Buying council house with a friend

aj9648

Hi

Friend of mine has been offered chance to buy his council at a ridiculously cheap price. However his credit rating and ability to get a mortgage is non existent and there is now way he can raise the capital.

Is there anyway I can step in and help and buy it jointly with him? And use it as an investment. I already own my own home and could buy it with cash that I have.

Where does the legality of this?

seashore22

Here we go again.

Your friend can't afford it.

You have no right to buy it.

Your friend will have to stay in the nice position of renting a council property, which has many advantages.

I say that as someone who lived in council properties for the first 20 years of their life and whose parents didn't buy their council house, despite having the right to buy.

karcher

aj9648 wrote: »

Hi

Friend of mine has been offered chance to buy his council at a ridiculously cheap price. However his credit rating and ability to get a mortgage is non existent and there is now way he can raise the capital.

Is there anyway I can step in and help and buy it jointly with him? And use it as an investment. I already own my own home and could buy it with cash that I have.

Where does the legality of this?

*sighs*

I hope not!!!

antrobus

aj9648 wrote: »

Hi

Friend of mine has been offered chance to buy his council at a ridiculously cheap price. However his credit rating and ability to get a mortgage is non existent and there is now way he can raise the capital....

Yes there is. He has a friend with plenty of cash that could lend him the money.:)

seashore22

antrobus wrote: »

Yes there is. He has a friend with plenty of cash that could lend him the money.:)

I suspect the op may not be so keen on that one.

Marvel1

seashore22 wrote: »

I suspect the op may not be so keen on that one.

It would also cause a fun mortgage application.

seashore22

cjdavies wrote: »

It would also cause a fun mortgage application.

That too.

davidmcn

aj9648 wrote: »

Where does the legality of this?

The legality of this does badly.

fairy_lights

I'll get the popcorn...

Pixie5740

You cannot jointly purchase the property with your friend because you do not have the right to buy the property. Your friend could make an application to purchase the property and you could gift or lend your friend the money to buy the property. If you lend the money you could place a 2nd charge (council will have the 1st) on the property to secure the debt. I can't see the investment opportunity there unless you charge your friend quite a high interest rate.

00ec25

aj9648 wrote: »

Where does the legality of this?

you cannot legally buy the property with your friend as you have no right to buy it

your friend can buy it if he has the money

"your" obvious solution therefore is to set up a private mortgage between you and your friend so he gets the money he needs to buy it with in his SOLE name

your friend then repays the money he borrowed from you under whatever terms you and he agree, for example:
- no payments for 5 years then, once the discount repayment period has ended, he transfers part ownership to you based on its then value and the fact your loan to value ratio has increased due to the zero repayments
- he makes payments for the first 5 years, and if you charge interest you pay tax on that. If he pays no interest, and thus is simply repaying capital, at the end of 5 years your loan to value ratio has decreased and you get a slightly smaller share of the house when he makes you a part owner

in both cases there is a remote chance that the council will exercise its right of first refusal when he tries to "sell" part of the property to you. Other than that, there is your disgustingly immoral, but legal, option.


don't forget you will have to pay the higher rate SDLT when you acquire part ownership, but more importantly, never mix money and friendship, particularly where a loan is concerned.