Council "right to buy" - funding with a friend

barry54321

Hi,

a good friend has the Right To Buy her council place. However, she cannot get a mortgage on the property. I am considering remortgaging my home to put the money up for her. Her discount is £100,000 I would put in the other £120,000.

We we have the basis of an agreement. I would own 55% of the property. We would share all the costs (55:45 %). She would pay me a monthly amount equal to 55% of the rental value of the property. After five years either one of us could call for the property to be sold, or to be bought out of it by the other one.

The question I have is how do I protect myself? Can I be named on the Land Registry Deeds without having a problem with the council? Would I be protected if we had a Deed of Trust drawn up? What are the risks to me?

many thanks for any help.

lighting_up_the_chalice

Yup. That's what Right To Buy was always meant to be.... A free for all so that every spivvy !!!!!! in the land can get their greedy little hands on a discount offered at the expense of the public purse. Your idea is right up there with internet dating fraudsters praying on the loneliness of widows.

However, to answer your questions (which you could have done had your research not been distracted by those pound signs), no, you cannot own 55% (or any other amount) of the property unless the discount period has expired or you repay a proportion of the discount offered. As a result, you cannot be named on the LR.

Wonder how much of a "friend" she is now that you've realised you cannot stiff her for both rent and equity!?

cattie

Only the person on the tenancy can get a mortgage on a RTB property & have their names on the deeds.

It isn't a case of you needing to protect yourself, it's a case of the council who currently own the property protecting themselves from unscrupulous potential buyers who have no rights to RTB or the huge discounts offered on RTB.

What would be the point in your friend being a property owner at a bargain basement price yet still paying rent, which would no doubt be a market rent much higher than the highly subsidized by the tax payer rent that she currently pays to the council, or claims HB for?

This might be a moneysaving forum but it's not here to help people find ways around gaining financial advantages they are not entitled to.

Jenniefour

OP, I see you may have posted about this before - the details seem to match closely what you've said in other post about your own RTB.

dacouch

Jenniefour wrote: »

OP, I see you may have posted about this before - the details seem to match closely what you've said in other post about your own RTB.

barry54321 wrote: »

Hi,

Help needed to find RTB mortgage.

You can skip this rant and go to the next paragraph if you like.
I got the right to buy my flat - eventually. I cleared credit check and got accepted for a mortgage. The property then got blown out by the mortgage company valuers! Unbelievably the reason given was because there is a high amount of rented accommodation in the block! Seriously, what did they expect? they were the ones offering a RTB mortgage on a local authority property. You have to tread carefully with mortgage applications, too many searches blow your credit rating. But i contacted another three major lenders who come up on searches for RTB mortgages and they all said that if their valuers came back with the same report, they wouldn't offer either. It makes a mockery of the government scheme when the very bank that we bailed out with taxpayer money won't support a government scheme.

Ok rant over, can anyone help me? I am London based and qualify for the full £100k discount, which leaves another £120k to find. I pass credit checking and can afford the repayments comfortably. The property is the problem. it is a two floor maisonette, with a similar property below us and just the roof above us. It's a low rise block, ground floor and three above. Access is via a balcony/deck and communal stair well. To the best of my knowledge there is only one other flat in private ownership.

Has anyone got a mortgage for a similar property? Anyone got any good ideas? Anyone know the email address of someone I can complain to? Anyone had similar problems?

https://forums.moneysavingexpert.com/discussion/comment/63600032#Comment_63600032

barry54321

OK, switch "I" in the above to "my friend" and you have the basis of the problem. I did it first person originally to make it simpler, no biggy

She couldn't get a mortgage on the property due to the amount of rented accommodation in the area. Absolutely appalling in my opinion. So, I have stepped up and remortgaged my own home so she can buy her place and get started on the property ladder. Simple as that. Yes, I am a good friend. No, I'm not profiteering, but I do want some protection and neither her nor myself think that it's right that I should just be giving out an interest free loan.

Her choice is that we buy the property jointly rather than she pays me back my investment. No different from any other joint ownership scheme really.

So if there is anyone on here that can see past their own political views about the Right To Buy scheme and actually give me some advice on how we might achieve this, their input would be gratefully received. If you just have political commentary then might I suggest you go off to Facebook where your friends might be interested in your opinion. This is after all a forum for adults to discuss money matters.

zzzLazyDaisy

barry54321 wrote: »

So if there is anyone on here that can see past their own political views about the Right To Buy scheme and actually give me some advice on how we might achieve this, their input would be gratefully received.

You can't. It simply is not possible to achieve what you wish to achieve owing to the way the RTB scheme is set up, and the protections that are built into the scheme.

barry54321

How about a Legal Charge or Deed of Trust?

lighting_up_the_chalice

barry54321 wrote: »

OK, switch "I" in the above to "my friend" and you have the basis of the problem. I did it first person originally to make it simpler, no biggy

She couldn't get a mortgage on the property due to the amount of rented accommodation in the area. Absolutely appalling in my opinion. So, I have stepped up and remortgaged my own home so she can buy her place and get started on the property ladder. Simple as that. Yes, I am a good friend. No, I'm not profiteering, but I do want some protection and neither her nor myself think that it's right that I should just be giving out an interest free loan.

Her choice is that we buy the property jointly rather than she pays me back my investment. No different from any other joint ownership scheme really.

So if there is anyone on here that can see past their own political views about the Right To Buy scheme and actually give me some advice on how we might achieve this, their input would be gratefully received. If you just have political commentary then might I suggest you go off to Facebook where your friends might be interested in your opinion. This is after all a forum for adults to discuss money matters.

I refer you to my reply in #2, which answered the specific questions asked.

Of course, you are free to GIFT your friend the money to take advantage of the massive r2b discount, but you may find little in the way of protection can be offered on that basis. I guess your actions will depend on your definition of "good friend".

dacouch

How does your friend intend to put a roof over her head when you sell the house in five years and she has £130k in her pocket?

barry54321

Perhaps she intends to by me out of my part of it. Then she would have no problem getting a mortgage because she wouldn't be buying from a local authority