Right to buy. What about everyone else?

[BrownieBanana]

AIBU to think that it's all well and good to bring in new policy that allows better saving for RTB for council tenants, but that it doesn't help people who REALLY need help? If you're in a council property it is still vastly cheaper than private rent (over 50/60% where I live). What about the millions of young people living with their parents into their early and mid 30s who can't afford rent (this is me), can't get a mortgage as a single person even on an OK salary. Am I missing the mark here? I'm not saying everyone in a council property has it easy, if course not, however I don't think it's the right way to deal with the housing crisis at all....

@woodhill I know 2 nurses who live in council houses.

On one hand it’s good for the individual as owning an asset is preferable

Maybe. Not if they're going to effectively lose it to health/social care by the time they die though. Once that happens they can't pass it on to their kids and no one else can get it either, unless they have sufficient funds to invest in what has now become yet another rising asset vehicle. And so the infernal neoliberal cycle of shitness continues.

They only reason i bought a house (only with family's help) was because landlord was selling and I just wanted somewhere secure where I could stay without being kicked out cos they want to sell or whatever.
If I had a secure tenancy I would never have bought.
People need suitable places to live.
People don't need to own a house.

Except the if someone is already on HB - when they retire, they will STILL be on HB, possibly more than before, plus pension credit plus any pension the person has. They are likely to be not substantially worse off than before they retired.

Why does everyone think that people who live in council houses don’t work?!

@Rinoachicken say for example somebody works on a minimum wage retail job. They don’t have a pension, so when they stop work and are left with the state pension of 10k a year, plus their usual benefits they really miss the extra 10-15k they used to have.

Now, say that person moved into their council house at 25. By 35 they have a partner with more income coming in they are in a position to buy. The asking price is £150,000 but they receive a 40% discount making it £90,000. The deposit is 10% £9,000 (so £4,500 for each partner, which they’ve saved for over 10 years).

I’ll be conservative but if they stayed in that same property and it increased in value by 3% per year until the point of retirement (68) that would give them a selling price of £397,850.29 and a profit in the region of £310,000 on their initial investment.

Admittedly the market can drop by 20% here and there, but equally increases in price can be greater than 3% as we’ve seen over the last few years. A small mortgage will have minimal interest (at this point) and be paid off pretty swiftly, 100k mortgage is about £550 a month at 4% over 25 years.

£310,000 to have in retirement for yourself or your children is a big deal, and it can potentially be much more if you move house a few times and reinvest profits….

So yeah that’s a pretty big reason to buy as even though the market fluctuates it comes back up pretty quick, so there is relative security.

And on your second point - in order to pass on your home tho your children you either need to be wealthy enough to be able to fully cover the costs of your care (and they are unknown and unknowable until you get there) OR very very lucky enough to not need any care in your old age.

Bollocks to this. There are several options, these are the main two gone for.

1. Sign over your home to your children and retain right of residence, you need to do it early enough. Then keep your savings below 16k and you get free care.
2. Have your home/assets designated as a limited company with your children named as directors - it isn’t taken into account in care calculations.

Seriously buying your council house or any house is a blooming good idea. And you are not liable to lose any of it to the care service if you actually use your head and do wealth planning…

I’d choose that risk tbh

Our parents, or when it comes to it us, might need it for care but I’d still choose ownership

Tory governments would prefer that there is less state responsibility for any services and that it lies with individuals to provide for themselves or private providers to take the responsibility.
Hence private adult social care, private providers creeping into the NHS and this government will sell the NHS to American private equity and insurance providers, selling off Royal Mail, water companies, energy providers, rail companies, council houses, nursery provision over the years.
There are two reasons:

