Right to buy

[pigsty]

Hello - I'm new to this so hope you can help me. My aunt (90yrs) is hoping to buy her council property with a loan from me (66yrs) and will benefit from a right to buy discount. She will lose her housing benefit and council tax support - are there any other benefits she may lose? I will cover these expenses for her. She will leave property to her sister (my mother - 86yrs) who will live there, and then my mother will leave property to me in due course. When my mother inherits will she have to pay back any of the discount my aunt received on buying the property? In due course, would I have to pay back any of the discount to the local authority?

[Amethyst]

Do you or your mother live in the property with your Aunt at the moment ?

Is the property adapted at all to be suitable for the elderly?

If you are 'loaning' your aunt the money to purchase the property, how will it be repaid?

Is she buying outright, using the money you loan her, or with a mortgage ?

Have you considered what will happen should your Aunt need to go into care? or later, should your Mother need care ?

On the leaving the house to your mother side of things, does your Aunt have no children or other relatives?

If anything happened to affect your circumstances and you were unable to pay the mortgage, or cover her lost housing benefit/council tax support, say if you lost your job or had to go bankrupt for any reason, what would happen to your Aunt?

[pigsty]

Hello - thank you for raising these issues - we have already thought through them and think that we are able to address all of those concerns. We do not live with my aunt and the bungalow was adapted for elderly use i.e. shower and handrail for her husband when he was alive. My aunt would buy outright and I would eventually be 'repaid' when the bungalow is willed to me. We would amend our wills to cover all eventualities, and I have talked this through with my cousin (my aunt's daughter) who would be happy to see the home retained in the family.

[pigsty]

Further to my original post, can anyone advise on what benefits my aunt will lose out on if she becomes a home owner? Has anyone had experience of right-t-buy and any tips on dealing with the process? Thank you.

[pigsty]

Also - do you have any advice on my query re. paying back the LA some of the discount my aunt would have benefitted from if my mother inherits the property from her? Does this make sense???

[Amethyst]

Other than Housing Benefit ( which she'll no longer require as no rent to pay as she'll own the house outright ) what benefits does she currently receive ?

The clawback charge is, however, not triggered by an exempt disposal (as defined in Housing Act 1985, s 160). If the former tenant dies, the beneficiaries under his will or intestacy do not, therefore, have to refund the money until and unless they sell the property within the unexpired part of the statutory period.

So 155 is the repayment on disposal ( https://www.legislation.gov.uk/ukpga...68/section/155 )

39 Exempted disposals.

(1)A disposal is an exempted disposal for the purposes of this Part if—

(a)it is a disposal of the whole of the house and a conveyance of the freehold or an assignment of the lease and the person or each of the persons to whom it is made is a qualifying person (as defined in subsection (2));

(b)it is a vesting of the whole of the house in a person taking under a will or on an intestacy;

[pigsty]

Benefits my aunt receives: she has her state pension (min) plus a top up of some kind to make it a liveable 'wage', she gets her council tax paid but other than that I don't think there is anything else - free prescriptions etc. but I don't think that sort of thing would be affected. Obviously at the moment the council is responsible for house maintenance and I would take on that responsibility after her purchase. Thank you for your comment and quote regarding the 'clawback' - as neither my mother nor I have any plans on selling within the 10 years it appears we would not need to worry about that - but as we are relatives, I was hoping we may be exempted anyway. I find the legalese language a little difficult to decipher! Would my mother have to pay capital gains tax if she inherits the bungalow from my aunt - is it 20% of the market value?

[Peridot]

Hi Pigsty,

Capital gains would only become payable if your mother inherited the property and kept it as a 2nd home, then subsequently sold it further down the line. The gain would be calculated on the difference between the probate valuation and the amount achieved on sale. https://www.gov.uk/tax-sell-property/work-out-your-gain

Word of caution, I appreciate that you have discussed what happens if, but just be aware if your aunt (or subsequently your mother) lives at the property alone and were to need a care home she could be forced to sell the property to fund such care. If the property was kept as a 2nd home following your mother's inheritance of it then the value would also be included in any care home fee calculations should the need arise for your mother to move to a care home. https://www.ageuk.org.uk/information...-pay-for-care/

Be wary of transferring the property into another's name at a later point too. This is another can of worms relating to intentional deprivation (again in relation to care fees). As far as transferring the home into another's name before the 'inheritance' aside from the care fees issues there could be an implication for inheritance tax and the seven year rule

https://www.gov.uk/inheritance-tax/gifts

in addition to the possible ramifications of transferring a property while still living in it as your home

and then the legal owner

has an issue with bankruptcy or divorce for example. The person living there could then lose their home.

I don't wish to panic anyone but you do need to make sure you are all aware of the possible consequences of this proposed transaction. It is complicated whichever way you try to deal with matters. Just be prepared for the property to potentially not be there when you would expect to be inheriting it.

[pigsty]

Many thanks for this advice. I need to sit down and absorb it! At the moment, we are just going to fill in the council form and see a) if they're willing to sell the property under right to buy, and b) for how much. I think once we submit the form they have 8 weeks in which to respond. In the meantime, I will try to look at this from all angles and see if I can find the best way to proceed. Maybe my aunt should leave the property directly to me, missing out my mother altogether - it would be one less step in the process and I would then be the one liable for all taxes. Any comments on that?

[Peridot]

Hiya,

Sorry a bit of a minefield. Which ever way you look at it there's something that needs more thought as to the potential consequences, which are often monetary!

If your Aunt wishes to leave the property to you, it is of course an option, but this would have to be her decision. The issue then would be relating to care fees. The property value would wipe out any financial assistance your aunt could obtain and the Local Authority would expected and can in fact obtain orders for it to be sold to realise the funds for a care home, if that became necessary. However, it is only a small number of the population that end up in a care home, so the situation may never arise.

It would be sensible to obtain some legal advice on the various options your Aunt has available to her and what, if any protection you could have if you loaned the money for the purchase.