Elderly person buying council house

Chattykathyblueblue

Thank you to everyone who has replied. You've confirmed to me what I originally thought. It seems like a good idea but really it's a non starter. I've no idea why she didn't buy the house when her husband was alive. She's lived there for about 40 years. 

eddddy

Just to add - I'm not aware of any legislation (or rules) that say family members (and/or others) can't lend a tenant the money to exercise a Right to Buy.  Unless anyone else knows different.

So I imagine that, for example, 5 family members or friends could lend her £12.2k each, and each put a charge on the house.

As long as the house isn't sold within a few years, they'd be pretty much guaranteed to get their money back when the house is sold. If they want, they could even charge some interest - but that would have tax implications.



After she dies, the house would have to be sold in order to repay the loans - so the house couldn't pass to the grandson. Unless the grandson can then get a mortgage on the house, and use that to repay the loans.

But the remainder of the sale money after repaying the loans could go to the grandson.

Unless, like I say, anyone else knows different.

strawb_shortcake

eddddy said:

Just to add - I'm not aware of any legislation (or rules) that say family members (and/or others) can't lend a tenant the money to exercise a Right to Buy.  Unless anyone else knows different.

So I imagine that, for example, 5 family members or friends could lend her £12.2k each, and each put a charge on the house.

As long as the house isn't sold within a few years, they'd be pretty much guaranteed to get their money back when the house is sold. If they want, they could even charge some interest - but that would have tax implications.



After she dies, the house would have to be sold in order to repay the loans - so the house couldn't pass to the grandson. Unless the grandson can then get a mortgage on the house, and use that to repay the loans.

But the remainder of the sale money after repaying the loans could go to the grandson.

Unless, like I say, anyone else knows different.

The council would also have a charge to cover the discount repayable should the house be sold within 5 years. Just remortgaging on our RTB was a pain due to this, I seem to recall that the council remained 1st charge, not sure just how this would work if I've recalling correctly 

WIAWSNB

It could work, I guess, but is clearly a gamble.
As pointed out, should she require care, then her assets would be expected to cover this - and that would be her house.
Quite a risk for the g'son. 

itsthelittlethings

Quite a big risk when the council knock it down to build new flats and the family still owe the money.

Eldi_Dos

itsthelittlethings said:

Quite a big risk when the council knock it down to build new flats and the family still owe the money.

Do not see any risk there at all, if the Council did decide to redevelop the area they would compulsory purchase any properties at the going rate for that postcode.

GDB2222

itsthelittlethings said:

Quite a big risk when the council knock it down to build new flats and the family still owe the money.

Why is this a problem? Whilst councils are not known for paying top dollar for CPOs, they have a statutory duty to pay a reasonably fair price. 

eddddy

WIAWSNB said:

It could work, I guess, but is clearly a gamble.
As pointed out, should she require care, then her assets would be expected to cover this - and that would be her house.
Quite a risk for the g'son. 

I'm not sure if this is what you mean - but if the grandson lent money and put a charge on the house when it was bought, the grandson would get their money back when the house was sold, before the council got their care costs back.

itsthelittlethings said:

Quite a big risk when the council knock it down to build new flats and the family still owe the money.

Again, I'm not sure if this is what you mean - but if the house was compulsorily purchased, anyone who had lent money and put a charge on the house would get their money from the proceeds of the sale.

Perhaps there'd be a risk of a shortfall if the house was compulsorily purchased within the first year, as the full discount would have to be repaid.

 

flaneurs_lobster

eddddy said:

Just to add - I'm not aware of any legislation (or rules) that say family members (and/or others) can't lend a tenant the money to exercise a Right to Buy.  Unless anyone else knows different.

So I imagine that, for example, 5 family members or friends could lend her £12.2k each, and each put a charge on the house.

Really? Maybe my family is abnormal but wouldn't be able to agree how to split the cost of a meal for 5 at a Toby Carvery let alone lending someone £12k each.

GDB2222

I’m surprised that they can’t come up with a way to make £100k.