MDiligent

Hey all

I returned to the UK a few months back and my elderly father wants me to buy his flat as an investment for myself (and possibly as somewhere to stay in the future). The good thing is that since he's been a tenant for several years he can get a good discount (more than half price) on a 'right to buy' scheme. I'm tempted but there are issues such as the flat can only be bought in my father's name and there are other potential challenges.

Has anyone else been in this/similar situation? Any thoughts/advice welcome.

Cheers

Editha

A few points to consider:

Firstly, you do need to protect yourself. Only you know how good your relationship is with your father and if you have any brothers or sisters, how much they might be expecting to inherit.

I'd discuss the deal with a solicitor. Depending on the rules under which your father is buying, it might be possible for you to lend the money formally to your father, like a mortgage. The house would be in his name, but you'd have the right to get your money back if it was sold.

Secondly, if it is a flat, you need to look at how much you are likely to end up paying in ground rent and maintenance charges for the building or the estate.

You also need to consider how easily the flat could be sold. In other words, how good an investment it really is.

Right to Buys often are a bargain, but you don't want to end up with a property that is impossible to sell and expensive to maintain.

MDiligent

Yes thanks for those points and the need to protect myself etc. If I live with my father for at least one year then I'm eligible to buy it jointly with him. There are other potential issues further down the line though so I'm going to think about it for now. Cheers

LondonSquirrel

If it's council, they have the worst reputation for high maintenance fees. Typically they will charge a lot to the peeps who have bought their flats to cover the cost for the people who are still tenants.

MDiligent

Oh ok... do you know how high fees can be, say for a town in northern England? Cheers

LondonSquirrel

I would ask some neighbours or phone the council as it can vary a lot, depending if there is a shared boiler for hot water or waste chutes, gardens etc etc. You need to find the amounts for your specific case.

Of course even then they may for example decide to replace the roof and charge the owners £5K each to cover the cost for the whole block as they cannot charge the tenants.

I'm not trying to scare you. I own a leasehold flat myself, albeit not ex-council. It was my belief that freeholders are not allowed to do substantial work without getting the leaseholders' permission. We had work done on the outside of our building (just a Victorian house converted to 4 flats) and they did seek permission from the owners. It cost £1500 each but worth it because the front did need work).

Maybe they don't always follow the law though, you do read of bad cases.

Editha

If you go ahead, your solicitor will obtain details of the maintenance charges for you to examine before you proceed.

MDiligent

Ok thanks again for that.. cheers

Englishmum

Beware: there are some highly relevant issues raised here when considering whether or not to buy a local authority (council) or housing association flat (or house) -

Buying Mothers Council House - MoneySavingExpert.com Forums

I got a bill for works on my flat from council for work they going to do I must pay - MoneySavingExpert.com Forums

Right to Buy relative's council flat? - MoneySavingExpert.com Forums

Buying a council flat - MoneySavingExpert.com Forums

Pro's and con's of ex-council flat - MoneySavingExpert.com Forums


Will there be a long lease on the flat? Some info about leases here:

FAQ Flats, Leases, Freeholds Share of, don't let it do your head in! - MoneySavingExpert.com Forums

You say that your dad is elderly. You need to know the definition of "Deprivation of Assets" if he needs to go into a care home:

http://www.ageuk.org.uk/Documents/EN....pdf?dtrk=true

My personal opinion is that it's [I]not [/I]a good idea to buy the flat from the council - even more so when the tenant is elderly. Too many risks.

BritInParis

If you buy I would only buy it if it is in your name only. Buying it in your father's name sets you up to be hit for inheritance tax on your own property when the time comes.

Editha

Depends on the value of the flat. Outside London, very few flats are going to reach the income tax threshold, which I think is currently £325,000.

Giantaxe

Inheritance tax.

I didn't realize the threshold was so low. Certainly got me thinking...

Editha

Sorry, that was a typo. I did mean inheritance tax.

MDiligent

Just came back to this thread, thanks for the extra useful comments and links... Well I don't think it'll be a good idea, prob too risky. Thanks again