Purchasing a Council House

MrFinance

Hi all,

Looking for some advice off somebody who has gone through the process of purchasing council housing.
According to the rules, a discount of 40%-60% is being offered to tenants depending on their circumstances. However, I am not a tenant and my Grandmother would like me to purchase the house that she has been a tenant of for approx 35 years. My sole reason would be to prevent her from paying rent and I'd like to renovate the home for her myself.
Would the council assess the above on a case by case basis or would it be a flat no?

Tow

She cannot sell what she does not own. If you live there, you can have your name added to the tendency and work from there..

BarryD2

I guess and I stress guess that you could gift the purchase price to your granny, on the basis that she buys and then bequeaths to you on her death. If that is what you're driving at? On other hand, if granny suddenly comes into money, then maybe her tenancy can be terminated by LA.

But even if this is possible, it would be morally very questionable.

antoinolachtnai

Have you got the cash to do this or do you need to get a mortgage? That is going to be the big issue.

Wheeliebin30

40-60% discount?

Jesus.

MrFinance

Tow wrote: »

She cannot sell what she does not own. If you live there, you can have your name added to the tendency and work from there..

Completely understand that. However, she would like me to purchase from the Council.

antoinolachtnai wrote: »

Have you got the cash to do this or do you need to get a mortgage? That is going to be the big issue.

I could do either. Obviously, pending the purchase price. I wouldn't find purchasing a council house at 100% of the MV a good investment as it needs approx 20-30k of renovations. Even after doing so I would be lucky to make back my money if I was ever to sell it in the future.

BarryD2 wrote: »

I guess and I stress guess that you could gift the purchase price to your granny, on the basis that she buys and then bequeaths to you on her death. If that is what you're driving at? On other hand, if granny suddenly comes into money, then maybe her tenancy can be terminated by LA.

But even if this is possible, it would be morally very questionable.

I could go down that route but obviously gifting gives rise to tax. I have not received any prior benefits so inheriting would be fine. But as stated above, morally questionable and would prefer to avoid.

antoinolachtnai

MrFinance wrote: »

Completely understand that. However, she would like me to purchase from the Council.



I could do either. Obviously, pending the purchase price. I wouldn't find purchasing a council house at 100% of the MV a good investment as it needs approx 20-30k of renovations. Even after doing so I would be lucky to make back my money if I was ever to sell it in the future.



I could go down that route but obviously gifting gives rise to tax. I have not received any prior benefits so inheriting would be fine. But as stated above, morally questionable and would prefer to avoid.

The council are not going to allow a non-tenant to exercise the tenant’s option to buy. Besides it being completely ridiculous, they would potentially be left in a situation where they had to rehouse your grandmother later, for example if you died or if you somehow couldn’t make your payments on a loan for some unforeseen reason.

Even if the tenant could do this, the difference between purchase value and market value would be taxable as a gift.

You can structure it as a loan to your grandmother. Your grandmother would then buy the house. The loan is structured to only be repayable on her death. It might make sense to charge a low level of interest in the loan or it might not. It might make sense to secure the loan on the property. This way there is no gift and no immediate tax implication.

MrFinance

antoinolachtnai wrote: »

The council are not going to allow a non-tenant to exercise the tenant’s option to buy. Besides it being completely ridiculous, they would potentially be left in a situation where they had to rehouse your grandmother later, for example if you died or if you somehow couldn’t make your payments on a loan for some unforeseen reason.

Even if the tenant could do this, the difference between purchase value and market value would be taxable as a gift.

You can structure it as a loan to your grandmother. Your grandmother would then buy the house. The loan is structured to only be repayable on her death. It might make sense to charge a low level of interest in the loan or it might not. It might make sense to secure the loan on the property. This way there is no gift and no immediate tax implication.

I was thinking in line of same. For example, I personally loan my Gran 50k. Then I charge interest of 4%. This would give rise to a €2,000 bill p/a. However, I could also utilize her SGE by gifting her €3,000 every year. Thus, allowing her the ability to live rent free and have a further €1,000 p/a.

antoinolachtnai

MrFinance wrote: »

I was thinking in line of same. For example, I personally loan my Gran 50k. Then I charge interest of 4%. This would give rise to a €2,000 bill p/a. However, I could also utilize her SGE by gifting her €3,000 every year. Thus, allowing her the ability to live rent free and have a further €1,000 p/a.

