Right to acquire query

Gemandcraig

Cakeguts - We probably won't sell the home just pass it to one of the children (although i dont know the rules around gifting property etc and the fees related to that - may be worth some research.

We cant afford the open market as we only have around 8k saved for a deposit and we would need at least 12k.... the other 2k we have saved is for legal fees etc.

3 bed houses around here that arent social housing are around 170k for a nice area.

dimbo61

Why not apply to buy your home and then overpay every month and build up equity in the property.
As a home owner you will be responsible for repairs so have a full survey and make sure it does not need a new roof or boiler.
Consider an offset mortgage to build up savings to pay for boiler/roof/new kitchen etc.
If in 5/7 years you have built up a good pot to pay off the mortgage or put down deposit on second property then well done

Cakeguts

Gemandcraig wrote: »

I agree about the tenants situation - but there are many areas in our local area where social area tenants like that would want to live above living around here - Its miles out of town and a small village. Its also the most expensive village to buy a house in our town so its quite popular although i understand what you are saying. The other social housing properties in worse areas than this are going for 130k so it makes sense to buy here although you say area doesnt matter too much - I think it matters alot.

We will probably be here for 5 - 7 years anyway.

Another question - after 7 years if we release equity what does this mean?

If we wanted to buy another house in 7 years would we need another deposit or can we use this property as collateral against another house purchase?

Thanks
Gem

I would like you to do some research so that you don't get yourself into a terrible financial mess which is where this is heading at the moment.

If other social housing is being values at £130k in areas that you say are not so nice you have to know why this is.

You don't get a bargain when buying a house there is always a reason why one house is cheaper than another. So what is it about the other houses that make them £130k and yours much less if as you say yours is in a more desirable area?

I will get you started. It could be that the house needs lots of repairs, (new roof) or it could be that it is in the middle of a housing association estate and that your road the next road round and the road behind it are all housing association houses. It could be that the garden is small and overlooked by neighbours or there are high crime statistics for your area or the local primary school isn't very good. Or it could be that there is risk of flooding from a nearby river that would make it difficult to insure. There is something about your house that is lowering the valuation compared to the other houses that you say are valued at £130k. You need to know what it is before you even consider buying this house because whatever it is might make it a) very difficult to let b) very difficult to sell. Your children won't thank you for a house that they can't sell.

Where do you think that the people who have been evicted by local councils and housing associations for antisocial behaviour or drug related crime or non payment of rent live? Do you think that they might claim housing benefit and rent in the private sector? What kind of houses do you think they rent in the private sector? Cheap ones? Rent isn't set by how big the house is. It is set by how much someone will pay to live in a particular house in a particular area. You will not get the same level of rent for your £110k house as someone will get for the £170k house and you will not get the same kind of tenant. There is a top amount that any local borough will pay for housing benefit. It won't be enough to pay to rent a £170k house. But the people who want to rent the £170k houses will not be interested in yours because those people do not want to rent ex housing association houses in the middle of a housing association estate.

Your property is exactly what social tenants want but they want it at the housing association level of rent not at the level of a private rent. If you don't understand what I mean find out how much it costs to rent a house the same size as yours that is privately owned and has never been social housing and compare it to the rent that you pay.

Owning a house is expensive. It is much much more expensive than renting a housing association house. All the repairs, building insurance, etc are down to you. You have to pay for anything that needs doing. You also have to pay for the mortgage. If the person paying the rent loses their job housing benefit will not pay a mortgage. The most you can get paid is the interest for a limited amount of time. If you do not pay the mortgage the house will be repossessed and you will become homeless. So house owners need a lot of savings so that they can pay the mortgage if they are not working.

If you buy the house you are in move out and let it you will have to be able to pay two mortgages if neither of you are working and the let house doesn't have a tenant so no rent coming in. The chances are that the let house will have a lot of vacancies because it will be difficult to let privately. If you are unable to pay the two mortgages both houses will be repossessed.

If houses fall in value the £170 houses will become cheaper but so will your house. What can happen is that the house can be worth less than the mortgage on it. If this happens you won't have any equity in the house to borrow against. This is called negative equity and as your whole plan relies on building equity in the ex housing association house the plan will fail if this happens.

Gemandcraig

I am saying they are priced at 130k not that they are selling for this. There are 3 roads of council housing in our whole village - crime rate around here is the lowest in our whole town, i am not sure about the valuation - I know the house 2 doors away sold for £150 2 years ago but it is a corner plot.

The idea of building equity is a good one however I am also thinking long term investment for the children as well as just owning a property. Its probably also the kind of area i wouldnt mind retiring in. Most of the houses on our street are privately owned anyway - the house next door is rented for £500 pcm for 3 beds which seems okay for an ex-council property.

I have lived in this property for around 7 years now and I know I am happy with the area - I have lived in this town my whole life so feel I know it pretty well. I am not sure how much research I need to do. I think its a good time to buy - 110k with around 10k relief and 10k deposit should be a good amount of equity to start with.

Gem

Cakeguts

Gemandcraig wrote: »

I am saying they are priced at 130k not that they are selling for this. There are 3 roads of council housing in our whole village - crime rate around here is the lowest in our whole town, i am not sure about the valuation - I know the house 2 doors away sold for £150 2 years ago but it is a corner plot.

The idea of building equity is a good one however I am also thinking long term investment for the children as well as just owning a property. Its probably also the kind of area i wouldnt mind retiring in. Most of the houses on our street are privately owned anyway - the house next door is rented for £500 pcm for 3 beds which seems okay for an ex-council property.