1. The less responsibility the State has, the less it costs in taxes.
2. The less responsibility the State has, the more money businesses can make from stepping in to the gap left. Let me give you an example. When my DM was elderly and frail and left hospital she was given 4 weeks of home care provided by her local council. Only 4 weeks. After that it had to pass her cate over to a private company who had been given the council contract which went out to tender and they won the tender. In the first 4 weeks my DM was looked after by two staff (each did 2 of her 4 daily calls) employed by the council. They turned up on time, did a great job and were kind and efficient and she loved them. They were also paid a salary. After the 4 weeks the private company stepped in. She never knew who was coming to her 4 care calls every day. It was often 4 strangers to her- who just let themselves into her house to deal with things like helping her wash, bathe, dress, undress. It was often someone who spoke very little English - my DM was very deaf and this was an issue. They were each supposed to spend half an hour per appointment with her. They rarely spent more than 15 minutes. They usually left the employment if the company after just a few weeks. They were not paid a salary - just an hourly rate which was only paid for the time they spent with a patient. They were not paid for travel time or fir their travel.Few had cars so they organised their round so they could walk from person to person or get a bus. Their hourly rate was £6.60 an hour (2013) and they spent at least half an hour of that travelling. I complained loudly and often about this provision and eventually the Director of Adult Social Care for the council came to visit my DM. He was appalled but not surprised and explained the way the tender process worked- basically the cheapest bid was most likely to get the tender. Also, the owners of the private companies build their own profits into the bids. So, of course, what gets squeezed are staff wages and patient services. He asked me if I would speak at a council meeting about my DM's experience - which I did but she died soon after so I am not sure where that went. My point is, money set aside for adult social care becomes a profit-extracting process by these companies rather than the money being spent on adult social care. The same is true of council housing. It is expensive to build and maintain council housing. Old council housing was not always well-built and is a drain on council budgets. The government in Thatcher's time was keen to get rid of it, and the burden it was placing and likely to continue to place on the state. They offered RTB because it was cheaper in the long run to sell it iff under the pretence if wanting to increase home-ownership- that it was going to be to maintain it. That's why councils were nit allowed to invest the money they git from sales into new housing - the government did not want the responsibility of the provision and maintenance of it. My parents lived in a council house. Of the 10 houses on our block, 8 people bought them (1980s). They were 15 years old. Within 5 years they required new windows, new heating systems and new floors- which the purchasers were then responsible for- they had to be dug up because huge cracks appeared in them. They sell now for £65,000. It might be different in the south -east in terms of prices of ex-council houses. There will always be a need for social housing but the Tories do not want the State to have responsibility for it. We have seen from ITV news investigations what has happened in numerous housing trust provisions. Take a look at the people on the boards of housing trusts - particularly the worst ones, and see how many are also making profits from being directors of companies building properties for trusts. Everything this government does is about reducing State responsibility for social issues and handing money opportunities to big business instead. The mess we are in is because of big business greed and lack of State intervention- nothing else.Think about the scandal of water companies- their disgraceful record on maintaining infra-structure and dumping billions of tons of sewage into our rivers. They do it because it's cheaper to do that and maintain their profits. Energy companies are raising prices and making ever bigger profits and thr government are making extra billions from vat on fuel. None of this is in our interests - not unless you are a multi-millionaire. Start saving now for your private healthcare- it's on the way.

That asset will likely be used to pay for your own care in old age though.

In the meantime you'll have previous council tenants who now own a home, great, but won't be able to afford to actually do anything with it. Even basic homeownership maintenance is costly, let alone the pricey things like boilers/windows/bigger repairs and replacements.

My next door neighbours are council tenants. In the 6 years I've lived in my owned property, they've had all brand new windows, a new kitchen and a boiler replacement. They said when their kitchen was being done "oh we've had to wait years for it.." I'm sure they have. But I've still got the same just about functioning old kitchen I bought the house with and old windows and no amount of years I wait, it ain't getting replaced unless I pay for it!

Yes I have the asset, but next door have a tenancy for life and will be able to claim housing benefit even after they are of retirement age so would be fools to buy their house!

@Robinni did you miss where I said am a council tenant and work full time?

My council house is worth in excess of £390k. It’s a two bed semi. Even with both me and my husband working FT, neither of us in MW jobs, we cannot afford the mortgage required to buy it even with the 70% discount.

Im approaching 40, my DH 50. We have a secure tenency. I have fluctuating MH and two children with additional needs, one of them significant. I would be completely mad to risk my secure housing by overstretching to own this house. We’d not be able to afford to move even if we bought it. And it would end up being sold to fund our care because we can’t afford to pay for ‘wealth management’ in order to know how to legally dodge it.

That’s up to them if they don’t want to swap, they can keep it as it is if they prefer

But there’s no way I’d swap for council over private ownership even with potential care costs

I do know someone who has tenancy for life in a very nice part of London, they didn’t buy in RTB but as a house in very nice zone 2 it must be worth a lot by now

It's not about swapping your owned property for council. It's saying if you have a secure tenancy council house then in most cases, people won't necessarily be better off buying it.

Again that’s up to them. It’s a choice people can make

Some will want a rising asset, despite risk of care fees, I would understand that as it’s what I’d prefer

Others might not

A choice is good imo

The biggest downside is reduction of HA stock

This is a bit of an outlier situation.

Most people’s council houses are not 390k. The average house price in the U.K. is 290k and liable to cool by 20% by circa 2026. Also most are not in the situation you are in health wise and with your children (I have a child with additional needs too so I understand that).

Presuming that you chose to live in London or the South East which would limit your opportunity to buy public or private sector housing. And you are right if you have a very nice house to live in in a very nice area at a very cheap price probably best to hold onto it.