Well if you collect the interest you will have to pay income tax on that interest, which may or may not suit you. You could allow the interest to accumulate until the end. You really do need advice on the tax aspects of this (as well as the legal aspects).

MrFinance

antoinolachtnai wrote: »

Well if you collect the interest you will have to pay income tax on that interest, which may or may not suit you. You could allow the interest to accumulate until the end. You really do need advice on the tax aspects of this (as well as the legal aspects).

Friends with a TA so he could tell me the ins and outs. Re income tax that's fine, to be expected. Appreciate the advice.

surrender monkey

It won't be possible for you to buy the house. You have to live there and be assessed for rent for a couple of years and then apply to be added to the tenancy. As far as I am aware then you could both apply to purchase the property. The Council don't have to agree to any of this though and under the new incremental purchase scheme councils have refused to sell to people who don't meet their criteria. For example a single elderly person in a three bed might be refused as they are in too large a property.

Samuel T. Cogley

Wheeliebin30 wrote: »

40-60% discount?

Jesus.

They've been paying into it for 35 years. Sold at a significant discount means an older property is off the books, renovated at the cost to the new owner and someone who could never afford a house through a mortgage is given the opportunity.

I was very anti-council house buying but the benefits, especially to the area as a whole outweigh the downsides.

banie01

The mortgage/means of financing question is very pertinent.
A mortgage would not be available to you in this instance as you wouldn't be able to be named on the deed transfer from the Council to your Gran
As spitballed above, forwarding a loan to your Gran is a means of circumventing this and the means of offsetting the loan against gift tax has been outlined.
The issues that arise are mainly tax related but manageable, the main concern would be that should you predecease your Gran how the loan balance is managed(Codicil to forgive the outstanding balance in the event perhaps?)

The other sticky issue is ensuring that should you finance your Fran's purchasing the house that your ownership is recognised
Relying on a will would not be how I'd do this.

Perhaps forwarding the loan to your grandmother for her to complete the purchase and then registering your charge on the property as a "lifetime mortgage" This would cost more to do in legal fees but should have the benefit of reducing any tax burden and making ownership of the property fairly straightforward.
Also allows it to be transmitted as part of your estate should you predecease your Gran either to her, or to your own children with a lifetime right of residence for Gran.

myshirt

From what I know from my network, they won't sell it to you if it's in Dublin, Kildare, Wicklow, Meath, Galway, Cork, Kilkenny, Limerick or Waterford. Only up to recently some went in County area of Cork, and Limerick was open to selling also but people's balls will be put in a blender if one more goes.

The scheme is still open, but no sales are taking place. The public housing stock is too low. It's even a struggle for people to inherit the tenancy in certain parts of the country. If anything, an approach by you with the proposal as you set it out may prompt them to move your grandmother on to a more suitable place and put a family into the house.

Discount is 50% if you can get it though, but there is clawback if you sell it on.

Mrs OBumble

There's a huge shortage of social houses properties.

If you find some way around the rules to buy the house, then that's one less house which is available for allocation family who need assistance, once your granny doesn't need it any longer. It may be legal, it ain't moral.

Paying income-related rent is not hurting your granny.

clfy39tzve8njq

MrFinance wrote:

Completely understand that. However, she would like me to purchase from the Council.

You can't get the discount

fritzelly

I would think under the incremental charge that should your grandmother die then the council will want the rest of the money outstanding due to the incremental charge and bequeathing the property won't make any difference

K_P

Mrs OBumble wrote: »

There's a huge shortage of social houses properties.

If you find some way around the rules to buy the house, then that's one less house which is available for allocation family who need assistance, once your granny doesn't need it any longer. It may be legal, it ain't moral.

Paying income-related rent is not hurting your granny.

100% agree with this. We're in a housing crisis. Your granny was lucky enough to be allocated a council house 35 years ago and benefitted from the security and affordability of that for decades. Now you're looking for loopholes so you can buy it and sell it on at a profit. You may find a loophole but it's not right.

If you want to renovate the house for her, talk to the council and see what can be done, can they cover the necessary repairs. In terms of the rent she pays, it's highly unlikely to be more than 18-20% of her income. If her rent is higher than that or seems unfair, talk to the council as it may have been assessed incorrectly.

