Advice about potential Right to Buy

Dalemar

Hi 

I would like to ask for your opinion about some options for the future that I am currently thinking about.  My situation is that I am 51 and single with no dependents (unlikely to change) living in a housing association property in central London.  The property is large, modern and with private outside space.  It is near all amenities and I absolutely love living here.  The rent and associated charges total approximately £615 per month.  I am very conscious, and grateful, that I have cheap stress-free living with all repairs and maintenance taken care of and lifetime security.

I am currently earning approximately £50k per year and have built up a defined benefit civil service pension of around 17K, which is increasing by 1.5K per year on average.  My job seems relatively safe for the moment, but I know this could change due to the present unprecedented situation.   I am, however, thinking about the future and especially retirement.  I have been considering that maybe I should try to buy a property, so that I have a chance of either living rent free in retirement, or at least having the opportunity to fix and reduce my accommodation costs to some extent.

I know that I have left it a bit late to be thinking of purchasing property.  I also know that I am currently entitled to a full state pension, and that along with my civil service pension, I should be able to manage quite well in retirement in a flat I love even though I will be continuing to pay rent.  However, I have been pursuing the idea of swapping my flat with a local authority property to potentially exercise the right to buy.  

I do have possible swaps lined-up.  But I am wondering if people think this is a wise move given the potential major works charges (I am looking at house conversions and midrise blocks without lifts) that you can be landed with, and also because of my age and the relatively short time before retirement that I can service a mortgage.  I would like to stay in London, so any potential property purchase would only really be do-able with the right to buy. 

I am really torn about whether to potentially give up my very safe, secure and pleasant living arrangements for potentially a much riskier set of circumstances, but with possibly much more financial security in future.  

I am really looking for people’s views of whether this would be a good thing to do in my situation or not, and the pros and cons.  I really would be grateful for your input.     

FtbDreaming

If it was me at your age and happy where you are then I would stay put. You could move just for the purpose of RTB then hate the property or the neighbours or not even have the opportunity to use the RTB. 

Mojisola

Dalemar said:

The property is large, modern and with private outside space.  It is near all amenities and I absolutely love living here.  The rent and associated charges total approximately £615 per month.  I am very conscious, and grateful, that I have cheap stress-free living with all repairs and maintenance taken care of and lifetime security.

When you put it like that, why would you want to move?

[Deleted User]

If you are single and love where you are living, no forseeable problems paying rent, I'd stay where you are knowing that the property you live in will be available to someone else when you no longer need it.  Then someone else in need of a stable home can appreciate it as much as you do. Getting a mortgage will be difficult, and introduce risks to your life you just don't have at the moment. Why change what is working so well for you?

AdrianC

At 51, with a £17k/pa and rising DB pension, why on earth would you be thinking of swapping your £600/mo secure and pretty-much-ideal property...?

I'd be thinking about early retirement, tbh. With that rate of annual increase, you could be looking at retiring on somewhere around national average income by your mid-late 50s. Would you want to stay in central London then?

You don't mention savings and investments - but I'd presume that as a single person with a £50k income, you do have a reasonably substantial nest-egg tucked away? May we ask what sort of size? Because that certainly affects your options.

And, looking ahead to your demise, you say that you are single with no dependents -  but do you have other family members or friends who you would want to leave bequests to... or would you prefer to spend your money on yourself during your life?

da_rule

Some things to consider:
1) Are you currently on a secure tenancy and is your landlord a “social landlord” as defined by the Housing Act 1985? If not, you’ll have to wait 3 years before you can exercise your right to buy. Also, local authorities are not necessarily offering secure tenancies right away, and you need to be a secure tenant to exercise your right to buy. 

2) As you’ve identified, service charges could be crippling. 

3) This year marks the 40th year of right to buy. For leaseholders that could be problematic as the Housing Act requires leases to have terms of 125 years (unless the local authority holds the property on a lease with a shorter term) however it permits local authorities to grant co-terminus leases. This means that if a lease under right to buy was granted in your block in 1980 for 125 years your lease could terminate at the same time (i.e. you are only getting an 85 year term). This would mean that you may have to fork out for a potentially expensive lease extension quite quickly after completing (having had to wait 2 years to qualify for an extension). If you have also had to wait to become a secure tenant and build up your qualifying period to exercise your right to buy, you may end up with a lease of less than 80 years. 

4) You’ll lose the protection of your tenancy. Your current landlord would make adaptions to your property if your needs changed or offer to move you to more suitable accommodation. You would lose this. You’d also lose the ability to claim housing benefit should it be needed. 

5) If you exercise your right to buy, the property you buy will be an asset taken into account should you ever need care, meaning that you may end up paying for your own care. 

6) If you have no dependents and that is unlikely to change then who will you leave the property to? The state may end up benefiting from your death. 

cattie

I agree with all other replies you've received, which basically amounts to you are very happy indeed living in  your current spacious home & have no financial problems now, or seemingly will in the future. Please stay where you are & don't risk ending up in a council block somewhere with less than perfect neighbours.

Having a safe & secure roof over your head, where you enjoy living is something to be very thankfull for, so just continue to enjoy living there until the time comes for you to shuffle off into the great unknown. Owning a property is not the be all & end all of a happy life & in times of financial hardship, there is far more help available to renters than there is for home owners.

Dalemar

I'd like to thank everyone for their contributions.  You have given me a lot to think about.  It seems that everyone is saying what deep down I have been thinking - that I should stay where I am.  To answer some of the questions above, I do have an assured lifetime tenancy with a Housing Association.  I also have savings of approximately £35,000 which I am adding 1k a month to for a possible deposit.  My only reason for thinking about buying would be to have less accommodation costs in retirement.  However, I think I agree that maybe that money should be put to another use - possible earlier retirement for example.  Once again thanks for all your replies.