This blog answers the question “How Can I Buy A Council House for My Relative? The blog explains how you can use the Right to Buy Scheme to purchase a property for your relative. This blog also evaluates the expenses generally incurred on buying a new home.
How Can I Buy A Council House For My Relative?
You cannot actually buy a house for someone else in your own name as the title deed and ownership documents have to be in their official name. Other details such as the address can also not be registered in their name by HM Land Registry. But you may be permitted to buy a property under the Right to Buy Scheme and transfer it to your relative after a period of 5 to 10 years.
You can apply jointly for ownership of the property with up to 3 of your relatives. If you are joint tenants, you should have lived together in the house for at least a period of 12 months.
The reason why you have to wait for 5 to 10 years to resell a property obtained under the Right to Buy Scheme is that before this period your council would be entitled first to repossess the house before you can transfer it to a relative.
What is the Right to Buy Scheme?
The Right to Buy scheme allows tenants to purchase their council house at a discount. You can apply for the Right to Buy scheme if:
- It is your primary residence and you don’t own any other property
- Your house is self-contained
- You are categorized as a secure tenant
- You have been living on the property of a public sector landlord for at least 3 years.
You can apply along with someone else who can be a relative who lives with you on the property. Your application to buy the house can be made along with 3 of your relatives (who have occupied the property with you for the past 12 months).
To apply you need to complete the Right To Buy application form RTB1 and send it to your landlord for their approval. They have upto 8 weeks to agree or disagree with your right to buy decision. If they have been your landlord for under 3 years, they only have 4 weeks.
If your landlord approves your case they will send you an offer. This offer letter will state the price at which you will buy the property, give the estimates of any service charge incurred by the landlord over the past 5 years and mention the discount you will get on your purchase.
This offer needs to be sent by your landlord within 12 weeks (for a leasehold property). It has to reach you within 8 weeks if you are buying a freehold property. The maximum discount available in the UK is £87,200. This discount is based on :
- How many years you have been a tenant with your landlord
- Which kind of property you are purchasing? Is it a flat or a house
- The value of your property
If you are buying a house jointly with a relative, you need to consider the years of the person who has been the tenant for a longer period. You will receive a 35% discount if you have been a tenant in the housing sector for between 3 to 5 years. After these 5 years, the discount increases by 1% every year, until it reaches a maximum of 70%.
This maximum ceiling amounts to a discount of £87,200 and to £116,200 in the London Boroughs.
Your landlord’s offer will confirm their acceptance of your purchase. You will have 12 weeks to respond to your landlord’s “offer” letter. The landlord can send you a reminder after the passing of this 12 week period. You will be given 28 days to respond to this reminder before your landlord can choose to withdraw the offer.
In case you don’t agree with your landlord’s offer, you can respond to them by explaining the reason such as setting the market value too high. You need to provide this explanation within 3 months of getting the offer. You can request an independent assessor from HMRC to revalue the property and provide an independent appraisal.
You will then have 12 weeks to accept this independent appraisal or to withdraw your purchase offer.
Can I sell the house to my relative?
Yes once the sale is finalized you can resell the property to whomever you like. If you are reselling your house within 5 years you need to pay back some or all of the discount on the right-to-buy scheme. The amount you have to repay depends on how long you remained in possession of the property and the price on which you will resell the property. So if you are selling the house in:
- Year 1, you have to repay all the purchase discount (you received) on the Rent to Buy Scheme
- Year 2, you have to repay 80% of the purchase discount
- Year 3, you have to repay 60% of the purchase discount
- Year 4, you have to repay 40% of the purchase discount
- Year 5, you have to repay 20% of the purchase discount
If you are reselling within 10 years, you have to ask your council for written permission for this action. The council should first be offered to rebuy the property from you after you can offer it for sale or give it to someone else.
The council will reply to your request within 28 days. So if you wait for the end of 10 years, you will be legally entitled to sell your house on the open market without any restrictions.
What are the costs I have to consider when buying a new home?
