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Can anyone advise me on how best to advise my mum re: buying her council house?

(11 Posts)
Badvoc Tue 24-Sep-13 07:51:20

Hi.
We lost my beloved dad in July.
Mum now has £100k in her savings account earning pretty much 0% interest.
She is 67 and has been retired due to ill health for some time.
ATM she is a council tenant and has been for over 40 years.
Because if this she is eligible for a huge discount under the right to buy scheme.
I reckon she could possibly get the house for £30-35k.
There are pros and cons of course in home ownership and I am trying to advise her as best I can.
She would no longer be paying rent of course but any problems and she would be liable rather than the local council.
Her outgoings are minimal and she has a healthy bank balance in her current account (+£10k)
She is concerned about the following;
If she has mobility issues later on?
Can she sign over hr house to me or one of my siblings so it cannot be taken for care home fees?
What if loads of things start going wrong? Pretty sure it needs a new roof...
Sigh...any thoughts? Experiences?
Thanks.

MarjorieAntrobus Tue 24-Sep-13 08:07:22

Is she easily able to afford the rent and other outgoings on her own? I kinda think it might be a bit soon to make decisions like house purchases given how short a time it is since she was widowed. Doesn't seem like she would gain by rushing into buying this particular house, considering that there might be v expensive repairs on the horizon (that the council would pay whilst she is a tenant). Has she looked into retirement warden-assisted flats? Has she looked at other places to live at all? (so that she has a feeling of what her options are, is what I mean).

MarjorieAntrobus Tue 24-Sep-13 08:09:00

How much would the house be worth on the open market? How soon would she be able to resell it if she wanted to move elsewhere?

LIZS Tue 24-Sep-13 08:15:50

Can she sign over her house to me or one of my siblings so it cannot be taken for care home fees? Not easily . They will look at assets, including recent ones, as part of assessment in case of trying to avoid paying. Also the terms of the scheme may prohibit this within a fixed period of time and it may be liable for CGT/IHT on her death especially if within 7 years of the gift. There are some schemes to aid mobility and keep elderly living at home but these are usually means tested so she may not qualify either way.

Badvoc Tue 24-Sep-13 09:41:59

Marjorie...that's my feeling. I have told her I think she should wait a year before making any big decisions.
The council are doing the roof, new doors and new kitchen in the next few months.
Wrt the house I guess a market value of £90-100k ATM.
You cannot sell within 5'years of buying.
My dad was always very much against buying but then again never had this kind if money in the bank.
My feeling is that she should wait til all the work is done, then see how she feels.
My father was born in this house, and his mother was its first tenant after it was built so I think she does feel like it's her home (even though it isn't really)
There is also the bedroom tax to consider as that will increase her rent by £80 a month.

MarjorieAntrobus Tue 24-Sep-13 10:15:38

Gosh, yes, well she certainly ought to wait for the roof, doors and kitchen to be replaced, I would think. What would that lot cost? £15-20K?? Complete guess on my part.

She could buy her house after this work is done, hang on in there for five more years (taking her to her early seventies) then sell and have not only the sale price of the house but also the remainder of her lump sum to buy somewhere else that is more elderly-adapted.

But what does she actually want to do? Does she really acknowledge that she has choices now, or does she feel obliged to commit to this house forever, what with it being your Dad's lifelong home?

She could buy a holiday caravan/lodge, or a campervan, or pool her money with one of her DCs & have a granny annex alongside their house, go on a world cruise, blahdiblah.

Does she feel that she must do something very sensible with this worryingly large sum of money asap?

Waiting a few more months might be wise, as you've said too.

MarjorieAntrobus Tue 24-Sep-13 10:17:43

Up there, where I said worryingly I was projecting a bit, thinking of PILs who wanted to make a decision speedy quick when they had a similar-ish dilemma.

Norudeshitrequired Tue 24-Sep-13 10:21:05

With regard to selling the house to pay for care home fees - if she doesn't buy the house then she will have to use the savings for the care home fees anyway.
If she buys the house she has the option of selling it a profit after the five year limitation period has ended. She has the option of signing it over to her children and as long as more than 7 years have passed they will not be able to count it as deliberate asset disposal for the purposes of care home fees.
How much rent does she currently pay?
If she is paying £100 per week (for example) then that amounts to £5200 per year which is enough to cover cyclical repairs. Her outgoings won't be more than they are now but she will have a decent value asset.

I don't actually agree with people buying council houses and getting huge discounts (due to social housing shortages) but in your mums case it makes sense and is the best thing for her personally.

Norudeshitrequired Tue 24-Sep-13 10:24:08

If she waits until the council have completed the work then the house will likely be valued higher and will cost your mum more to buy- might be worth getting a quite for the work to be done by yourself before making a final decision. Doing the work yourself rather than the council doing it means you get full choice over the finish, get better quality fittings and can distinguish your house from the ones still owned by the local authority which will help when you decide to sell it on.

MrsKwazii Tue 24-Sep-13 10:35:22

As your Mum is a pensioner, she will be exempt from the bedroom tax - best to check with housing officer

Badvoc Tue 24-Sep-13 12:13:04

Thank you all...lots to think about

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