To keep our council property when we can technically buy?

[HungaryForLove]

Hi all,

My partner and I are TTC and thinking about our future. Ideally, after I have a baby I only want to work maximum 2 days weekly so I can be around for our kids, and also save on childcare costs. Partner earns about £35k/year before tax/pension, and we have around £16k in savings. We wouldn’t be claiming UC, just child benefit.

We currently live in a council house that my partner grew up in — he inherited it when his mum moved abroad. It’s a 3-bedroom house. Rent is £480/month. The estate is fine, some people are bit rough around the edges but they never give us any trouble and there’s actually a nice community. I regularly walk to the local shop at night and never feel unsafe. It’s full of young families.

The alternative is buying a 3-bedroom house (we need 3 bed as want 2 DC and I often WFH), which seems to start around £160,000 here and with the 10% deposit of £16,000 our savings would go back down to £0 with no buffer for house maintenance, car issues, maternity leave etc. Also with a 30-year mortgage (we’d need 30 years to be able to afford the monthly payments) at 4.35% interest, I’d realistically need to work 4–5 days a week just to cover costs. I am currently only earning £26,000 full-time. Working so many days would mean barely seeing our kids and only taking home less than £1000 anyway after childcare, and that’s with taking into account the 30 free hours as you still end up paying hundreds a month anyway (I know this from my sister who uses our local nursery 4 days a week for her son who is soon changing to 2 days as she will pay nothing then).

If we stay in the council house, we could comfortably manage on one full-time income and one very part-time income and retain over £10,000 in savings (that would otherwise go on house deposit) to get us through maternity leaves etc, and the a portion of the money we’d otherwise spend on mortgage interest we would invest. Even considering rent going up a few percent per year, we’d still be much more comfortable.

So, AIBU for wanting to stay put in our inherited council house for now, even though we could technically afford to buy? I’m not saying we would stay forever but at least until the expensive childcare years are over, and maybe by then mortgage rates will have become more reasonable and I could go back to working full-time and we’d only be paying wrap-around care.

I do appreciate we are in a fortunate position to be even able to make this choice. Me and DP did grow up in severe poverty, I had alcoholic gambling addict parents and DP is originally from a very deprived country which his DM has moved back to and neither of us will inherit anything. Just to add context.

Unbelievable. And his mom moved back to Eastern Europe! She wasn’t even British!

that’s just shocking that the council hasn’t taken the property back

I can see why you would stay, but you shouldn’t be allowed to.

that late union rmt leader stayed in his council house when he earned 400k

stay and save up few more years-im not even sure you can just put a 10 percent deposit anymore

I’d move out in the OP’s situation and I’m pretty sure I’m not the only one on this thread who would 🤷‍♀️ And it’s not to do with MNers deeming people worthy. Clearly a couple on £61k shouldn’t be in a council house while there are people far, far worse off financially with children stuck in emergency accommodation. It’s selfish. Just because something’s allowed doesn’t mean you should do it.

FFS of course councils and housing associations have to keep their housing stock up to a reasonable standard! Such a sad ignorant comment.
I believe it's usually every 15 years or so that bathrooms/kitchens are upgraded.
Tenants would get some limited choice from a simple/basic range of options for kitchens.

Edited for a typo.

Morally it’s wrong. There are people who need that house, you don’t need it, it’s just comfortable for you and your family. So you’re comfortable that you’re disadvantaging someone else - maybe a family - who need to be in that house?

Keep the council house. Hard working tax payers should have some benefits. I own a house but most of the houses around me are housing associations and the tenants all working families. I am delighted to see them have nice affordable homes.

Why are the people in emergency accommodation the OP’s problem?

Bollocks would you, I, OP or anyone else make ourselves worse off to house a stranger. Come off it.

OP I would stay until oldest children turns 3, save more, and then buy a property in a nicer area. I agree with those who say you shouldn't really stay there long term, but staying for a couple years to get through first 'childcare chunk' seems sensible. You are a hardworking family paying into tax pot, paying rent and looking after property.

Any reason for not applying for the right to buy before it ended last November..I bought my house on a single income with a £3k deposit, mortgage is a manageable amount and I am still able to save. I earn the same as your partner

I would stay for now and reassess in a few years. In our 20s/30s, we earned a similar amount to you, though we privately rented (no council house). We saved for a decade and finally bought a beautiful house at 40.