By the by sorting out a change of property ownership and right of residence really only involves one solicitors appointment, it isn’t really a lot of time, money or effort to sort. And you should have a solicitor any way to deal with your affairs.

Even with the discount I'd never be able to afford to buy mine (not that I would want to, so many problems with it), as I'm in my 50's so would have a smaller window to pay the mortgage off before retirement. A rough calculations puts my repayments around 3x what I'm paying in rent so this scheme, if it gets off the ground, will mean nothing to those would have lived in their homes for a long time (almost 30 years in my case) as we just won't be able to afford it anyway.

This is bonkers. For most in council - where property prices are more normal - it is a win win.

My friends bought theirs for 54k (reduced from 90k). They put about 10k of work into it and decorated. By the time they sold it 5yrs later their mortgage was pretty much paid off and it went for £154k. They then bought somewhere for 200k taking on another small mortgage of about 50k. That house is now worth 300k. This growth over a ten year period.

I really wanted to live in London where I grew up. Cant afford it. My cousin, who got knocked up by stealth, parlayed that into a council flat, then house, then right to buy. She earns at least as much as I do. The way this is done is massively unfair. I cant afford to live where I grew up because I did not game the system.

@Wheresmywoolyjumpers agree with you it’s tremendously unfair. I was on the list for a house for several years following homelessness. The only two places I was offered as a single person were a flat in an apartment block which housed alcoholics below me and sex offenders above. And later a house that needed absolutely everything done in it, in a dodgy street, with vomit over the window….

I stayed private rental, eventually got educated and that got me out of it.

Meanwhile seen people with a kid or two be offered 3 bed lovely homes in new developments. And those who could have bought private housing gaming as you say to get a public house at discount. Sorry it’s crap.

@Robinni yep, we live in SE. My husband was born here, so all his family are here. I was born up north though. Moved down not by choice more by fluke as the company I worked for transferred me. Spent many many years paying extortionate prices for grim rooms in shady shared houses before eventually getting my first council property.

If we lived up north we would almost certainly buy. But our jobs and lives are down here, so.

*Moved down 20yrs ago

Really, I think the whole thing is implausible on so many levels and will never take off.

I live in social housing. I live in North Kensington/Notting Hill. My flat would be worth £800k plus on the open market. There are lots of flats like mine in my street and surrounding areas which were bought up cheap by housing trusts years ago to house local people before the area became fashionable.

If the discount is really up to 70%, I think what will happen is this. Financiers will move in and offer to loan the money to the tenant to buy the flat with the discount as long as it’s then sold to back to the financier.

Of course the tenant will be tempted to take it, even if the flat is worth a lot more than is being offered. Then the financier will then sell on at a profit.

Net result, no more social housing tenancies. All private owners. Change the demographics including the voter base in parts of London too.

In fact, I know that my flat and hundreds of others are used as collateral for finance to enable the building of shared ownership properties. So how this is going to work is beyond me. I can’t see the Govt underwriting the housing associations.

@Rinoachicken you’re probably in the best situation you can be in. I’m sure that you can appreciate for the 50 million people who don’t live in London/SE that help to buy and the ring fencing they are to introduce around ISAs is quite a good thing.

We’ve been absolutely petrified that we’d lose everything if my DH lost his job. And finally, now can breathe easy our ISAs are going to be protected.

I have been in HA for 23 years so would get the max discount of approx 80.000
But I don't think I would be able to get a mortgage on just my wage.

You do realise that Housing Associations are private companies. No different from private landlords. The policy could easily be applied to private rentals if the Government wanted to. Maybe the Labour party should bring it in. There are far more private renters who vote than landlords.

I moved out, I moved back recently after an abusive relationship. I was in a women's refuge prior to this. Bitter is the wrong word.

@Stripedotsquare

This is going on now. They are just extending to housing associations. The discount is incremental and capped hence unlikely private investors would be tempted to loan and likely that’s illegal anyway.

www.gov.uk/right-to-buy-buying-your-council-home/discounts

Houses
You get a 35% discount if you’ve been a public sector tenant for between 3 and 5 years.

After 5 years, the discount goes up 1% for every extra year you’ve been a public sector tenant, up to a maximum of 70% or £87,200 across England and £116,200 in London boroughs (whichever is lower).

Flats
You get a 50% discount if you’ve been a public sector tenant for between 3 and 5 years.

After 5 years, the discount goes up 2% for every extra year you’ve been a public sector tenant, up to a maximum of 70% or £87,200 across England and £116,200 in London boroughs (whichever is lower).

Also to reiterate - there are 50 million people who live outside London and SE for which this will be good news.

Don’t know until you try, have a look at mortgage calculators and see a mortgage advisor it’s free.