[Ask an expert] - Right to Buy / Council

[DaBouncer 13]

I'm curious to know if we have any right to buy and valuations experts in the house.

 

My dear old mum recently put in a right to buy for her council house and the valuation has come back. She can buy her 2 bed end terraced home for £25k.

 

It's nicely decorated inside, has an extension on the front which he paid for and the garden is well looked after and has a large patio area.

 

Now she put in a right to buy in Nov 2002 and got the valuation for that in Feb 2003 and it was then valued at £14k.

Now the time frame between the two valuations is about 14 months give or take. At the time the market value of the home was £40k and now it's got a market value of £49950.

 

Now does that valuation (right to buy price) seem to have jumped a little too much to anyone else. Now my mum is a pensioner and has just enough savings to have covered the previous valuation. When she spoke to the council before her re-submission for right to buy they said the property would have only gone up by about £2k of the previous valuation.

 

She could appeal but it will take 6 months before it would be looked at (again house price rises). Then there is raising the extra £10 to buy the house. What would be her cheapest option?

 

And the reason she wants to buy it is to sell the place and move off the estate (Gleadless Valley) cos it's going down the pan IMO.

Then she'll be stung for the capital gains tax to pay the government 40% of what she's made on the house.

 

Anyone got any usefull advice?

[Skatiechik 10]

My opinion would be to just buy it now, don't wait any longer. It is only likely to rise again in the future so the cheapest option may be to buy it now.

 

Also I thought on right to buy places, that you had to live there for 3 years before you sell the property, otherwise you have to pay the discount back. Not sure if you can rent the property in the interim tho.

 

Not sure on the capital gains tax, not something I have had to worry about yet so I can't give you any information on that.

 

 

Skatie

[mikey 10]

Originally posted by DaBouncer

Then she'll be stung for the capital gains tax to pay the government 40% of what she's made on the house.

 

Anyone got any usefull advice?

 

She wont get Capital gains tax if its her only house

 

http://www.inlandrevenue.gov.uk/pdfs/cgtfs1.htm#8

 

What about my home?

 

You will not have to pay CGT when you dispose of your home if all the following conditions are met.

 

Throughout the period that you owned it, it was your only home.

You did actually use it as your home all the time that you owned it.

Throughout the period that you owned it, you did not use it for any purpose other than as a home for yourself, your family and no more than one lodger.

The house and garden do not exceed 5,000 square metres (about one and a quarter acres - roughly the size of a football pitch).

[DaBouncer 13]

Genius Mikey.

 

Now just about raising the extra £10k

 

Anyone fancy loaning £10k for 3 yrs to a pensioner and getting £15k back at the end of it. I'm sure interest you made in the bank wouldn't amount to that!

[Zamo 10]

DB, it is because there is a limit on the amount of discount you can receive. In Yorkshire it is presently set at £24k.

 

More info here.

[qazitory 10]

Originally posted by Zamo

DB, it is because there is a limit on the amount of discount you can receive. In Yorkshire it is presently set at £24k.

 

More info here.

 

yeah that would explain the difference. Shame no one at the council could have explain that to her.

 

Although I think you can't sell your house for 3 years after buying it.

[tango2 10]

We too are currently entangled in the right to buy performance.

 

A letter sent to us by the council said,for rent purposes the property was valued at 24k,this was based on 1999 values.

However as we wish to buy it,the value will be determined by current market value.

The letter then went on to say everything short of dont buy it,and listed loads of reasons why we should think twice about it.

 

It als stated,as we had showed an interest in purchasing the property,the will no longer consider major repairs to the property,only minor repairs.

 

what the hell is that all about.

[Gunner 11]

Maybe you should study this carefully. Are you buying for the right reasons. you cannot re-sell a council house straight after buying it. Then even when you are allowed to there are restrictions. What for instance if the value ( as is happening in some areas ) goes down. As you say, Gleadless is going down the pan. Maybe a move to another area would help. There are quite a few areas that have undergone regeneration, Improvements have been made on a massive scale. Doing it your way will cause massive debt problems. For instance. If you bought the house. You have the mortgage and high interest rate to worry about. You would not be able to sell, But, When you are eventually able to sell, In several years time, You may find values have gone down, You may find yourself losing lots of cash. But How then will you be able to move. You would not be able to afford to buy in another area that is for sure. Nor would you be able to return to Council Housing at all easy. You may finish up out of the frying pan into the fire. Finaly, May I suggest that the council have several schemes to allow tenants to boy. The right to buy does not compel you to buy the house you occupy. The council have other ex rental properties in many other areas that you can apply to buy......

[DaBouncer 13]

Wow this thread is blast from the past but I'll press on anyway.

Please tell me how a house worth currently in today's market £80k will go down below the purchase price my mummy dearest will pay of £24k

 

That most certainly is not possible in today's climate of supply and demand.

Yes house prices may go down, but certainly not in Sheffield. Well maybe in dore or areas that are WAY expensive, but still unlikely.

 

And you CAN sell your house within the first year of purchase, you just have to pay back your discount (£24k) which is the max discount.

 

At the time of valuation the council said her house is worth £48k, however a leading estate agent valued the house at £80k so it's definately a win situation from that respect. However if she waited 3 yrs to sell (and she would sell) then she wouldn't have to pay back any discount.

 

Now the reason she cannot just move council house is that she has (over time) made alterations to the house:-

* Bigger back patio

* Knocked two bedrooms into one (to make it a 2 large bedroomed house).

* Knocked wall of utility room down to make the kitchen bigger.

* Extended bathroom

* Made that house like a palace basically so she's comfortable.

 

Over the years she has done a lot of work on the house and made it very nice. Not only would someone else get the benefit for all her money, time and effort spent, but the council would charge her to make the house back as it was. They've already told her this!

 

So to be honest there is only one option!

However I do thank you for your response

[Andy 10]

Originally posted by DaBouncer

Wow this thread is blast from the past but I'll press on anyway.

Please tell me how a house worth currently in today's market £80k will go down below the purchase price my mummy dearest will pay of £24k

 

The problem is that, if the house doesn't sell at £80k, your mum might not end up out of pocket (because she's only paid £24k) but she'll make less profit on the deal. If she doesn't make enough profit, she won't be able to move out of that house.

[DaBouncer 13]

It's not profit she's after, just enough to buy another place a little nicer.

I.e. Sell that house for say £80k and buy a flat up say Sothall for the same price. OK it's a downgrade from a house to a flat, but she only needs a flat AND it's in a nice safe environment (chav free).

[Andy 10]

I know she's not looking to make a profit on the sale, but she needs to make enough money out of it to be able to afford the flat or where ever. So if house prices in Gleadless drop, and she only gets £60k, but the flat she wants is £70k, she'll be short.

 

Then again, the worse that can happen is she has to stay in Gleadless for a bit longer, so she's not going to be any worse off.