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A question about right to buy your council house

(47 Posts)
pussollini Fri 01-Mar-13 19:23:29

We want to buy DP's brother's council flat. He has no money (and drug issues but that's another thread). We were thinking we could give him the money to buy it, then rent it out and give him an income from it.

The problem is, we will need to get it transferred into our name after the purchase. Is there anything to stop us doing this?

headinhands Fri 01-Mar-13 19:25:46

Where would dp's brother live?

OddBoots Fri 01-Mar-13 19:30:03

From looking at this you'd (or he'd) have to pay back a decreasing proportion of the discount if he sold it to you (which is effectively what would have to happen) within ten years.

pussollini Fri 01-Mar-13 19:30:07

He may go to university where we live and stay with us, or in a rented flat nearby, which we'll pay for.

The flat is at the top of a high rise - he needs to get out of the area, at least for a while, so he can break the old associations.

OddBoots Fri 01-Mar-13 19:32:09

Sorry, my mistake, 5 years. It's for the first 10 years he'd have to give first refusal to a social landlord.

pussollini Fri 01-Mar-13 19:32:15

Oh right. Well, I suppose we just leave it in his name then. We will have to pay for it in cash, so it's not a great use of our capital.

chickensarmpit Fri 01-Mar-13 19:32:38

I'm sure this isn't allowed, otherwise everybody would be doing it and we'd have no social housing.

bananananacoconuts Fri 01-Mar-13 19:34:14

heard on the radio today that if you buy a flat in a high rise, you assune responsibility fkr the communal areas!! not sure how true this is as it came from an mp but do your homework

pussollini Fri 01-Mar-13 19:35:02

Chicken, that's what I thought, everyone would take advantage of the discounts. We actually just wanted to help him, and pass on the profit to him, as he is legally and morally entitled to it.

bananananacoconuts Fri 01-Mar-13 19:35:04

stupid phone! sorry...errors a plenty!

pussollini Fri 01-Mar-13 19:40:01

I suppose we can give him the money to buy it and rent it out to give himself an income, and then ask him to repay the capital in five years.

lalalonglegs Fri 01-Mar-13 19:56:55

This is wrong on so many levels the main one being that the RTB policy - for all its many faults - was designed to empower council tenants by giving them ownership of their own home, not simply giving them the opportunity to make a fast buck by renting it out to other people at market rates.

I'm also not convinced that someone with drug problems needs an additional income stream with which to fund his habit.

Anyway, not only is your plan greedy but it is extremely flawed someone who buys under RTB cannot sell for five years and most councils have included clauses in the sale contracts that stop them being rented out for several years as well.

If you want your BIL to break free from the area, look into social housing swaps or sort out somewhere else for him to stay which may mean him giving up his council house entitlement (but worth it if it helps him to get clean and turn his life around). I'm really shocked that you want to make a profit from social housing and remove from the pitifully small pool yet another home that a disadvantaged person could use.

pussollini Fri 01-Mar-13 20:08:53

hmm

Our plan may be flawed, but I'm not sure why you call us greedy. We wouldn't make any money out of it ourselves, just use our capital to help him do it.

I don't think there's anything wrong with helping him to buy it so he can get away for a few years and build a life. He loves the area, but it's very raw at the moment, as he has just stopped using.

lalalonglegs Fri 01-Mar-13 21:48:16

It's greedy because you are using a (very generous) government subsidy to help you or your BIL build a property portfolio. FFS, in your grand scheme, he's not even going to live there. Council housing is meant to house people with a genuine need, not subsidise his lifestyle. Do you get why it's greedy now? hmm

SuedeEffectPochette Fri 01-Mar-13 22:26:05

Isn't the problem that he may not "give" it back to you in 5 years time? Sounds like a problem in the making to me.

pussollini Fri 01-Mar-13 22:31:14

Lalalonglegs, we are not using it to build a property portfolio. Not sure why you're so confused, perhaps you'd better turn in for the night.

Suede, there is that to consider. But that would be a pretty poor show, I'm leaving that aspect to DH because it's his brother.

We're not buying the house because it's a really good deal, it's a tiny flat on the top floor of a tower block. It's value is very low so we could still buy it without any discount. But he can't leave it and go anywhere unless it's owned. He wants to come back and life there again.

lougle Fri 01-Mar-13 22:31:51

You're not going to be able to do that.

