Right to buy

Gfitton

Hi everyone,

I have been a council tenant for 36 years, I am looking into buying the house using the right to buy scheme with financial help from my son.

After some initial research I'm left with a few questions and would like further explanation. 

I am just wondering how that will effect my benefits. I am currently on Universal credit and limited capability to work?

Should i get my own valuation done (free one if possible) first or just wait for the council to do a valuation after i have started the application process?

My son also has his own help to buy ISA to get his own home in the next few years and he is wondering if he buys this house with me or provides funds for me to buy the property will his ISA will be affected?

Also is there other things I should be considering before going through with this?

Thanks

HampshireH

Gfitton said:

Hi everyone,

I have been a council tenant for 36 years, I am looking into buying the house using the right to buy scheme with financial help from my son.

After some initial research I'm left with a few questions and would like further explanation. 

I am just wondering how that will effect my benefits. I am currently on Universal credit and limited capability to work?  Have you read this ? It may help with this question - specifically the links in it

https://righttobuy.gov.uk/help/questions-and-answers/#:~:text=Being on benefits doesn't,out all the costs involved.

Should i get my own valuation done (free one if possible) first or just wait for the council to do a valuation after i have started the application process? The Council will value it. You can get your own but they will probably go with theirs. As you don't own the property some agents will decline to value it for you as they know you won't ever be a customer.

My son also has his own help to buy ISA to get his own home in the next few years and he is wondering if he buys this house with me or provides funds for me to buy the property will his ISA will be affected?  Your son will not be able to benefit any further than FTB discounts /incentives as he will already be a homeowner unless he is gifting you the money?

Also is there other things I should be considering before going through with this?

Loads. Can you afford repair and maintenance? How will you pay the mortgage? What interest will you son have if any? Will he live there?

Thanks

See above in bold

Gfitton

Thanks for the response,

My son was planning on getting a bank loan rather than a mortgage as it will not be over £45,000, and then gifting me the money. This way it will not effect his own plans with his help to buy ISA?

I will look and read through the information you provided with the link, as we are only just starting the planning process we are very early on and are probably missing loads of key information needed to make a decision as big as this.

My son will not be living with me in the house as he lives and works abroad. I guess as the house will eventually be left to him he is also classing this as a future investment for himself.

I also understand that I will have to pay for any repairs/maintenance etc.

McKneff

What if you became ill and ended up having to go into care. 
Property would have to be sold to pay for that care. So no guarantee of any inheritace for your son
Not only would you have maintained costs
ts,, there is also buildings insurance, contents insurance, 
Have you mentioned it to your son. 

If you get a payment of 45k into your account you will be over the benefits entitlement you may be receiving now. ...
Its a minefield

HampshireH

McKneff said:

What if you became ill and ended up having to go into care. 
Property would have to be sold to pay for that care. So no guarantee of any inheritace for your son
Not only would you have maintained costs
ts,, there is also buildings insurance, contents insurance, 
Have you mentioned it to your son. 

If you get a payment of 45k into your account you will be over the benefits entitlement you may be receiving now. ...
Its a minefield

We can assume that the son knows as has proposed to get the loan. 

Is he eligible for such a high loan value? What % interest rate would he be paying as it could be better value to get a mortgage. 

The money going into your account would definitely mess up benefit entitlement as a gift to you of that would be expected to be used to better your financial situation. You really do need advice on this.

Can you son afford to pay back a 45k loan.  What if he became unemployed?

[Deleted User]

Gfitton said:

Thanks for the response,

My son was planning on getting a bank loan rather than a mortgage as it will not be over £45,000, and then gifting me the money. This way it will not effect his own plans with his help to buy ISA?

I will look and read through the information you provided with the link, as we are only just starting the planning process we are very early on and are probably missing loads of key information needed to make a decision as big as this.

My son will not be living with me in the house as he lives and works abroad. I guess as the house will eventually be left to him he is also classing this as a future investment for himself.

I also understand that I will have to pay for any repairs/maintenance etc.

Firstly, many personal loans preclude you from using them to buy property or land but not all.  Secondly, lenders generally have the criteria that you are resident in the UK to get a personal loan in the UK which your son is not.  Thirdly, loans of that size are limited to a handful of lenders.

[Deleted User]

Gfitton said:

Hi everyone,

I have been a council tenant for 36 years, I am looking into buying the house using the right to buy scheme with financial help from my son.

After some initial research I'm left with a few questions and would like further explanation. 

I am just wondering how that will effect my benefits. I am currently on Universal credit and limited capability to work?

Should i get my own valuation done (free one if possible) first or just wait for the council to do a valuation after i have started the application process?

My son also has his own help to buy ISA to get his own home in the next few years and he is wondering if he buys this house with me or provides funds for me to buy the property will his ISA will be affected?

Also is there other things I should be considering before going through with this?

Thanks

Who will be repaying the £45k loan, assuming your son is able to get one, you or him?  In terms of universal credit if you are receiving the housing element then that will stop as you will no longer be a tenant paying rent.

If your son is resident overseas then he should be putting money into any ISA unless he's a crown employee or the spouse/civil partner of one.

https://www.gov.uk/individual-savings-accounts/if-you-move-abroad

Gfitton

From reading the comments above and doing some research online this does seem like a minefield. 

I think my son is just classing this as a future investment without considering all the things/issues what will come along with it. To be honest I don't know much about this kind of thing myself which is why I have posted on here to get your opinions.

I think we will need to seek further professional advice on this before we make a decision. 

How would you go about this if you was doing it yourself going off the information I have provided? or any questions I can answer to make my circumstances more clear?

Thanks

gwynlas

Before buying off any social landlord you need to know who your neighbours will be. The majority of social tenants are fine but the minority can be neighbours fron hell. These might be placed there by the social landlord or by a buy to let investor who purchases ex LA housing. Also whilst you have a social landlord you have security of tenure and can move within the system if you require sheltered housing in the future and it will all be covered by your benefits. Your son would be much better off not borrowing this money as  should you need to move in the futre to sheltered housing or a care home his investment will be compromised.

[Deleted User]

I was always against this because mainly, the council (at least my one at my parents home) can after five years turn around and say you owe 100k for these repairs. It has happened to others and resulted in the tenant giving up the flat. Even if they turned around and said you will owe 20k, would you be able to cover that? The tenants above sold after five years to escape! Every time they do works you will be expected to pay up.

Gfitton

I have lived here for 36 years and my neighbours are lovely people (been the same neighbours for 20 years) I know everyone on the entire street pretty much and it is a nice area. 

& would the council still turn up to do work? I thought that I would be responsible for all of that if i went through with this? how can they just say you owe them money for repairs?

Ive just spoke to my son briefly about this and he thinks if we buy this property for 40-45k (with maximum right to buy discount) it will be worth 150k in 10 years at full value. He is only 26 years old and probably getting ahead of himself with these big ideas lol.