Trying to buy a house in this area is near impossible

[Zebedee Tring]

David McWilliams is a very versatile man. I remember very well his classic song "The Days Of Pearly Spencer" from the time that I left school.

[LadyDeliah]

I am in the middle of buying my 3 bedroom council house near the top of Barry Road and will be selling as soon as I own it because I want to buy land and go the self-sufficiency route.

If anyone is interested, I'm hoping to get ?495,000 or more for it and it should be ready to sell by about July 2014.

Details here: http://edhousesale.site90.com/Home/

Not very socialist I know, but the changes proposed for council tenancies will undermine my security of tenure anyway and this is only ony way I will ever get enough capital to buy land, so there it is. Morally ambiguous, but a no-brainer really.

[Jeremy]

Won't you have to pay your discount back to the council? Theoretically this sort of scam shouldn't be profitable.

[PokerTime]

Some or all of the discount has to be repayed if the property is sold within five years of purchase.

[LadyDeliah]

Yes I'd have to pay the full discount back.

It's taken the council nearly 2 years to organise themselves, so I will only be taking advantage of the rise in market value, not the fact I have been a council tenant since 1985.

I don't earn enough to get a mortgage, so I'm using a bridging loan to buy it and will attempt to sell it within days to keep the interest on the loan down.

The alternative is to stay put and watch my secure tenancy undermined whislt remaining in the same crappy financial position.

[LondonMix]

How does that work exactly? Do you have to give the equivalent of the discount back to the council out of the sales proceeds. After you repay your bridge mortgage will that actually net you much equity (enough to build a house some place rural)?

[LadyDeliah]

After I pay everything back, I'd probably be left with about ?125,000 which is enough to buy a decent plot in Spain or France.

I intend to rent privately in London to carry on earning a living and be near my kids, until I am in a position to re-locate more permanently.

A friend of mine has set up a housing association and he rents huge houses from landlords and rents rooms out individually so the rent to each person stays reasonable. I'm hoping to do something similar and might organise it through his housing association.

I've always had a lot of people round me, so I'm happy to live in a large shared house, while I travel backwards & forwards to my little eco-farm.

That's the plan anyway.

[LondonMix]

That sounds lovely but I think I am still missing how it works. If they council for instance were willing to sell you your house for 400k and it was in reality worth 500k, there would automatically be 100k of equity in the house. However, if you sell within 5 years (which appears to be your intention), they clawback the market discount-- ie. you sell for 500k and have to repay the council 100k so you are left with 400k. If you use a mortgage plus your existing savings to buy the place for 400k in the first place, I can't see how you are raising any more cash than you have already to live your eco-farm dream.

I realise I must be missing something as I am not actually that familiar with Right to Buy so if you could tell me what step I've got wrong, I'd be genuinely interested to learn.

[LadyDeliah]

I get to buy the house at the July 2012 value, which is when I made the application to buy it. The value then was ?350,000, so I can buy it for ?250,000. Today's value is roughly ?500,000 because of the market increase, but the offer of July 2012 from the council still stands (it's taken nearly 2 years for the process to near completion).

I'd pay back the ?100,000 discount when I sell it plus the bridging loan fees, which are really high and other fees, leaving me with an estimated ?125,000 profit to buy my land.

[Earl Aelfheah]

If you're going to be regularly flying back and forth from Spain, the farm ceases to be very 'eco' I'd have thought. Good luck to you though, sounds like a nice lifestyle.

[LondonMix]

Ah, so you are benefitting from the rising market between when the council made its offer and now. Good for you! I hope it all works out.

[Jeremy]

LD, I believe the repayment is based on a percentage of the resale value, not just your original discount, so you might not get as much as you say. Still, I'm sure you've research it thoroughly.

[LadyDeliah]

No, Jeremy, it's a fixed discount off their offer, not a percentage.

[numbers]

???? Wrote:

-------------------------------------------------------

> Er, actually PT, with the problems it has no doubt

> created, right to buy was one of the biggest

> drivers of social mobility ever. Until the 80s the

> working classes were meant to know their place and

> that was not as home owners but away from the

> Middle classes - in their council houses.

> Also, earlier in this thread, you talk about

> quality social housing built before the 80s...you

> are having a laugh aren't you? much of it,

> especially from the 60s and 70s was cheap shite,

> often dangerous (Ronan Point anyone?) and largely

> a failure much of which is now or has now been

> knocked down with no-one mourning it.

>

> Most of it was designed by middle-class tossers

> from their georgian homes, naturally. Always know

> what's best for the plebs statists/lefty middle

> class types....

quids I couldn't agree more.

working class people owning their own homes, having aspirations, whatever the hell next?!! sorry to digress on this thread but you only have to see sanctimonious suzanne moore article bandied about on twitter about how disgraceful it is that her former council flat in kings x is going for ridiculous money, (London being a playground for international finance.) although she graciously (!)acknowledges that 'she's one of the lucky ones' i.e. firmly on and moved up the property ladder, er... she fails to see that she is part of the problem she's complaining about.