There are really strict rules. However, if you are living there for 12 months with him, then you can jointly buy it.

dothraki Fri 01-Mar-13 22:38:25

Er - is this even legal ? I very much doubt it.

lalalonglegs Fri 01-Mar-13 22:46:31

No confusion here about your greed and attempt to defraud a local authority. As I pointed out, there are options such as flat-swapping with other LA tenants if he wants to move in order to leave the area. Whatever the faults with RTB (and as I said upthread there are many), at least someone somewhere had the foresight to put some measures in place to stop people like you exploiting loopholes.

pussollini Fri 01-Mar-13 22:48:30

Thanks all, I posted here to get info on whether it was possible to transfer ownership of a right-to-buy flat and you've all clarified that it isn't. As I said, we're just going to help him buy it for himself, which is his right.

I don't think I'd want to live there with him under any circumstances!

LegoAcupuncture Fri 01-Mar-13 22:49:32

You wouldn't be able to lease it for first 3/5 years. If he doesn't need the property, why not give it up for someone who does?

pussollini Fri 01-Mar-13 22:51:47

Why are we defrauding? Is it illegal to help people? Are the mortgage companies defrauding the council too? Jesus, you really have a very mean view of life. Can you not see that people might be aiming to do more than line their pockets? We have spent thousands putting him through rehab and want him to have some security.

He doesn't want to flat swap, he wants a stable home where he has always lived.

dothraki Fri 01-Mar-13 22:53:32

You are defrauding because what you are doing is not legal - OK

mamababa Fri 01-Mar-13 22:56:04

I am with lala here. You want to buy his flat with very generous discount. For him. That's ok.

You then want to rent it out (and therefore make money) and then you or him will keep it for a number of years and then sell. For a profit lets face it.

So your intentions may be ok, but the suggestion you won't profit is ludicrous

expatinscotland Fri 01-Mar-13 22:57:15

You can't lease it out for a while after it's been purchased.

OneHundredSecondsofSolitude Fri 01-Mar-13 22:57:55

Giving large financial "gifts" is not without strings too.

You need to think about him being responsible for inheritance tax if the giver of the £ should unfortunately expire within (I think) 7 years

When dpil helped us with a deposit for our house it had to be structured carefully to minimize risk to us.

expatinscotland Fri 01-Mar-13 22:59:05

Then he can live in it or swap out, but it's illegal to buy it and immediately rent it out.

lougle Fri 01-Mar-13 23:00:39

Hmmm...actually there may be a way. If you gave your DBIL the money to purchase the property, then he transferred ownership to you, he may not have to pay back the discount:

"You can apply to buy your council home if:

it’s your only or main home
it’s self-contained
you’re a secure tenant
you’ve had a public sector landlord (eg a council, housing association or NHS trust) for 5 years - it doesn’t have to be 5 years in a row"

"You can make a joint application with:

someone who shares your tenancy
up to 3 family members who’ve lived with you for the past 12 months (even if they don’t share your tenancy)"

"For flats you get a 50% discount if you’ve been a public sector tenant for 5 years. For every extra year you’ve been a public sector tenant, the discount goes up by 2%, up to a maximum of 70% – or £75,000 (whichever is lower)."

"If you sell your home within 10 years of buying it through Right to Buy, you must first offer it to either:

your old landlord
another social landlord in the area

The property should be sold at the full market price agreed between you and the landlord.

If you can’t agree, a district valuer will say how much your home is worth and set the price. You won’t have to pay for their valuation.

If the landlord doesn’t agree to buy your home within 8 weeks, you can sell it to anyone."

"If you sell your Right to Buy home within 5 years of buying it, you’ll have to pay back some or all of the discount you got.

If you sell within the first year, you’ll have to pay back all of the discount. On top of this, the amount you pay back depends on the value of your home when you sell it. So, if you got a 20% discount, you’ll have to pay back 20% of the selling price.

If you sell after the first year, the total amount you pay back reduces. You pay back:

80% of the discount in the second year
60% of the discount in the third year
40% of the discount in the fourth year
20% of the discount in the fifth year"

"*you may not have to pay back the discount if you transfer ownership of your home to a member of your family.* You will need to agree this first with your landlord and then get a solicitor to do this for you." https://www.gov.uk/right-to-buy-buying-your-council-home/help-and-advice

dothraki Fri 01-Mar-13 23:07:33

yy and if you give him the money he might just fuck off with it and spend it all on drugs - very helpful

lougle Fri 01-Mar-13 23:09:17

Well, quite. But that's a decision for the OP. The answer seems to be 'possibly' but I do think there are moral and practical considerations that need to be considered above whether it is 'possible'.

expatinscotland Fri 01-Mar-13 23:11:34

The catch is that you usually can't lease it out straightaway.

lougle Fri 01-Mar-13 23:15:46

Yes, that is a catch. But if the OP was interested in helping her BIL, presumably she could move her family to the flat and he move to her home for a few years while he cleaned up?