I have lived in this property for around 7 years now and I know I am happy with the area - I have lived in this town my whole life so feel I know it pretty well. I am not sure how much research I need to do. I think its a good time to buy - 110k with around 10k relief and 10k deposit should be a good amount of equity to start with.

Gem

So you would have a mortgage for 90k is that correct with 20k equity? For a buy to let mortgage which is what you would have to have if you wanted to move and let the property before you had paid off the mortgage you would have to have 25%k equity in the property. Buy to let mortgages are different to ordinary mortgages and the limit on what you can borrow is often only 75%.

The house next door is let for 500pcm but the owner has to pay income tax on the rent they also have to pay buildings insurance and they have to pay for all repairs. If they have a mortgage they may also have to pay that as well out of the rent. Sometimes this can mean that there isn't very much left over afterwards and if you get the figures wrong you could finish up not getting any money and actually having to pay some out.

When you buy your house and have a mortgage you will have to pay for everything to do with the house as well as the mortgage. So if the kitchen tap starts to drip you will have to call a plumber and pay to have it repaired. So add up all the things that the housing association has repaired recently and check to make sure that you could afford to pay for them after you have paid your mortgage. If the fences get blown down by the wind in the back garden you will have to pay for a new fence. House owners pay for all the maintenance to their houses.

Did the house that sold for £150k on the corner plot have the original kitchen and bathroom in it that were put in by the housing association or did it have a new kitchen and bathroom? A corner plot can be worth more if you could extend the house. A new kitchen and bathroom could cost 10k. Most people who buy a house will want a better kitchen and bathroom than one that has been put into a house by a housing association and so they would offer you less money. If the house needs repairs then it will also be worth less. So you can't guarantee that you will make money when you come to sell without spending any money on the house.

House prices go down as well as up. If you have a mortgage for £90k and house prices go down you could lose all of the equity. If you can only sell the house for 90k you will have lost the discount and the deposit and the house will only be worth what the mortgage is for. There are threads on this forum about people who have lost money when they sell houses. This is why it is a bad idea to try to buy houses as investments in order to acquire equity it doesn't always work like that. The best thing to do is to buy a house because you want to live in it not because you hope to make money from it.

You are working from the basis that you will make money on this house but what are you going to do if you don't? Will you be happy to live there until you have paid the mortgage off? There is never any guarantee that anyone will sell a house for more than they paid for it. Lots of people sell houses for less than they paid for them. Some people have houses that are worth less than the mortgage so have you considered what you would do if the house is worth £85k and the mortgage is 90k?

No one can tell what will happen to house prices in the future. Just because they have gone up recently doesn't mean that they always will. In the early 1990s house prices went down a lot. It could happen again you have to be prepared. Lots of people got negative equity where their mortgages were more than their houses were worth. All of this is why it is important to buy a house because you want to live in it not because you hope to make money from it. The people who do make money from their houses choose the houses they buy very very carefully and they often spend a lot of money on the houses improving them.

Norman_Castle

Cakeguts wrote: »

It isn't anything to do with the area as much as to do with the origin of the house and whether any other houses are still rented by housing association tenants. That is what makes a difference to who chooses to rent an ex housing association house privately. Housing association houses are social housing and good tenants don't want to rent ex social housing regardless of how nice the area is if they can get a house that has never been a housing association house. Good tenants would much rather rent a property that has never been social housing. If you are relying on the income from a let property you don't want one that only attracts tenants who don't pay the rent, or wreck the house. You also don't want the house to be vacant for long periods of time.

It is easier to let a house that has always been privately owned than a house that has been social housing especially in an area where 3 bed houses cost £160k on the open market.

Tenants are unlikely to know or care if a property is ex social housing. As the op said, "The area we live in is lovely - We would not struggle to rent a property out around here."

Private_Church

Another one of those "investment" threads rather than buying a home like normal people , today the priority is how much money people can make rather than a home... I do wonder if as a society we are progressing or just becoming obsessed by money..

Cakeguts

Norman_Castle wrote: »

Tenants are unlikely to know or care if a property is ex social housing. As the op said, "The area we live in is lovely - We would not struggle to rent a property out around here."

It depends where it is. I know of an area in the North West where people do not want to rent a council house privately if they can get one that isn't ex local authority. In London it doesn't make any difference as to the origin of the property but in some places it certainly does.

teddysmum

Mist council houses have a recognisable design, depending on the decade in which they were built.

Zahir764

Housing Association Group is not playing right for me. I am leaving in flat ans I was not aware that I am renting in HAG instead council, I have applied to local Council and I did not sign anything that could rent out as association tenants I was thinking that still is with Council. My contract does not say anything about association housing/flat or rental. What I have find out that should be 50% or 30 % less rental from Council Tenants because the houses/flats can not be sold for them in the future.

So, my rent was not cheat and had not any discount, flat was dirty with fungus and I had not any discount for remount, my all salary went for monthly rent 750.00 and I have find out that flat can not be sell because the HA is the private owner.

Question is ..what the hell private institution doing in Council ? Only because they want grab own profit what about the poor people which they this way are cheated ?
Why Council do not inform people about taken over by association house ?

Normal people thinks that after 5 years they will be able to buy property but they are in mistake - big surprise.
If you would like require why this is not included on application or why nobody inform you about this on time ? they will response that nobody is obligated to inform you but after 5 years renting then will kick you !!! from property and do not let you buy. they will inform you about this.

Do you think it is fair ?