I would want to buy, yes. Because I wouldn’t want to be in a position of having to pay rent in retirement. My mortgage will long be paid off by then and my children will have a nice inheritance. But there is no rush. Get yourself on your feet first and save.

Yanbu. Taxpayers are not subsidising your family, the ignorant idiots on this thread who think council tenants are subsidised just prefer to keep uninformed in order to better serve their petty hatreds but there is nothing wrong with being a council tenant. It's true there's a shortage of council properties but that's not your fault. You are entirely entitled to stay there and reasonable to do so. It's tory party policies over the last 50 years that have decimated the social housing stock and caused the housing crisis, it's certainly not ordinary people like you OP that should pay the price for that. Council rents are lower than private rents because they don't exploit people to profiteer from them like private landlords do. That's not a subsidy. We would be a better healthier and safer nation if all tenancies were like that.

It doesn't matter what the incomes are, she needs to be on the rent book but it's not mean tested

DH and I both work full time, have always worked hard, always paid taxes etc etc - I would love to work less days to spend time with my children but we need to pay our mortgage.

Social housing shouldn’t exist to allow people to work less out of lifestyle choice. It’s function is to provide housing for those who can’t afford to buy or rent on the open market.

It is irrelevant what other people choose to do, your own social conscience should be telling you to make this property available for someone who genuinely needs it.

We can do Right To Buy but we don’t see the point of that really as we’d still be responsible for repairs etc and end up paying mortgage interest. We would rather stay here on the council tenancy until we have a larger deposit that would allow us to buy another home comfortably rather than buying a home and being on the bones of our arses afterward which would be the current situation.

Same. I would stay too on that income. He doesn’t earn very highly and I can see you might struggle to buy, at least for the short term.

And where on earth do you live where 3 beds are £160,000? I don’t live in or near London but that wouldn’t even buy you a one bed flat here.

I completely understand why people are angry but we have approached our council several times to check we’re not breaking any rules by staying there and they have never once mentioned that they had any issue with it. If the council were to kick us out to house a homeless family we would understand but we’re not going to beg them and pester them to do so.

It’s all well and good saying “do the right thing” but people will do what is best to support themselves. We both grew up in poverty and will never see any sort of windfall or inheritance. We’ve been fortunate with our council housing and are reluctant to give up our safety buffer until we feel fully secure to buy. Buying now would leave us with no safety buffer and we certainly couldn’t afford to grow our family any time soon if we bought, which isn’t fair when we both work full-time.

I would stay put for now if buying is going to drain your savings to £0. You need savings as a homeowner - what if the boiler goes? Electrics etc? You don't want to get into debt sorting repairs and stuff. Id wait until you've got more of a buffer. See how things are when your children are looking to start school maybe?

It does feel unfair when council properties are not becoming available for others in need as people are just never leaving them and passing them on to family members

Exactly my thoughts. I do feel guilty because technically we do have a deposit and are eligible for a mortgage so we could go, but we can only afford lower-end houses with issues and if anything with the house goes wrong we are screwed and are instantly in huge debt before we’ve even brought a child into the world. We could end up in a cycle we’d never get out of I fear and potentially never be in a comfortable enough position to have a child.

I just don’t think we are ready yet. I think I would at least want to get the nursery years out of the way.

Also my partner is not and has never been a scrounger…they moved to the UK after his dad attempted to murder his mother and they had to flee the country to avoid another attack. The mum and my partner were working. Partner was working from age 14. The sister was in full-time education. The mum then got a back injury and became disabled and he was working and supporting the entire household when he was still a child. How was he ever supposed to start saving up his own house or rental deposit or study in those circumstances? By the time the mum and sister had moved back home he had put so much into this home to make it liveable and homely and when the council offered him the opportunity to stay he took it, which is fair enough IMO. When you’ve grown up in the poverty that he has you will do anything to ensure security for your future family.

OP Financially it seems to make sense to stay, but have a good think about this in terms of compound interest etc plus rising house prices. The maths don't necessarily support the theory of staying put.

