Can i walk away from £80 000?

Helen27

km1500 said:

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

Yes indeed how it is thank you so much i have expanded on my initial post. I value your input and time we really are at a loss and confused with this all !p00hsticks said:

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.

Correct. The RTB discount is 80 000 the council value not yet given but open market is approx 400 000. 80 000 discount is not to be sneezed at but we have no idea what to do thank you for your input.

Helen27

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 others have said, I would look to keep your pension out of this exercise. 

Hi as of yet we dont have a value of the RTB home just the 80 000 discount figure although the open market is approx 400 000 we believe the council value slightly less than market value. We dont need two homes only want one !  Thank you for your great idea something to ponder x

Helen27

TiVo_Lad said:

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.

Very greatful for hour reply. We live in the RTB home. The 50 % share in in an inherited home that we get 300 per month for. A family member lives in that home and would have to move or look at equity release we think as they dont really want to move. But we need the 50% share  in order to purchase the RTB house. Its so tricky but we are very greatful for your good points and advice. 

Helen27

Alistair31 said:

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

Indeed they are! 10 years at 300 pm... but its family... but we may just need our 50% now so we can buy our own home x thank you for your point. 

Helen27

km1500 said:

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

Thank you yes that is an option. It would be a pity not to make use of the offered 80 000 discount.

sevenhills

Helen27 said:

Very greatful for hour reply. We live in the RTB home. The 50 % share in in an inherited home that we get 300 per month for. A family member lives in that home and would have to move or look at equity release we think as they dont really want to move. But we need the 50% share  in order to purchase the RTB house.

I bought my council house with an old pension, it's total value was £100k, I intend to get a lodger in the future, I was 55 when I bought it.
But if you do buy it, you will have equity tied up in two houses.
You need to be able to spend it.

km1500

I suspect Helen that the only way you can do this is to sell the equity in your inherited house.

You say you new house is about 400k - let's say they value it at 380k and give you a 80k RTB discount.

That means you will still have to find 300k - probably nearer 320k with stamp duty, fees etc

Even if you got the full 250k from your share of the inherited house, you would still need 70k or so to complete the purchase.

This means getting some kind of mortgage. With such a big 'deposit' you may get one, but you may not.

Do you have any other family members (children etc) who can help you, as I assume it will benefit them in the end?

strawb_shortcake

Whilst you have a share in another property, you may not actually be entitled to the right to buy? 

in_spired2

I'd think the first thing to do is find out how much it actually would cost to buy your home, so you know how much money you need to find?  Then you can think of ways to free up/raise that money if it's affordable.

Nebulous2

It may help to think about what it is worth to you, rather than that you are losing out on £80k - which is a huge sum for most people. 

At the moment you have a house, at a modest rent compared with the private sector. If something goes wrong the landlord has to fix it. If you can't pay the rent then there may well be state help to do so. You are guaranteed the house as long as you need it. 

You are thinking about swapping that for a huge financial commitment, possibly £300k as said already, at a point in life where many people are winding down. If it needs a big repair, such as a new roof you will be responsible. If the council decide to do some major works in the estate you might be expected to pay a share. If your finances fall apart you could even lose the house. 

In some ways you are better as you are than taking on a huge long-term financial commitment.