parents buying while on state pension

alisonnpaul

mum and dad are 78ish we discussed their potential "right to buy my council house" they would get the 70% max discount roughly a 80k discount 
4 siblings would fund the costs of care house buy and any upkeep in return we inherit the house 4 ways equally if required sell & relocate the parents to a more suitable 2 bedroom bungalow rather than a 3 bed semi with winding stair 
how do they go about it without it affecting there state pension both are disabled with council wet room and stair lift there main concern is the benefits office stopping there money if we put 40k into there account both are of sound mind so don't expect to be put in a care home within the next 10 yrs i'm aware the government stop your money if you have more than 16k in the bank but not sure if it affects a pensioner 
i believe they need 5 yrs from purchase before the council lose there right to buy back on selling 

_Penny_Dreadful

alisonnpaul said:

so mum and dad are 78ish we discussed their potential right to buy my council house they would get the 70% max discount on there south tyneside council rental valued around the 120k mark so roughly a 80k discount 
how do they go about it without it affecting there state pension both are disabled with council wet room and stair lift put in for them there main concern is the council stopping there money as they would have more than 6000 in the bank both are of sound mind so don't expect a care home within the next 15-20 yrs i'm aware the government stop your money if you have more than 16k in the bank but not sure if it affects a pensioner as they no longer pay tax 
the family have talked about this as an inheritance gain i believe they need 5 yrs from purchase before the council lose there right to buy back on selling which would be the idea on the inevitable happening 
if there not allowed to have the money in the bank to buy can the kids get a mortgage all 4 of us could pay for them 

Do your parents actually want to buy their council home or are they being strong armed into this so that you can receive an inheritance? I can’t see what’s to be gained (for them) by exercising their right to buy when they’re pushing 80. 

The state pension is not means tested (yet) so it doesn’t matter if your parents become home owners are not. I don’t know what other benefits they are receiving.  Pensioners do pay tax it just might be that your parents’ income is below the income tax threshold. They have £6,000 in savings so that is not enough to cover the £40,000 required to purchase the property and I can’t see them getting a mortgage. Purchasing the property would just be the start anyway. How would they afford repairs or any further adaptations to the property that might be required as currently that’s all paid for by the council? 

Unless you and your siblings live with your parents you can’t make a joint application for RTB with them and therefore you can’t apply for a mortgage to purchase the property. 

With the adaptations the council has made to the property is it even eligible for RTB? 

Devongardener

This is a bit confusing,  why would they suddenly have more money in savings if they are buying their house?
How will they fund the balance of the purchase price?
with regard to needing care, don’t dismiss this, they are 78 and no one can predict what they are going to need.

Keep_pedalling

Agree this is very confusing, your opening posts suggests they don’t currently have more that £6000 of savings currently so how are they going to raise £40k to buy the house, and how are thy going to afford the upkeep?

Even if they can raise the money you may find that a house that has been adapted for use for disabled people may not be available on RTB.

elsien

I read it that to try and get round the rules and to ensure their inheritance, the family are talking about giving the parents the money to buy the house with. This isn’t about them because at their age there is no benefit to them at all in buying it.

They are also being a tad optimistic if at the age of 78 they expect to be still living at home in 20 years time.

The children cannot get a mortgage on their behalf, because the children do not have a right to buy.

Alderbank

Keep_pedalling said:

Agree this is very confusing, your opening posts suggests they don’t currently have more that £6000 of savings currently so how are they going to raise £40k to buy the house, and how are thy going to afford the upkeep?

5 years ago the OP said 'I'm due a 3rd share in a property worth around a 100k in about 20 years time when the parents pass over'

meeemee

Anything can happen to anyone at any time so I wouldn’t count on banking on this as a future inheritance, which it sounds like you are doing (seeing as even back to 2014 you were asking about paying extra rent to buy a house off your landlord )so you are hoping to put in approximately £8500 (your share if mortgage if borrowing as a group is allowed on this purchase) to eventually get a quarter of the selling price back? It doesn’t sound like you are doing this for your parents ease, chances are they would need some sort of care even if you are lucky enough to have them for another 20 years in your life, can they maintain the house, they may decide if it’s still council owned it’s easier for them to exchange to a flat, but if they own this they can only do this in five years at the ages of 83 with all the stress buying and selling entails, and cost compared to council exchange, your parents well being should be thought about too over monetary gains. 

SavingPennies_2

Your post is a little hard to read without punctuation. I think what you're asking is:

If you and your siblings give your parents 40k to buy their council home at an 80% discount, will them (temporarily) having over 16k in the bank/ savings, affect their pension and/ or benefits?

I don't know the answer just trying to clarify your question.

Flugelhorn

who will pay for repairs on the house when they buy it?

deannagone

Before you do anything, double check with the council that the adaptations made (particularly a wet room) don't preclude the RTB.  I suspect they will as the council will have applied for a grant to make the changes.  I've had a partly adapted kitchen fitted myself and I know it was done through a grant.  

To be honest, at 78, its a bit late in the day to start messing with mortgages etc.  Not sure how it can feel like this is a good idea for your parents at their time of life.  If they are happy, leave them to it.  

ThisIsWeird

Your parents are ~78, and you don't anticipate they'll need care for 15+ years? 

That would be great, but when they do need a care home, how will it be financed? If they own a property, it'll be (should be) from that. Does that affect your plan? 

I would anticipate questions being asked when your folks get to the "where did the money to buy this property come from" stage. Whether the council will also ask these Qs, I don't know, but they'd be remiss not to; I doubt this is the first time elderly tenants with a good RtB discount and zero bank balance suddenly found themselves with the 'means' to do so.

If they somehow manage to find a way of buying this discounted house and then pass it on to their children, then that would, I understand, be considered a 'deprivation of assets'. Ie, they would have had the means of paying for part of their own care when the time came, but they intentionally disposed of it, expecting the 'state' to pay for their care instead, for the sole purpose of their offspring having a nest egg at the expense of the tax payer - and the latter group will include most of the folk on here from whom you are seeking advice on how to do this.

Does that sum up what this thread is about; how to get a cheap house for which you have no entitlement, by manipulating a system which was never intended for this purpose, and for which the tax payer will pay the balance?

Is this an ethical move?