Council "right to buy" - funding with a friend

AnnieO1234

Speak to a solicitor and see whether the council will allow RTB with a private mortgage. Mortgages can come from any source, not just banks and building societies. You would need a proper mortgage deed drawing up for this. Your friend would pay you back in the same way as a standard mortgage at whatever interest above base rate and term you choose. At the end of the RTB discount clawback period, you would need to renegotiate with your friend. Unfortunately this means that you are trusting said friend as any paperwork trail whatsoever will lead the council to sue for the discount amount.

Tread extremely carefully OP. You may want to consider whether there is anyway around it with a mortgage deed similar to sharia mortgages. I'm not saying there is, but it would be interesting to find out.

Xx

lighting_up_the_chalice

barry54321 wrote: »

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

An interesting suggestion, bearing in mind she has saved sweet FA despite benefiting from many years of affordable rent in London. I admire your faith, misguided though it may be.

barry54321

Lighting up the chalice
You make outrageous assumptions, probably based on your own life and experiences.

In fact, the lady is extremely financially astute. Yes she has savings. Yes she has a decent job. As I said, it is the property cercumstances that prevent her getting a mortgage, not her personal cercumstances. If she wasn't RTB for a local authority she would have her mortgage no problem.

barry54321

AnnieO - many thanks for your input. Neither myself nor my friend are trying to be shady or defraud the council or anyone else. She wants to buy her flat. She can't get a mortgage, I want to help her. Being practical, we have to accept that even the best of freinds can fall out over the years, especially when money or property is involved. We are just trying to protect each other's interests and feel comfortable and secure in what we are doing.

I have actually sought legal advice, one said, Deed of Trust, the other said Legal Charge. I have to admit, I'm confused now.

lighting_up_the_chalice

barry54321 wrote: »

Lighting up the chalice
You make outrageous assumptions, probably based on your own life and experiences.

In fact, the lady is extremely financially astute. Yes she has savings. Yes she has a decent job. As I said, it is the property cercumstances that prevent her getting a mortgage, not her personal cercumstances. If she wasn't RTB for a local authority she would have her mortgage no problem.

Unlike you, I make no assumptions. I also do not tell lies or attempt to mislead. I simply respond to the information provided... in this case, by you. That you should choose to open this discussion with a lie is something for you to defend, not I.

As your "friend" is so financially astute, might I suggest she buys a property on the open market, rather than further depleting the SH stock for those in genuine housing need, not out for a quick buck (with your so generous assistance, of course).

carefullycautious

If you have a legal charge put on it this will protect the money you have given her as it will be repaid to you when she sells the property.

Whether you can force a sale if you needed the money back is another matter and one you would need advice on.

lighting_up_the_chalice

But you can't put a charge on a r2b sale without losing discount.

Pixie5740

Did your friend actually go and speak with a mortgage broker specialising in RTB mortgages or did she just apply directly to HSBC?

Mokka

I am absolutely amazed that you've managed to remortgage your property to buy another person's flat to which you will have not rights to. Did you disclose this fact to your lender?

I've heard of guarantor mortgages for RTB but never came across anyone managing to pull the above stunt off.
It is possible to create a Deed of Trust for a relative but never heard of being able to do this for a friend on RTB.

The rules regarding buying somebody else's RTB property have changed- you really need proper legal advice from someone who understands RTB legislation- a regular conveyancing solicitor won't necessarily know them and can give you wrong advice.
I recommend you read Section 163A of the Housing Act 1985 Part V. From what I understand of it, the council can recover the whole of the discount from your friend if she sells it to repay you the loan.
This can get you both into serious difficulties- you need good lawyer not keep asking about it on a forum.

poppysarah

barry54321 wrote: »

AnnieO - many thanks for your input. Neither myself nor my friend are trying to be shady or defraud the council or anyone else. She wants to buy her flat. She can't get a mortgage, I want to help her. Being practical, we have to accept that even the best of freinds can fall out over the years, especially when money or property is involved. We are just trying to protect each other's interests and feel comfortable and secure in what we are doing.

I have actually sought legal advice, one said, Deed of Trust, the other said Legal Charge. I have to admit, I'm confused now.

So you've looked into service charges and any possible repair work in the future that could be excuses why she won't give you the money back or you can't sell it after 5 years.

You're cruising for a bruising. Friends should not lend each other huge sums of money like this.
Unless you pee money, don't do it.