Buying the Mother In-Laws Council House

DilbertJones

Is it possible to buy my Mother In-Law's House?

She has lived there for quite some time, & it was a council house, now its a housing association House, & she is entitled to about 50% Discount.

I live in an area where house prices a far higher then normal in terms of average wages, & I am unable to fund a mortgage for myself at the current time, but i could easily afford this house.

what are the implications, & any future gains from doing this if any?

Best Regards

lady123_2

firstly ask the ha if she still has the rtb on the property, if she does then you have to put your name on her tenancy agreement as the rtb is hers and the bank will need your name on the deeds before lending you the money.if the property is valued really lowthen you might be able to buy it wth saveings or a non secured loan that you can pay back penalty free

Bossyboots

lady123 wrote:

firstly ask the ha if she still has the rtb on the property, if she does then you have to put your name on her tenancy agreement as the rtb is hers and the bank will need your name on the deeds before lending you the money.if the property is valued really lowthen you might be able to buy it wth saveings or a non secured loan that you can pay back penalty free

Its not quite that simple. You have to hold the tenancy for three years and there is no guarantee that the landlord will agree.

The other way to do it is for MIL to buy the property with you lending her the money. You then need a Deed of Trust drawn up to protect your investment. You should seen proper legal advice for this and have it done professionally. I know several people who have done it this way with no problems.

DilbertJones

sounds complex to me!!

Bossyboots

robodan wrote:

sounds complex to me!!

The legal wording can be complex but the theory is simple.

You lend your MIL the money to buy the house. You and she execute a document ensuring the property passes to you on her death. This document is designed to protect your investment as otherwise MIL could leave the house to someone else in her will.

The wording needs to be right though to stop anyone trying to claim on her estate over your head if they find a loophole in the deed of trust. That is why it needs to be done properly.

The other alternative is to loan her the money by way of legal charge and secure that against the property (in the same way as a mortgage). This would ensure you recovered your investment (subject to house price fluctuations which are unlikely to be a problem here because of the discount). However, the house would not pass to you as of right doing this. You would simply be entitled to repayment of the loan on sale of the property.

Cardinal-Red

Will the Deed of Trust or the registered charge on the property protect the buyer if the house needs to be sold to fund long term care?

Bossyboots

Cardinal-Red wrote:

Will the Deed of Trust or the registered charge on the property protect the buyer if the house needs to be sold to fund long term care?

The registered charge will protect the investment as it is the same as a mortgage and falls to be repaid in the property is sold. It won't prevent the property being sold but the capital will be repaid. It would be sensible to include interest in the charge as well so there is a return on the investment.

I am not sure about the the deed of trust as unfortunately of the people I know that have done it, some are still alive but others have died without needing care. The investment plus interest should be safe but it may be that there is a claim on any surplus. This is why it is important to have proper advice. When right to buy and the associated deeds of trust first came about, there was not all this business about paying for care so it was not an issue.

The deeds should have evolved to take this into account and the OP needs to find a solicitor familiar with dealing with them.

Cardinal-Red

Thanks Bossy - am in a similair situation but it's my partner's grandparents home, so the chances of death or long term care are (sadly) higher.

It's a tough subject to approach when discussing it with them to be honest but it seems fraught with danger.

skylight

Ask for a leaflet from the council when you check the right to buy scenario.

Just because she could have 50% discount, each council views that differently. Mine for example (Slough) will allow me an 18% discount UPTO £15k. My house is currently worth £185k on open market, so 18% is about £33k, but they will only give me £15k Max.

The leaflets will give you more information and you are not obligated to do anything. Also, the value of the house is worked out by their valuers and not yours!