Can i walk away from £80 000?

Helen27

Hello my home has 80 000 RTB but we cant afford a mortgage but do have 54000 in a small pension ex tax plus 50% of a property worth 500 000 but that would mean equity release or a buy out of 50 % share currently getti g 300pm for my share as fam member living there. 60 yo  and on low wage. No idea what to do. Its a bit of a mess am i right no to use RTB and loose the 80 000 discount and just plod on or where and how do i invest?  Help greatly appreciated. 

km1500

I suspect:

1. he/she is offered 80k discount (right-to-buy) on their current home.

2. they cannot get a mortgage (age 60, low wage)

3. they have 54k in a pension but not sure if that is liquid ?

4. they have equity ie 50% of a 500k house - maybe ex-marital home?? - getting 300pm 'rent' for the other half (seems very low)

Should they buy the house with RTB discount and if so, how

Will_Riker

Your post is a little difficult to read, but I'll try to interpret is as best I can.  Am I right in thinking you live in a council house and have the option to buy it for £80,000 under the Right To Buy scheme?  You have a half-share in a house worth £500,000, from which you earn £300 per month in rent?  You are unable to obtain a mortgage for whatever reason?

If this is a correct appraisal, then the simplest option would appear to be to sell your share in the rental house, giving you (presumably) £250,000 in cash.  This assumes the co-owner has the funds available to buy you out.

Equity release schemes generally have a very negative press, for very valid reasons, so I'd be tempted to advise against going down that route (even if it would be possible with a joint ownership - not sure on that particular point).

And it's probably unwise to sacrifice your pension - what would you live on when you retire?  Even if you did/were allowed to, there would be tax implications to consider.

On the face of it, selling your share in the rental house would appear to be the best option.  Either that, or simply carry on renting your current house.

Apologies if I'm mus-interpreted any of this, but just a few thoughts to ponder on.

mebu60

Have you investigated the possibility of a buy-out of one-third of your half share of the £500k property? That would yield the required £80k and reduce your rental income to £200pcm. 
As others have said, I would look to keep your pension out of this exercise. 

TiVo_Lad

There may be Stamp Duty and Capital Gains implications here to consider. If you're currently living in a rented property but you have a half share ownership in another property, that may be considered your primary home and hence the purchase of the rented property might attract the extra 3% in Stamp Duty as a second home. There may also be Capital Gains implications later if you sell the (half) share of the home you do not live in (assuming you purchase your rented house and that becomes your principal home). You need to tread carefully here.

Alistair31

Someone living in a £500k home paying just £600pm in rent is doing very well. 

p00hsticks

Will_Riker said:

Your post is a little difficult to read, but I'll try to interpret is as best I can.  Am I right in thinking you live in a council house and have the option to buy it for £80,000 under the Right To Buy scheme?

mebu60 said:

Have you investigated the possibility of a buy-out of one-third of your half share of the £500k property? That would yield the required £80k and reduce your rental income to £200pcm.

As I read the OP, it's the RTB discount that is £80,000, not what the actual asking price for the property is - the poster doesn't mention that as far as I can see.

p00hsticks

Alistair31 said:

Someone living in a £500k home paying just £600pm in rent is doing very well. 

The OP mentions that it's a family member living in the property - so I'd hazard a guess that the property is possibly inherited from a parent, with either the remaining parent or a sibling owning the other half and living there. It's not a market rent.

mattywallace121

Alistair31 said:

Someone living in a £500k home paying just £600pm in rent is doing very well. 

Someone being offered an 80k reduction on a property whilst having 250k equity in another home isnt doing too bad either!

km1500

I would try and 'sell' the share in the 500k house and the use RTB to buy your home

Helen27

msallen said:

The first thing you have to do is explain your question in clear English. 

I do apologise i just tried to put the important facts.The other readers have helped and made the situation clearer im greatful for that.
So we have been told we have RTB and the discount is 80000. This home has not been valued to get the council purchase price but market value is approx 400 000.
We are in our 60s on low income however there is 54000 in a pension pot we can take all of but it is subject to tax but we can have it if need be.
In addition there is a 50 % share in an inherited family home value approx 400 000. A family member lives there and pays 300 per month to do so for the last 10 years.
This is all a bit overwhelming hearing about the RTB and the discount. Which has prompted millions of questions but we have no answers what to do or options hence asking for advice here. 
Would we be netter off staying as we are but the walking away from that great discount is such a gift.
I hope that is a better explination 
Thank you for your time.