If you leave it five years the same property could have risen a good amount in value, whilst your wages are likely to shrink in real time because of the economic conditions currently. You are also reducing the maximum number of years you can mortgage for and effectively likely to increase the monthly payments you would have to make.

The first thing - you can't assume that interest rates will get better. The last 15 years has seen unusually low rates. It's thought that 4% is more normal.

Second thing - you can't assume house prices will stay the same. The increase in prices ATM is about 1.5 - 3% annually but a few years ago it was skyrocketing at more like a 9% increase. I don't think it's likely to get that high again, but you need to assume that a 3% increase per year isn't unlikely. It may be that prices do the opposite but you have to bet on this as a basic scenario.

Based on a 160k property with a 10 deposit repaid over 30 years at 4% you are looking monthly repayments of roughly £675
In five years time if house prices go up 3% annually, that same house is going to cost more like £185483.

So your deposit would need to be about £2500 more. Worse still the amount you'd have to borrow would be more and your monthly repayments more like £775 - that £110 a month more.

We are in a period of wage stagnation so the chances of your wages rising to match these numbers aren't great.

So add up the costs of repayments and interest over just twelve years - it's about £15000 extra if you wait 5 years.

In total after adding together the cost of the house and your repayment, after 12 years you'd be out of pocket £40k if you wait five years. Of course your mortgage is actually 30 years long... That makes about £65k extra over the course of the mortgage extra that you'd have to pay. Suddenly waiting five years to move doesn't look so great after all.

Here's another way of putting it though. Every month you pay into the mortgage the more you save in equity. If you pay rent it's dead money. How long is it going to take you to save the equivalent in buying a house? And of course your house may have gone up in value too. Your house is an asset you can pass to your kids. Not only this but when you finish the mortgage term you don't have to worry about rent anymore. Just maintaining your property (which isn't always cheap admittedly).

Now my amounts here are firmly fag packet rough calculations for illustrative purposes only. But they highlight how mortgages work. They are really badly understood. You obviously can remortgage and yes those interest rates may get more or less favourable.

Of course it depends on what you can actually afford each month - that's a completely different consideration - that's hard when the kids are small and it may be that you value the quality of life more than the money and think it's worth waiting for that reason.

My point is, council housing looks like a better option short term. But long term, it's generally not.

I wouldn't be betting on pensions in 30 years time paying the council house rent either.

Whatever you do it's ultimately a gamble - no one can really predict what the market is going to do - but at least understand how the gamble you are making works before you make that decision.

I agree that sinking all your savings into a mortgage at a time when you are planning to have children (expensive) may not be wise. You (or your partner, not sure if you are officially added to the tenancy) are in a fortunate position of having stable tenancy in a property big enough for the family you are planning.

I can understand some envy from those in a less fortunate position to you.

I can't understand the critical comments from those who may see themselves in a more fortunate position (homeowners? Higher earners?) who think you are sponging off the state.
You are paying income tax and your rent is going directly to the council. If your rent was going to a private landlord instead that would not be better. And if you ended up in a position of having to claim HB/UC housing element in the future to pay a private landlord because your earnings dropped/childcare costs were high and you couldn't afford the private rent then the state would certainly not be better off.

Of course it would be better if there were affordable secure tenancies - council or HA for all that needed them. But it's not your fault that there aren't.

Your lives will be upended by a young family. Crack on renting and look again at buying in a few years.

There's an enormous amount of misinformation and misinformation on this thread about both mortgages and council housing.

Ironically the problem is the cost of emergency housing - if councils were allowed to borrow and build more houses they would quickly massively reduce this bill. Its financially madness to not allow councils to do this more (there's a cap that prevents them doing this). It would recoup it's costs relatively quickly. It's a good example of piss poor government management over real life issues.

It's not scrounger who are the biggest problem. It's inept politicians and local government.

I lived in a council which had more foresight over this and built a lot more council properties during the last forty years. It has one of the lowest waiting lists for properties now - the trouble is that they are under pressure from neighbouring councils to take on people because they fucked up the same long term planning. This council had a single local councillor who was a geography nerd and was really into demographics for a long time and he did a lot to push the issue for many years. That's all it took - one person who actually fucking understood the actual problem and planned for it.