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Right to Buy - council property


jon hammersley

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Hello I wonder if anyone is able to help or point in the right direction here. My mate Dean, his mum and nan both live in separate maisonettes in the same block in east London. One is a ground floor maisonette, 3 bedroom, with ground and 1st floor plus a garden, the other is 3 bedroom in the same block but not on ground floor and no garden. They have both lived in these properties for over 30 years and have the right to buy at a heavily discounted rate. The are worth in the region of £350,000 and he believes that they can be bought for £80-£100k each.

 

Dean doesn't have the money to buy them and has asked if I am able to help him, it is possible that I can help him here what I would like to find out is the following;

 

1 - can Dean buy the property or properties if it is his mother and nan living in them. (He still lives in his mums on and off himself)

 

2 - if he was to buy it or his mum was to buy it are there any restrictions or clauses that they have to keep it for a set period of time before they can sell them?

 

3 - if I were to help him is this still possible with me in the mix?

 

Any help of suggestions would be greatly appreciated, thanks for reading.

 

Thank you, Jon

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Hi Jon

 

OK, so lots of inter-dependencies here...but an opportunity too.

 

Rather than rely on me or anyone else that does not fully understand the local right to buy conditions, I would suggest this is checked out directly from the source i.e. the local council. Once you know the 'rules' you can plan better.

 

In terms of the opportunity a c70% discount has to be taken, no doubt about that! The questions then are how and also on what terms. In terms of buying the properties, I imagine that the person renting the flat would need to be the one 'buying' it, so the named tenant, which I imagine is Dean's Mom and Nan here. I guess the council may allow a close family member to step in, especially if they have been living at the flat but to buy two this way might be a stretch. That said, anyone buying a property this way would probably need a loan or a gifted deposit to do so and that is probably your best route to follow also, at least for the second one. I imagine some lenders would be willing to look at R2B loans and Dean standing as co-mortgagor could help here (with ownership as Tenants in Common). A decent broker could provide the answers to that one.

 

Consideration should be made about how to get the money back out, presumably renting could continue? Alternatively, a transfer under tenants in common (sorry to say that only applies following death), or a sale at a future date outside of the minimum holding period could take place. There may be restrictions on renting under the R2B terms also to check.

 

I think you could help in a number of ways and if you are not permitted to be directly involved under the rules, then you can use loans and gifted deposits and protect your position by way of a Deed or Declaration of Trust and charges / restrictions on title placed just after the sale takes place. I good solicitor would provide guidance here - a different one to the one doing the conveyancing as they would represent you and the other parties should have their own independent legal advice.

 

That all said, I am not an expert in this field and so that is why I have been signposting you to speak to the council and some other professionals that can give better and more personalised advice...you don't want to get it wrong and with at least one elderly (possibly vulnerable) person involved you also need to tread carefully and protect their interests.

 

I hope that helps a little.

Richard W J Brown a.k.a. The Property Voice

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Hi John

 

1, the only people allowed to buy their council property at a discount are the people named on the tenancy agreement. Other family members are not entitled to be party to the purchase and no mortgage lender will give a mortgage to anyone other than said named people. It is possible to request adult family members, who live at the property and contribute to the living costs but are not noted on the tenancy agreement, have their name added

2. Always. Councils are very aware of people trying to make a quick buck at their expense, to eliminate the chance of that happening every Right to Buy purchase has penalty clauses written into it. The penalties may differ from council to council but there is always an indemnity period during which some or all of the discount given to purchase is repayable back to the council from the sale proceeds. Most often that period is 5 years.

3. not unless your name is on the tenancy agreement. Any type of involvement by you in any other form would need careful, probably legal, examination to ensure that Sale and Rent Back legislation was not being breached

 

I hope that helps

Kevin Wright

Positive Property Finance

Telephone: 01206 586586

Email: inspireme@thinkpositively.co.uk

Brokerage website: www.positivepropertyfinance.co.uk

Workshop website: www.ninjainvestorprogramme.co.uk

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