I'm not suggesting it's feasible, but it's how they would make it work.

pussollini Fri 01-Mar-13 23:15:55

Thanks, Lougle, for that helpful post. I'll look into that, but I would have thought that transferring ownership was the same as transferring the deeds, which would be a sale.

I'm still clueless, Lala, why you consider this fraud. Surely people help people buy houses all the time? And it would be legal to use a mortgage lender to buy the flat, wouldn't it? I have already said we would be prepared to leave it in his name. We had originally thought we could rent it out while he is elsewhere, so he could fund his studies or whatever, but if that isn't possible, and in the light of information given here it seems it isn't, then we won't do it. I really resent the meanness of people determined to cast as us grasping property developers.

mamababa Fri 01-Mar-13 23:32:58

But you say in your OP 'we need to get it transferred into our names' why, if it's for him?

And then you talk about him moving and you letting it out, but then say 'he doesn't want to flat swap, he just wants security where he lives now'

Not sure why you buying it from council of HA helps this. You say he needs to get away from old associations but then he wants to stay hmm

pussollini Sat 02-Mar-13 08:36:28

Mamababa, he has two children right near by, so he wants to stay in the area so he can build more of a relationship.

Can I just repeat, that we have no plans to sell it. He wants to live there in the future. If we rent it out, the profit would be held for him, or used to pay tuition fees/living expenses.

I only wanted advice and was very willing to take it!

stormforce10 Sat 02-Mar-13 09:52:54

I would be very very cautious about buying a council flat and not just because of the reasons outlined above.

If the freeholder decides to make a repair to e.g. the roof then the price will be divided by the number of flats in the building. Any leaseholders will then be charged the appropriate amount for that repair. This can turn out to be very .
expensive. Imagine if there was subsidence. Really and truly I would not touch a council flat leasehold with a barge pole. I've seen too many people stung really badly by these costs. On top of that there will usually be an associated managment charge. There have been some legal cases about this lately and some have been won with costs being massively reduced but this was on the basis that councils did not notify the costs properly in advance. Take a look at this article for more information

pussollini Sat 02-Mar-13 10:09:45

Thanks Stormforce, I hadn't considered that aspect at all. I actually had to pay 3k in my old mansion block in exactly the situation you describe. This is a massive 20 storey tower block built in the 60's. He is on the top floor, though, and has amazing views over the river, it could be a great flat if done up at bit.

You'd be very unlikely to get a mortgage in a flat in a multistorey. Not an issue for you if you're a cash buyer, but you'd have problems selling it on.

expatinscotland Sat 02-Mar-13 10:48:41

And again, it might not be able to be legally rented out for a while. To prevent people buying their council home in order to become BTLers.

sleepyhead Sat 02-Mar-13 11:05:52

What AP said - you could get landed with an unsellable property (no guarantee that the council would buy it back and possibly needing a cash buyer in future).

pussollini Sat 02-Mar-13 11:24:09

Thanks all, it is absolutely not mortgageable (and possibly uninsurable too) but all that is reflected in the low price. We would have been cash buyers.

We have pretty much binned the idea, although we would have liked to have helped him in this way, we will have to find something else.

He may also lose it soon anyway because it is a two-bed and he is on his own - he will be a bit gutted because he saw his right to buy as a chance at financial security.

stormforce10 Sat 02-Mar-13 12:58:59

I think its lovely that you wanted to help him especially after all the money you've already put into getting him through rehab. I think your idea was deeply flawed for lots of reasons but I don't think you were being greedy.

I do think you're right to ditch the idea though. Its unlikely to give him financial security to be honest. Sadly it would have been far more likely to land him an unsellable flat, surrounded by the very people he needs to get away from and possibly faced by huge maintenance liabilities.

I think you're a lovely sister for wanting to help him though

expatinscotland Sat 02-Mar-13 13:12:00

He really needs to focus on getting away from that area entirely to further his recovery. He needs a clean break, not a tie to the place. That is the most important thing and being in recovery is the only way to ensure he does have financial security in the future.

expatinscotland Sat 02-Mar-13 13:12:39

His life and health are worth far more than a flat!

stormforce10 Sat 02-Mar-13 13:36:21

I think its lovely that you wanted to help him especially after all the money you've already put into getting him through rehab. I think your idea was deeply flawed for lots of reasons but I don't think you were being greedy.

I do think you're right to ditch the idea though. Its unlikely to give him financial security to be honest. Sadly it would have been far more likely to land him an unsellable flat, surrounded by the very people he needs to get away from and possibly faced by huge maintenance liabilities.

I think you're a lovely sister for wanting to help him though

stormforce10 Sat 02-Mar-13 13:37:13

sorry don't know how that happened.

pussollini Sun 03-Mar-13 11:39:06

Thanks Stormforce, we've found a few flat options close by to us and will think about the future as it comes.

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