You need to consider the following costs when buying a new home:
- Your mortgage deposit. If you are purchasing your house using a mortgage, you will have to provide your lender with a 10% to 20% mortgage deposit.
- Mortgage Agency fee. The lending agency might have a subscription or membership fee for its services.
- A mortgage valuation fee is paid for your lender’s independent assessment of the property’s purchase.
- A standard survey fee, is charged by most mortgage providers to assess the property for repairs and safety standard requirements.
- The land registration fee is to be paid once you have bought the property and it is to be listed in your name. This charge depends on the value of your property. The current rates for land registry fees by HM Land Registry were revised on 31st January 2022.The charges are £45 for property valued upto £80,000. £95 for property valued from £80,000 to £100,000.
- You have to pay Stamp Duty Land Tax charges. These are exempt if you are buying your first property and its value is under £300,000
Can I buy a property along with my relatives as co-tenants?
Yes, you can buy your property with relatives as co-tenants given that:
- This property will also be their primary residence
- They have lived in the property for 12 months (as tenants) before applying to purchase it
Relatives cannot apply for purchasing a property without the consent and partnership of their “primary tenant”
What are leaseholder’s rights?
Leaseholders have the following rights:
- The right to extend their lease or to buy a freehold of a house (or housing association home) under the Leasehold Reform Act 1967
- The right to extend their lease or to buy a freehold of a flat under certain conditions
- The right to buy the freehold of a flat when it is sold, under the Landlord and Tenant Act 1967
- The right to information regarding appealing service charges on their lease
- The right to avoid repossession for owing ground rent or service fees to the landlord in case the unsettled charges are very low
This blog post addressed the question “How Can I Buy A Council House For My Relative? You can buy a council house for a relative with your own money through a mortgage agreement, once all the payments are complete, you can transfer the property to your relative. Using the Rent to Buy scheme from your council is a much more affordable option for buying a house for your relative, its only drawback is that they will have to wait for up to 10 years to gain ownership of the property.
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Frequently Asked Questions (FAQs) : How Can I Buy A Council House For My Relative?
Can I make a joint application for the Rent to Buy Scheme?
Yes, you can make a joint application for the Rent to Buy Scheme. This joint application can be made along with a maximum of 3 of your relatives. All 4 of you should have been living as tenants on the property for the last 12 months. The expense of purchasing the property at a discounted price can be split among all of you equally or as you decide through mutual agreement.
You can have 2 other relatives bear the cost along with you to purchase the property for the 3rd relative. Or you can just mention one other relative on your joint tenancy application and pay the entire purchase amount yourself.
What are deferred resale agreements?
Deferred Resale Agreements are made by a company or person offering to help you in buying your home. You need to be wary of such persons because:
- Their offers are usually more preferential to their interests than yours
- They could rent the property to you at a higher rate than the previous landlord did
- As the lender requires the name of the tenants on the mortgage application so if the debts remain unpaid due to the other partners, your property could be seized to recover the debt.
To prevent being defrauded by deferred resale agreements you should agree on the following matters with your co purchasers. You need to agree on where you will live if your house is repossessed. Who is going to maintain the garden? Which partner is going to be responsible for paying the utility bills
What responsibilities does my landlord have to his tenants?
A landlord has a few basic responsibilities to his tenants under the Landlord and Tenant Act 1985 Your landlord has the responsibility to consider your offer for buying a “freehold” of the property under the Leasehold Reform Act 1967 (which applies to your leasehold agreement)
A landlord’s basic responsibilities under the leasehold include:
- Getting an Energy Performance Certificate for your property
- Ensuring that your rented properties are hazard proof
- Check if your tenant has the correct right to rent documents with them. This generally involves verifying if your tenant belongs to the UK and if not, then checking their current immigration status.
- To provide your tenant with a copy of the “How To Rent Checklist” when they start their assured shorthold tenancy.
- It is your responsibility to ensure that fire safety regulations are complied with on your rented property
- When you rent out a property, your council may decide to conduct a Housing Health and Safety Hazard System Inspection. In this inspection 29 health and safety hazard areas are assessed