But if you're talking about buying the house in cash, then you're not in need while tens of thousands of families are. Seeing this as an investment that you can flip in a few years time is shocking.

MrFinance

K_P wrote: »

100% agree with this. We're in a housing crisis. Your granny was lucky enough to be allocated a council house 35 years ago and benefitted from the security and affordability of that for decades. Now you're looking for loopholes so you can buy it and sell it on at a profit. You may find a loophole but it's not right.

If you want to renovate the house for her, talk to the council and see what can be done, can they cover the necessary repairs. In terms of the rent she pays, it's highly unlikely to be more than 18-20% of her income. If her rent is higher than that or seems unfair, talk to the council as it may have been assessed incorrectly.

But if you're talking about buying the house in cash, then you're not in need while tens of thousands of families are. Seeing this as an investment that you can flip in a few years time is shocking.

Mrs OBumble wrote: »

There's a huge shortage of social houses properties.

If you find some way around the rules to buy the house, then that's one less house which is available for allocation family who need assistance, once your granny doesn't need it any longer. It may be legal, it ain't moral.

Paying income-related rent is not hurting your granny.

Sorry I must not have clarified in the post, but if I wanted unhelpful opinions I would have went elsewhere. Unless you can positively contribute to this thread I'd recommend bashing elsewhere.

Graham

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K_P

I'm not bashing. I offered advice on how you could assist your granny with the renovation and her rent without going down the morally dubious route of buying a public good at a discount for private profit.

MrFinance wrote: »

Would the council assess the above on a case by case basis or would it be a flat no?

To get back to your original question, there is no case by case basis. It will be a flat no. You're not the first person to have thought of this.

MrFinance

K_P wrote: »

I'm not bashing. I offered advice on how you could assist your granny with the renovation and her rent without going down the morally dubious route of buying a public good at a discount for private profit.



To get back to your original question, there is no case by case basis. It will be a flat no. You're not the first person to have thought of this.

Ultimately, I did not come here for opinion. Merely advice. As I said, I would like to contribute toward my grandmothers home. The council are slow to get involved in a house that needs anywhere from 20-30k worth of renovations. However, I'm willing to make this up and purchase the rest at a discount if possible. Re Private Profit, I would be residing in the house after.

MrFinance

Rennaws wrote: »

Does the house actually need those renovations or would they be a nice to have so that you could live there comfortably ?

Reason I ask is that i've been amazed recently by the speed and efficiency with which my MiL's needs have been taken care of by the local council. Anything she's needed as a result of her mobility decreasing has been provided for within a week or 2 of asking.

We fought with them for almost 4 years due to window and door being broken. I'd love to know which council you have because ours is pretty grim.



Also, yes, 30k would be about right. Roof is in disrepair, windows need to be replaced, back end of house will need to be redone as it's protruding as is a serious health and safety hazard. Regarding the other 8k or so it would be more suited to having the downstairs catered to her needs so she doesn't have to climb the stairs.

clfy39tzve8njq

MrFinance wrote:

Ultimately, I did not come here for opinion. Merely advice.

Wasting your time OP the moral police are ready to jump on every thread here.

surrender monkey

But if your gran gas decreased mobility etc you can apply to the council to do the works. Your gran should go see her local td / councillor and get them to look at her house and make representations to the council on her behalf.

MrFinance

surrender monkey wrote: »

But if your gran gas decreased mobility etc you can apply to the council to do the works. Your gran should go see her local td / councillor and get them to look at her house and make representations to the council on her behalf.

I'd sooner see a pig fly than see a politician working.

I did this.


The factual side of it is:


1) Your granny won't be allowed to purchase unless she has an income from employment. If she only has an income from Social Welfare or pension etc. then she is not eligible to purchase the house. Someone living in the house has to be making income from a current job.

2) So, yes, you can still buy it! You must put your name down on the rent, and pay the rent for a year with both of you living there (The rent cost will be adjusted upwards to take your income into consideration). You can then apply to buy. You must have the income from employment or they won't entertain you.

3) If you allow the Council to adapt the house for a disability, then the house is removed from the scheme. You can not purchase a house that has been adapted for a disabled tenant. Also, as part of the process of adapting the house, the Council will inform any tenants of the house that once the disabled person dies, the house will be taken back by the Council and given to someone else. Any other able-bodied tenants in the house will be re-homed elsewhere (ie; you lose the house).

