Anything stopping me buying parents' council house?

maria990_2

Hi,

I'm looking for some advice about the technicalities of buying my parents' council house. They have been tenants for about 30 years so are entitled to the right to buy with a full discount, but they are both 50 and due to their circumstances won't be able to get a mortgage on their own. If I was to help them buy it (pay the full mortgage) and they signed the deeds over to me after the 3 year period was over and they were living in the house rent/mortgage free, would the Council be entitled to claim that it was mis-sold or not allowed to be transferred over to me should the time come that they would have to go in to a nursing home and claim it for fees?

I want them to be financially stable and not have to pay rent for the rest of their lives but don't want to be in the position where I own the house but the council/government has a claim for nursing home fees.

dolce_vita

In other words, you want to know how to buy a house on the cheap?

CrimeWave

I cant see the problem with it or they wouldn't have introduced the 5 year discount payback. They probably increased this from 3 years because of other people doing what you want to do.I suppose they could have stated a condition that it couldn't be transferred or sold at all. My father in law did the same, was over 50 and managed to get a mortgage. If no company would offer your parents' a mortgage I cant see them taking your wages into consideration but I believe some 'dodgier' companies offer mortgages on a no proof of income basis but arrangement fees and interest rates hit the roof. Ignore the posts about getting a house on the cheap. They are just jealous due to the current housing market situation and probably think you are getting it handed to you on a silver platter. If you have the opportunity to do then go ahead, my father in law is really happpy he did it.
There is a hell of a lot worse the tax payers money has been wasted on, this is not one of them. Ridiculous bureaucracy in all public services is just an example. This government just needs to open its mouth and money pours down the drain. The list can be a mile long. At least this 'incentive' gives something back.

GeorgeUK

The right to buy is only available to the tenent, so you would not be able to buy the property for them.

BUT

The secure tenant can elect members of their family to share the right to buy. Members of your family may share the right to buy if the property is their only or principal home and they have lived with you throughout the last 12 months. A person living with you as your husband or wife, who may not actually be married to you, is regarded as a member of your family. You may share the right to buy with up to 3 members of your family who are not themselves tenants.

So it doesn't sound like this is an option for you.

Have you worked out how much of a mortgage they would need to get?
The basic discount when buying a council house is 30% then 1% extra for every year they have been a tenent - up to a max of 60%
(Differrent rates for Flats)

There may also be a maximum £ discount that the Local Authority restricts them to.

Have they looked at right-to-buy mortgages as well as ordinary mortgages? Are you sure they won't be able to get one?

If you need an idea of how much the property may be valued at, try
http://www.nethouseprices.com/index.php?con=sold_prices

but bear in mind that most of these home would have been redecorated + possibly updated etc before being sold.

thesaint

It would be best to ask the council who own the property in question.

Asking this question on here leads to lots of accusations and name calling.
If you can buy the house, the council will let you know without the moralising that is evident here.

If it gets too unpleasant, report it to the 'Abuse' team, they will remind MSE'ers that we are not here to judge on the merits of the policy. :A

Melissa177

Can I remind everyone that when this policy was introduced, the idea was to SAVE taxpayers money because of the amount of maintenance that social housing required.

And the answer to the OP's question is... I don't know!

seven-day-weekend

I am sick and tired of people being abusive to others who are enquiring about RIGHT to buy - notice the capitals, it is a RIGHT. If you don't like the policy, write to Flash Gordon and ask him to change it.

In answer to your question OP, yes, AFAIK they can sign the house over to you after the tie-in period.

However I think that this could be classed as deliberate deprivation of assets should they need to go into care.

Please bear in mind that the Council cannot take the house if a person over 60 is still living in it. Also that if they live there rent-free, you may have to pay loads of inheritance tax when they shuffle off this mortal coil.

Hope this helps!

mum2one

Im digressing slighty, but at the end of the day no one on here has taken into account that the rent paid on the property, his parents have most probably paid for the house 3 times over.

There is a way of doing it, but they may insist that one of the tenants is on the mortgage, if this is the case, then when a will is written, the tenant would merely sign over there share of the house.

Also there would need to be a document drawn up legally saying what why and how.

wifeforlife

maria990 wrote: »

Hi,

I'm looking for some advice about the technicalities of buying my parents' council house. They have been tenants for about 30 years so are entitled to the right to buy with a full discount, but they are both 50 and due to their circumstances won't be able to get a mortgage on their own. If I was to help them buy it (pay the full mortgage) and they signed the deeds over to me after the 3 year period was over and they were living in the house rent/mortgage free, would the Council be entitled to claim that it was mis-sold or not allowed to be transferred over to me should the time come that they would have to go in to a nursing home and claim it for fees?

I want them to be financially stable and not have to pay rent for the rest of their lives but don't want to be in the position where I own the house but the council/government has a claim for nursing home fees.

