Council Right to Buy Scheme - HELP

smitchy73

I've got no reason to dislike the person involved here, my arguments would be with the Councils and the government who for years have been renting these houses out for quite alot of money, and didn't reinvest it into the housing stock, now they are selling them off to Housing Association and getting hundred's of millions for the priviledge of doing this.
My wife and I (well just before we got married) applied for both Council and Housing Association house, we were both in full time work, both from the same council area and had been all our days, both been working for over 10 years paying tax and NI etc, we got about 5 points, I think we needed something like 50 points to even get on the list!
What made it worse is the fact that a girl my wife used to go to school returned to the town after something like 10 years away, came back with a kid (Single mum - no offence) and got a house straight away even though she had relatives in the area.
I'm not saying she doesn't deserve a house but to deprive other people who have lived and worked in the area with parents and just about to get married just doesn't seem fair either.
So I say buy the house for the old man, let him live in it till (I hate to say) the ultimate happens, and get him to leave it in his will, or better still can your bf and his brother not go halvers on it and then split it when and if they decide to sell at some point in the future.

hedgehogpenguin

Why would you need council housing if you were both employed ?

krisskross

scottp wrote: »

Hi,

I have a little problem for you. My mums partner has the opportunity to purchase his dads council house that he has lived in for a number of years. However, the house has to be firstly purchased by his dad, and then transferred over. This shouldn’t be a problem as the contract states that transfers can be made to immediate family without imposing a penalty, as if it is sold within 5 years you have to pay back a percentage of the discount.
The plan was for my mums partner to give his dad £25,000 to buy the house, and then transfer the house straight into his name, keep it for 5 years and sell at a profit (The house is worth around £90,000 already).
What would the implications be? I know CGT would probably be an issue, as well as deprivation of assets if his dad needs to go into a care home, but what else?
Something I suggested was it may be more worthwhile putting something in his dad’s Will stating that the house will go to his son, but this may cause a problem with his other son?

Any ideas on what they can do?

Thanks a lot!!

I thought discounts were capped. Will £25,000 really buy a property that you expect to be valued at nearer £90K?

seven-day-weekend

hedgehogpenguin wrote: »

Why would you need council housing if you were both employed ?

Anyone can apply to go on a Council Housing list, it is nothing to do with being employed or not. Even employed people would like security of tenure and less rent to pay.

hedgehogpenguin

So I can apply for council housing even though I have a fairly well paid job ? Kind of seems unfair that I should be able to get a council house and save loads of money due to low rent and then get a discount when I want to buy it !!
Is that right ?

tanith

Well you can apply but that does not mean you will ever get one... it will depend on your circumstances and the length of the waiting lists in your part of the world....

My parents waited 28yrs for a council house and finally were given one when 3 of their children were grown up and married... but that was in the 60's but you have to have lots of 'points' nowadays to get allocated even a one bed high rise flat in London....

moneysavinmonkey

hmmm... aside from the moral implications - which you obviously aren't bothered by so I won't waste my breath - there a number of practical problems to your plan:

- the arrangement would most likely be against the rules of the RTB scheme
- your mother's partner would have no legal claim to the house - a lot could happen in 5 years he couldn't 'force' his dad to sell it to him
- 25k isn't going to buy a whole house even with a discount - how is your partner's dad going to get a mortgage - i'm presuming he is retired - subprime mortgage don't exist anymore
- a council house is arguably the most secure tenure you can get, your mother's partner should think long and hard about depriving his father of this for his own financial gain
- again a council house is fully maintained and if any adaptations are needed for disability etc the council will do these - again why voluntarily give this away? If the house is bought and the boiler breaks and your dad needs a stairlift who is going to pay?
- if you dad buys the property but falls behind in the payments and gets repossesed he will not be eligible for another council house as he will be classed as intentionally homeless.
- where is your mother's partner's father planning on living after 5 years - renting privately or buying a property on the open market will likely eat up any 'profit' gained by exploiting RTB
- does he really want to move from his family home in five years time?
- what happened if your mother's partner's father needed to go into care, or even just assisted living, his house would be sold by the state to pay for this
- what happens if your mother's partner's father dies before 5 years is up?? - Is the house allowed to be sold/inherited? does it revert to the council? - - - Can you guarantee that it would be inherited by the right person?
-watch the news - is now really the best time to get into speculating on property!!
- probably loads more reasons......:rotfl:

