Right to buy discount equity release?

LazyD

Hello,

A family member has lived in a 3 bedroom terraced council house for 3 decades with her family paying full rent all the time being a working person and has the right to buy with something like £100,000 discount. She does not have the deposit to get a mortgage, and although the house is modest it is in London so as you can imagine it's "worth" a lot, something like £600,000.

Does anyone know of a legal scheme or business whereby an investor fronts the money to buy the house and then my family member who is entitled to the discount and the investor can then split the discount so my family member could leave the house with some of that discount equity so to speak?

Thanks.

somethingcorporate

Almost certainly not.

Have you looked into what the property would cost after the discount?

If you're using a business to utilise your relative's RtB discount it is going to be dodgy as hell, the discount is for the benefit of the tenant only.

kingstreet

You don't need a deposit to get a mortgage for RTB.

The discount is the deposit.

Mojisola

LazyD wrote: »

A family member has lived in a 3 bedroom terraced council house for 3 decades with her family paying full rent all the time being a working person and has the right to buy with something like £100,000 discount. She does not have the deposit to get a mortgage, and although the house is modest it is in London so as you can imagine it's "worth" a lot, something like £600,000.

Won't the repayments on a £500,000 mortgage be a lot more than the rent?

LazyD

Yes I suppose it's fair that the discount should be for the benefit of the tenant only.

Kingstreet, that's a very interesting point, never thought of it like that (I obviously don't know much about buying houses, mortgages etc) if it's true, very interesting, mortgage payments would still be large and for a long period though I think.

LazyD

Mojisola, I would think so, a lot more, but I'll have to look into it.

McKneff

I cant imagine the mortgage payments on £500,000

strawberries1

Depending on the borough, most of the council properties are only valued at about 1/2 of their market value definately not the actual market value so it could be valued at £250 or perhaps £300.

On a side note, it beats me why anyone needing govt assitance would need to live in a £500k property when people who've never claimed benefits cant afford to buy half the value.

Pixie5740

strawberries1 wrote: »

Depending on the borough, most of the council properties are only valued at about 1/2 of their market value definately not the actual market value so it could be valued at £250 or perhaps £300.

On a side note, it beats me why anyone needing govt assitance would need to live in a £500k property when people who've never claimed benefits cant afford to buy half the value.

It probably wasn't worth anything like that when the tenant originally moved in.

harrys_dad

Yet another example of people seeing "right to buy" as a taxpayer (or forced Local Authority) funded gift to existing tenants whilst social housing withers away and private rents go through the roof. The housing situation is desperate in London and this sort of thing makes it worse.

strawberries1

Pixie5740 wrote: »

It probably wasn't worth anything like that when the tenant originally moved in.

It was worth that when the tenant moved in. The value didn't suddenly jump relative to other properties. At the time the tenant moved in the property was worth a higher amount relative to other properties. On the BBC last week there was a woman spared jail for renting out her Hyde park council flat. Why does anyone need a council flat in Hyde park in the first place? People who grew up in that area living with their parent but priced out move to an area more affordable for them.