Right to buy?

henrygregory

Hello there,

My mother and I have been living in a council home now for around 26 years. I have a reliable job, with a stable income and as such, I had suggested to her that it might be an idea to use the right to buy to purchase the property.

There is lots of information on the council website regarding this but I was wondering if anyone knew exactly how the process worked in terms of the following...

If we ask the council for the right to buy, they will come out and ascertain what they/an independent surveyor thinks the property is worth. Once this has been done, they have four or so weeks to come back to us with an offer.

That all seems perfectly ok to me. My question is, if we ask for this, and then decide at that point in time, we don't wish to proceed (if we don't have enough deposit or other financial reasons), are we allowed to ask again in the future?

It strikes me as a reasonably expensive procedure on the council's part and I was just worried that it would cost them enough that they may only be prepared to do it once?

Any help would be greatly received.

Pixie5740

Yes you can apply again in the future if you don't decide to go ahead with RTB this time.

If your mum is the tenant and you need to submit a joint application for RTB with her it might be worth having a chat with a mortgage broker (assuming you're planning on using a mortgage) to see how much you can borrow and over what term (depending on your ages) before putting your application in.

Sambella

You may not need a deposit as your tenancy discount means you are not paying 100% of the value of the property. You buy with equity already in the property already there.

Cakeguts

You also need to have a very careful think about this from the point of view of your mother. You have a stable job but what would happen to your mother if you no longer lived there? Would she be able to pay the mortgage on her own? At the moment your mother has a home for life as long as she keeps paying the rent. Also if she needs to downsize into a retirement property she would probably be offered one by the council. This will not happen if she owns the house. There are a lot of downsides to owning a house if you do not have a good income and are older.

Are you expecting to live with your mother for the rest of your life? Once you own this council house you will be responsible for all the repairs and costs of living there. If something breaks it will be your responsibility. This may not be in the best interests of your mother as she gets older. So you need to think very carefully about how this may affect the housing needs of your mother as she gets older.

It may be that if you wish to own a property you might be better off to buy one on the open market and allow your mother to continue in council housing where you know she has a home for the rest of her life.

henrygregory

Hello,
Thank you to all of you for your helpful posts. I am really grateful. Yes lots to consider, and something we had been thinking about is her age and what could happen in the future, so your comments are very valid.

I don't think I would live with her forever, no, but she does now have a pension so she has an income which would allow her to sustainability live there. But we do need to have a proper look at the figures. This was one of the reasons I wanted to establish if you are able to re-ask for RTB as now may not be the best time, and there may not ever be a good time!


Thanks again

booksurr

if you will end up on the deeds of the property consider this - when you finally move out and start a life on your own you will have to pay the higher rate stamp duty on your next purchase as you will already own one property and will be classed as buying an additional property

higher rate is +3% on top of the basic rate, and starts from a purchase price of £0 not £125,000

exercising your RTB is a good way of getting hold of a large free sum of money, but not if you cannot sell it yourself and get the money for your own uses. Rather inconveniently therefore the only way to avoid that is to wait for your mother to die before you can sell and get the money

henrygregory

booksurr wrote: »

if you will end up on the deeds of the property consider this - when you finally move out and start a life on your own you will have to pay the higher rate stamp duty on your next purchase as you will already own one property and will be classed as buying an additional property

higher rate is +3% on top of the basic rate, and starts from a purchase price of £0 not £125,000

exercising your RTB is a good way of getting hold of a large free sum of money, but not if you cannot sell it yourself and get the money for your own uses. Rather inconveniently therefore the only way to avoid that is to wait for your mother to die before you can sell and get the money

Ok that does make sense, although, I don't think I would be planning on selling until she did pass away as she likes the house and location. But at least it would give me a foot on the ladder as at present, I am unable to afford a property of similar size on the ordinary housing market.

Presumably, though, if she passed away, if I did not own the house and she bought it herself (which I think she would struggle in doing), I would then have to pay an inheritance tax?

Pixie5740

Inheritance tax is paid by the deceased's estate, not the beneficiaries of the estate. If your mother's estate is worth less than £325k then there would be no IHT to pay. That £325k threshold is for this tax year I think there are plans afoot to increase the threshold in the near future.

I wouldn't get too caught up with the additional 3% SDLT because even if you do end up paying it in the future it will most likely be less than the value of the RTB discount.