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Helping Dad buy council flat, will it affect me from getting 'first home' benefits?
Comments
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@Norman Castle - I don't understand your argument. Surely it is totally self-evident that anyone, council or otherwise, who sells an asset below market value, is losing money? Effectively giving it to the buyer? The fact that they might have future income streams that will, in time, be greater than that loss is entirely irrelevant.0
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Not sure what you think my argument is. Council housing is self financing and not funded or subsidised by council tax payments.ThePants999 wrote: »@Norman Castle - I don't understand your argument. Surely it is totally self-evident that anyone, council or otherwise, who sells an asset below market value, is losing money? Effectively giving it to the buyer? The fact that they might have future income streams that will, in time, be greater than that loss is entirely irrelevant.
The cost floor rule ensures rtb council houses are not sold for less than they cost to build or maintain. There is a loss of profit in the form of house price inflation but council homes were not built to generate profit.0 -
Pk_King_X11 wrote: »
If it's legal, I don't see a problem here. This is a money saving forum is it not? It's not like I'll have 2 houses. My dad will have his, I will have mine. They will both be our first homes. That is fair.
I'm not sure what you are claiming to be fair, but if 'dad' sells his home at a profit, to help pay for yours, then he won't have a house, unless he lives with you.
If he just gives you the money and you buy in your name, what legal agreement would there be over his share, which he may choose to bequeath elsewhere? If he goes on the second house's mortgage, the sale will not be to a first time buyer (even though on paper you are a first time buyer), so no help there.0 -
Pk_King_X11 wrote: »Thanks for all the replies!
Exactly. Plus, we could sell that flat for a 50% profit after 5 years (which we have no desire in doing though).
If it's legal, I don't see a problem here. This is a money saving forum is it not? It's not like I'll have 2 houses. My dad will have his, I will have mine. They will both be our first homes. That is fair.
Thanks. Another question. If my dad wishes to give this place to me in the far future, will it be difficult without being a joint tenant? Is there tax to pay or something? Or can he just give it to me just like that?
As its a flat, there is a very good chance that your dad could be presented with a bill for thousands (or even tens of thousands) of pounds for maintenance/upgrading of the building and communal areas at any time. Would he be able to pay?
There was a flat for sale near me a few years ago that looked like an absolute bargain but said on the Rightmove ad that whoever bought it would be liable for a £25,000 bill for refurbishment of the building (incidentally the cladding that paid for is now coming down as has been found unsafe after Grenfell).
What would your dad do in that situation?0 -
Norman_Castle wrote: »Not sure what you think my argument is. Council housing is self financing and not funded or subsedised by council tax payments.
Yes, and he isn't saying it isn't.
He is saying that selling off council housing at a fraction of its value is NOT self-financing and IS subsidised by council tax payers.0 -
Red-Squirrel wrote: »As its a flat, there is a very good chance that your dad could be presented with a bill for thousands (or even tens of thousands) of pounds for maintenance/upgrading of the building and communal areas at any time. Would he be able to pay?
There was a flat for sale near me a few years ago that looked like an absolute bargain but said on the Rightmove ad that whoever bought it would be liable for a £25,000 bill for refurbishment of the building (incidentally the cladding that paid for is now coming down as has been found unsafe after Grenfell).
What would your dad do in that situation?
Exactly. Owning a flat in a council block leaves you open to having to contribute to any major works - a big risk.0 -
"Thanks. Another question. If my dad wishes to give this place to me in the far future, will it be difficult without being a joint tenant? Is there tax to pay or something? Or can he just give it to me just like that?"
There is no gift tax in the UK, so your Dad can give his home to you without any tax being paid. However, if he continues to live there, then unless he pays full market rent, it will be considered a Gift with Reservation. This means that if he were to die, the flat would be considered as if it were part of this estate, which may or may not be relevant depending on the value of the flat and any other assets owned by your Dad.
If it was not your main home during the time you 'owned' it, then you would be liable for Capital Gains Tax on the increase in value between the date it was given to you and the date it is eventually sold.
It is also quite possible that the 'gift' would be considered an attempt at "Deprivation of Capital", if your Dad were to need residential care and therefore still be taken into account for a financial assessment. In short, if you are thinking of transferring it into your name to avoid inheritance tax and / or care home fees then this method may well not be successful (and could also be considered morally dubious).
If your Dad gives you his home, it would also be considered in any bankruptcy or divorce in your future.0 -
I'm not sure what you are claiming to be fair, but if 'dad' sells his home at a profit, to help pay for yours, then he won't have a house, unless he lives with you.
Why do you assume we're buying it to sell for profit? I said we technically could, but we have no desire to do so. This is about getting us each a place, to own, not to make a profit.
While we could go our separate ways and buy our own places, but I am single and have no desire to have a partner, it wouldn't be fun living on my own, and a lot hard to get a decent place with just my income. Yes, it's possible this could change, but it would only make things better.Red-Squirrel wrote: »As its a flat, there is a very good chance that your dad could be presented with a bill for thousands (or even tens of thousands) of pounds for maintenance/upgrading of the building and communal areas at any time. Would he be able to pay?
We just had interior renovation and maintenance, the place isn't that old. There will soon have exterior maintenance, after which we are going to buy the place. So it will be some time before any more is needed. We will be able to handle the costs if any arise. Pretty much everyone owns their flats in my street, us and some other guy next door are renting.0
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