4) If you go down the route of going onto the rent, paying your share and then trying to buy next year (a new tenant has to be on the rent for 12 months before you can purchase) then your own income is taken into consideration (unsure if your granny's SW payment will be or not) to work out what percentage you get (40,50 or 60%).

5) The rules state that it doesn't matter where the money is coming from to buy the house. Your granny is legitimately allowed to get help from family, friends, etc. to get the money together. However, as per no. 1 above; she still needs to have a current income from work.

6) The discount you got from the CoCo is still owed back to them if you sell the house within 25 years. If you sell the house in the first 5 years of owning it, then you owe them back the full discount. After the 5th year of ownership, the amount you owe them drops by 10%. It then drops by 2% every year after that until 25 years have expired (depending on the discount you get, the 25 years clawback can last 30 or 35 years).

7) If you attempt to sell the house (at any time, not just within the 25 years), the CoCo get first refusal on buying it back into their stock before you're allowed sell it privately.


I'm flying out the door at the moment so can't really write any more but i did this very recently, so any questions just fire them at me

MrFinance

Deleted User wrote: »

I did this.


The factual side of it is:


1) Your granny won't be allowed to purchase unless she has an income from employment. If she only has an income from Social Welfare or pension etc. then she is not eligible to purchase the house. Someone living in the house has to be making income from a current job.

2) So, yes, you can still buy it! You must put your name down on the rent, and pay the rent for a year with both of you living there (The rent cost will be adjusted upwards to take your income into consideration). You can then apply to buy. You must have the income from employment or they won't entertain you.

3) If you allow the Council to adapt the house for a disability, then the house is removed from the scheme. You can not purchase a house that has been adapted for a disabled tenant. Also, as part of the process of adapting the house, the Council will inform any tenants of the house that once the disabled person dies, the house will be taken back by the Council and given to someone else. Any other able-bodied tenants in the house will be re-homed elsewhere (ie; you lose the house).

4) If you go down the route of going onto the rent, paying your share and then trying to buy next year (a new tenant has to be on the rent for 12 months before you can purchase) then your own income is taken into consideration (unsure if your granny's SW payment will be or not) to work out what percentage you get (40,50 or 60%).

5) The rules state that it doesn't matter where the money is coming from to buy the house. Your granny is legitimately allowed to get help from family, friends, etc. to get the money together. However, as per no. 1 above; she still needs to have a current income from work.

6) The discount you got from the CoCo is still owed back to them if you sell the house within 25 years. If you sell the house in the first 5 years of owning it, then you owe them back the full discount. After the 5th year of ownership, the amount you owe them drops by 10%. It then drops by 2% every year after that until 25 years have expired (depending on the discount you get, the 25 years clawback can last 30 or 35 years).

7) If you attempt to sell the house (at any time, not just within the 25 years), the CoCo get first refusal on buying it back into their stock before you're allowed sell it privately.


I'm flying out the door at the moment so can't really write any more but i did this very recently, so any questions just fire them at me

Exactly what I was looking for. I appreciate the message and thorough answer. I will be sure to fire questions at you shortly.

surrender monkey

Kkv just a question , how long were you paying rent to the council before you were included on the tenancy?. I only ask because I thought the rule was two years on the rent account then you can apply to be put on the tenancy, after your a tenant for a year you can apply to purchase. The discount is based on the income into the household. Does the op live with his or her gran at minute?

MrFinance

OP is not a tenant. However, lived with her for a number of years in the past. Never paid rent as I am only 23 and just finished college.

surrender monkey

surrender monkey wrote: »

Kkv just a question , how long were you paying rent to the council before you were included on the tenancy?. I only ask because I thought the rule was two years on the rent account then you can apply to be put on the tenancy, after your a tenant for a year you can apply to purchase. The discount is based on the income into the household. Does the op live with his or her gran at minute?

I was a tenant for 25+ years, but then left the house.

It was when i had left the house that it was bought. I wasnt living there during (or before) the purchase process.

My dad, who has the house, was a tenant for 35+ years I believe.


I know straight away im setting myself up for the 'council houses aren't supposed to be forever homes' etc and although i generally agree with that line of thinking, my area is rough and people buying their houses seems to be one of the few things that helps with quietening down a bit. Forced gentrification.