Perhaps this is harsh but as I see it your mother's partner is screwing over his dad for a quick profit... i hope his father takes the money, keeps his council house and screws him right back!!

monkeyspanner

Swift1 wrote: »

A friend or family member giving a tenant money to buy a council house under RTB would be at risk of losing their cash as they would have no rights at all over the property. In most cases any deal thrashed out between these people would be totally invalid legally.

Anyone on benefits taking out a fresh mortgage would struggle to get anyone to pay off the interest for them and would be giving up all the rights and benefits of a secured tenancy.

Valuation wise, I honestly don't think the council will let anyone 'sit on' a price for a few years, they are keen for purchases to be made within a few months of the official offer.

Seems a dangerous venture for everybody involved really (especially the dad!)and I wouldn't go any further without getting masses of free advice and exploring every possible scenario.

I assume these comments relate to my original post which was based on personal experience of the RTB and benefits system in relation to a purchase of a council house by my Mother in Law for which I provided the funds.

If you provide a private mortgage to a relative or friend and this mortgage is drawn up by a solicitor the lender can register a charge over the property at the land registry and as long as the mortgagee makes the relevant interest and/or mortgage payments then their ownership of the property is secure.

If the mortgagee is in receipt of benefits then it is possible to apply and receive support from the benefit system to cover the interest payments on the mortgage. This is calculated at a standard rate and may not exactly match the actual mortgage interest but will not be much different. In the case of my MIL I did not take interest payments letting them mount up and eventually set these payment arrears against the value of the house when it was sold. This allowed my MIL to enjoy a better standard of living and more financial stability whilst she was still able to live at home and in addition allowed her the flexibility of choosing her own care provider. These benefits were less than the housing benefit the council were providing the housing association to cover the rent on the property prior to purchase.

My MIL requested a RTB valuation and had forgotten about it for I think 2 years (it may have been 3 years), the council reminded her that this valuation was about to expire if she did not proceed with the purchase. At that point we offered to help her buy. So unless the rules covering RTB have changed I think it should be possible to fix a valuation now and pick it up later.

This assistance I provided for my MIL was not to make a profit for myself or my MIL it was to provide some funds to give her some flexibility in her old age. The proceeds of the sale of the house have paid for care when she moved from her own home to a rented flat in sheltered accommodation and are currently being used to pay for a care home of her choice so is effectively going back into council funds as Social Services are not funding her care at all.

kunekune

If person A contributes to the purchase of a house by person B, but person A is not on the legal title, they may be able to argue that person B held a portion of the house on trust for them. However ... it is never quite that simple in the real world. Obviously, litigation is expensive ... so it is daft to plan on something where you are going to end up in court. The whole scheme really only works if you can trust everyone to stick to their side of the deal. And also, if the purpose of not being on the title was fraud (eg, help someone use right to buy in order to get it yourself?????) then the evidence of what was intended might not be admissible in court (see the lesson of Tinsley v Milligan).

Swift1_3

Yes @ Monkeyspanner the comments were aimed at you and yes I believe the rules have changed, I assume your purchase was many years ago.

Also any contract, by a solicitor or otherwise is totally invalid when relating to a RTB property as whatever is agreed the council and/or the former tenant have sole right and responsibility. You could give someone £100K to buy their council house and have all sorts of contracts drawn up but the property would never be yours and you would have no right to a single penny against it. At the end of the 10 year buyback period the tenant could if they wished pass it on to you (or 5 years if the council agreed) but theres every chance by then they would be unwilling or unable to do so.

After many years of people 'being creative' with RTB just to make profit the Government have finally closed up all the loopholes they can think of. Most people who aren't genuinely after a long term home with a small discount to help them get on the property ladder will now find it very difficult to use RTB and I think thats to be applauded.