My folks bought my nans house last year for her, she has lived in it for 36years, it's where they moved as a family, my grandad died in it, and we've all lived in it at some time or another. The way my parents helped her was to get my Dad and his mum to get a joint mortgage. Obviously it's my mum and dad paying it as my nan is 74 yrs old but she pays all her own bills and it's in her will that it be left to dad when she passes away. Although my mum and dad will never want the house for themselves my dads batchelor brother (in his 40's) who lives there now will probably stay until he passes too.

Anyway the house is in my nans name and it's her and dads on the mortgage, my folks just wanted her to be safe and secure in her later years, although I think my nan wanted her son who lives with her to be secure when she's not about anymore.

I as someone who doesnt qualify for council housing (single working mum) and cant afford to buy a house so privately rent, dont have see what the problem is with what your looking to do. I think it's honourable that you want to look after your parents.

Goodluck
Cate

monkeyspanner

Maria please ignore the negative comments. Your parents have paid rent for 30 years they have more than earned the right to buy at a discount and whether people believe the system is right or moral is irrelevant as it is the current legislative framework.

There are a number of practical points you need to consider.

As your parents are entitled to the discount due to their long term tenancy the house would have to be purchased by them and in their names either as joint owners or tenants in common. Long term there are some advantages in tenants in common if either of your parents ever need care or care home provision.

It would be worth making enquiries and getting an offer from the council/HA as these offers are open for a couple of years (I can't remember the exact period) your parents can sit on the offer and let the value of the house increase until they are ready to buy and the purchase price will be as originally offered.

If they are unable to obtain a commmercial mortgage and it would surprise me if they could not find a lender as the amount of the mortgage would be more than adequately covered by the value of the property. It is worth noting that if they are in receipt of benefits they may be able to get some assistance with the mortgage interest costs. Before someone starts screaming about the state buying their property for them consider that if they are on benefits they may be in receipt of housing benefit anyway which could amount to more than any mortgage assistance they might receive.

If you cross guarantee the mortgage or take out a mortgage to give/lend them the money to buy you need to decide what security will secure the mortgage. i.e. will the mortgage be secured against your parents property or some other asset. If you have your own funds you could provide them a private mortgage and they could be entitled to assistance on the interest arising. It may be more practical for you to raise the money against an asset of yours e.g. a second/extended mortgage on your property and then loan your parents the money to buy on a private mortgage agreement.

There is normally a time-out period during which a proportion of the proceeds of any sale would need to be repaid to the council/HA. This I think is normally calculated as a diminishing fraction of the valuation discount. In addition councils/HA usually ask to be given first refusal if you intend to sell but they usually only have limited buy back funds.

Once this time period is over the house is your parents to dispose as they see fit subject to any mortgage lenders permission. If your parents give you the house there a few things to consider.

Inheritance tax - Unlikely this would affect you due to IHT allowances of £600,000 per couple. But the house would only be treated as a totally exempt transfer if your parents survive 7 years and they pay you a commercial rent after the gift, otherwise it could be considered that they retained a benefit by continuing to live in the house rent free.

Capital Gains Tax - You would be liable for any gain in value of the house between the value of the house at the time of the gift and its eventual sale unless it was your main residence.

Care Home Fees - If either of your parents need a care home in the future they could be assessed as having deliberately deprived themselves of assets in order to avoid care home fees. As they are both relatively young and if there are no current health issues at the time of the gift and if an amount of time elapses after the gift this would probably not be considered but it is a possibilty and I believe it is not time limited. In addition the council has the right to recover the asset from the person it has been gifted to, but more normally would assess your parents as still having the asset and therefore not entitled to assistance with their care home fees.

Security of tenure - Once the house is gifted to you, your parents will be vulnerably to any unfortunate events in your life and could as a result lose their home. e.g. family disputes, your divorce and any financial settlement, your death/ill health/financial problems. So you might wish to cover some of these possibilities with insurance protection.

I have in the past assisted my MIL in buying her council house and she is currently using the proceeds of its sale to pay for her own care home fees.

Debt_Free_Chick

maria990 wrote: »

In what way is it buying a council house on the cheap? The price is the same only the person paying for it will be different. My parents get to live rent free for as long as they can, and god forbid their health deteriorates the house can be sold at market rate to take care of them in a home. Only my dad works and he earns mininum wage and is in poor health. No way they could pay a mortgage.

Just bear in mind that in addition to the mortgage, there would be all the maintenance to pay and buildings insurance premiums. So their outgoings could be more.

Are your parents claiming all the benefits they're entitled to? Is Dad eligible for Working Tax Credit?

When they get to receive their State Pension, they'll probably get it topped up by the Pension Credit as well.

I can understand about "securing their retirement" but you may actually be upping their outgoings, so do the numbers for each different scenario before you decide that it's definitely right, to buy.