try getting that promise in writing and see how far you get....

Social housing allocation doesn't take into account capital - see the Shelter website to understand the actual process. It is based on need, hence the prioritisation of the homeless with children or disabilities and the rejection of applications from people who left accommodation when they did not need to.

Someone needs to have a chat with the homeless department about her options once the house is sold, the actual housing/homeless department, not the HB department that provides guidance on just that particular benefit for claimants.

Each homelessness application is assessed on a case by case basis and will only start to be be processed when the person is actually defined as homeless (this is usually less than 21 days tenure but councils do encourage potentially homeless people to contact them early). That is why I do not believe the council were in the position to guarantee that they would rehouse her - it's a decision made at the end of the process and if she's in England, they do not have to give her social housing anyway. And there is not one part of the official homelessness assessment process that makes capital a criteria to get social housing. Shelter are experts at providing free advice to the homeless - do actually read what the council do during an assessment.

dacouch

She claims mortgage support to pay the mortgage her son pays.

Nice

BigAunty

charm232 wrote: »

I would not want the benefits dept to know it was me buying in case they do ask questions. Can I buy anonymously?
I could possibly get a new mortgage as my parents have agreed to lend me a deposit. When talking to housing I made it clear that we either sell the house or MIL will be homeless and have to be rehoused anyway. We want to do it an amicable way.

Right, let me get this straight.

Based on a historic thread, your husband bought your mum's place for a song under Right to Buy because the mortgage advisor (incorrectly) told him that he would receive rent (via HB presumably) for his mum at this heavily discounted property, gifting him both capital and rental income (As it turns out, since she continued to be the owner she didn't qualify for HB as this is just for tenants, the advisor was wrong, plus even if she was no longer the owner, there are rules that prevent the previous owner occupier from getting HB for the first 5 years anyway).

https://forums.moneysavingexpert.com/discussion/4390519

So now you would like to buy this already discounted property at a further discount in your own name to depress her capital to maximise her housing benefit entitlement (and because you've been incorrectly told she won't get rehoused unless she's broke).

And so 5 years after buying her property cheaply, she will then get another one off the council?

Sometimes you can't make this stuff up.

BigAunty

dacouch wrote: »

She claims mortgage support to pay the mortgage her son pays.

SMI is £40 per month while the mortgage is £330, so barely pays more than 10% of it. SMI only pays the interest only part of the mortgage but there are other conditions, too.

I wonder whether this means the property was heavily re-mortgaged after purchase (SMI, I think pays only the original mortgage) so what happened with the sum of money released through this?

But it might be the case that as the property is jointly owned, his income is taken into account when calculating SMI which is why her share is so low. Or its a repayment mortgage on a bad rate, for example.

BigAunty

charm232 wrote: »

My name (his wife) is not on the deeds or mortgage can I buy it from him for what the mortgage is worth £66,000? My parents have offered to lend me a deposit to buy it on a buy to let mortgage and rent it out to pay the buy to let mortgage and they can keep the little profit from rent each month???? It seems like the only small light at the end of the tunnel. I don't know if I would be allowed to buy from my husband?.

In theory, there's nothing to stop you from buying the property at whatever sum you agree (noting the future deprivation of asset issue that's been raised) - I assume you have employment income that will satisfy a lender that you can afford the balance of the mortgage once your parents have paid the deposit? Have you seen a mortgage broker yet?

Annisele

charm232 wrote: »

The housing benefit dept have said they would rehouse if she has less than £16,000 savings/equity from the house.

Like BigAunty, I'm pretty sure there are some wires crossed there. Housing benefit entitlement and getting a council house are very different things. Where I live, if you're not in priority need the waiting list for a council house is 10+ years. I'd be astonished if your MiL could move from a BTL ex-council house straight into another council house. She'd almost certainly be expected to rent privately.

I would not want the benefits dept to know it was me buying in case they do ask questions. Can I buy anonymously? .

You can't buy anonymously - Land Registry will say who bought the place. I am completely flummoxed as to why you want to buy the place at all. If you'll be taking out a mortgage, then the whole thing will be at your risk - but you said any profits will go to your parents.

Your financial situation sounds far too precarious to be starting up a business as a landlord (if you get no rent for a year and the boiler breaks, you'll be stuffed). I'd also be very wary of involving your parents in your finances; involving your OH's mother doesn't seem to have gone very well.