[Otta]

The problem with right to buy was that the money was never put back in to social housing. Yes it was good for a kot if people, but it could have been better for a kot more people.

[PokerTime]

Quite, and under Thatcher LAs were not allowed to use the proceeds from the sale of homes for building/ buying new property. It was a deliberate act to diminish the level of social housing.

[Jeremy]

I do have mixed opinions on right-to-buy... the social mobility argument is of course a strong one, and if I lived in a council house I'd probably try to go for it myself. But selling off government assets at below market value while depleting the social housing inventory doesn't seem like such a great deal for society as a whole.

Oh and LD - this indicates that the discount repayment is a percentage of the resale price. But maybe there are exceptions to this.

[numbers]

Otta Wrote:

-------------------------------------------------------

> The problem with right to buy was that the money

> was never put back in to social housing. Yes it

> was good for a kot if people, but it could have

> been better for a kot more people.

not saying it was perfect otta and I am sure you have a point there. but do remember that even for those who did go ahead and buy, it wasn't handed on a plate to them they still had to work and save up for it, not sure that just because it was on offer that everyone would have achieved this anyway.

oh and it started under a Labour Government, not Thatcher. edited to add: sometimes this fact is conveniently forgotten.

[PokerTime]

Let's just correct that numbers. There have always been conditions under which LAs could sell property, but they had strict guidelines that are very different to the open season that Thatcher's scheme created. You only have to look at the number of properties lost since the 80s compared to before to see the dramatic impact. Let's not try and pretend that Thatcher was not instrumental in this depletion. It is also very clear that for all the hype offered at the time about giving social tenants a way onto the propery ladder (i.e. good policy) that the regulation also made replacement of that social housing impossible (bad policy).

[Zebedee Tring]

On a point of information Right to Buy was introduced under the Housing Act 1980 and was one of the early measures of the first Thatcher government (I remember this period very well, I was working for Lewisham Council who were very opposed to the policy). The Blair/Brown governments, however, made the very big mistake of continuing the Tory government RTB policy without instigating a major public sector housing building programme.

[numbers]

lets just correct what exactly, pokertime?

Labour did start it and the people I know personally who bought their council houses in the east end of London did so under a Labour government. I never "tried to pretend that Thatcher was not instrumental in .........".

interesting that the fact 'there has always been conditions under which LAs could sell property" was not mentioned earlier in the thread before the predictable Thatcher blaming. Wikipedia is not your friend here either due to its inherent factual inaccuracies.

[Earl Aelfheah]

Like a lot of people, my parents got married and moved into a council house. The cheaper rents allowed them to work hard and save a deposit for their first house. It's not true that council housing somehow locks the 'working class' out of property ownership and that only right to buy offers them this opportunity. In fact it is the exact opposite. For many, council housing represented an essential leg up onto the property ladder. This no longer exists for the majority of people, who stuck paying huge private rents will never have the chance to save up a deposit.

To suggest that Right to Buy encourages social mobility is nonsense. It only does so for those lucky enough to be given a this one time windfall - once the asset is gone, it's gone. The individual is given a leg up, but the ladder is kicked away for those below them who will never have the same opportunity. I wouldn't criticise those who take up right to buy (after all, you would be a fool to look a gift horse in the mouth), but it should be stopped as a matter of policy.

[LadyDeliah]

Jeremy Wrote:

-------------------------------------------------------

> Oh and LD - this indicates that the discount

> repayment is a percentage of the resale price. But

> maybe there are exceptions to this.

Just read further down the page. I might have to check that out.

So I might need to transfer it to my daughter or get a mortgage for the whole ?350,000, foregoing the discount. Looks like I'll have to work on it a bit more, see if I can get my dad to sort the mortgage out instead.

[PokerTime]

Numbers, I do not use wikipedia for my information. I have been researching for a year now for a major project on the subject. That research has been in depth and sourced from credible data sources and noteable experts on the subject.

Prior to 1980, council tenants could only buy their home if they had the say so of the LA. It was not a guaranteeed right. There are many reasons why an LA at this time might choose to sell a property (maintenance costs/ undesireability etc) but equally an LA could choose not to sell property. The Thatcher policy of 1980 gave the LAs no power to say no. The result is that more than half of all council properties have been bought under the right to buy scheme - 1.9 million homes, that have not been replaced. This was NOT happening before 1980, no matter how many people you know who were allowed to purchase before 1980. The loss of that stock CAN be squarely placed at the foot of Thatcher.

Blair and Brown did not remove the scheme but they did reduce the level of discount on offer to discourage the trend. The coalition have since increased the discounts to more than under Thatcher's government.

[PokerTime]

You are spot on rahrah. That is absolutely the fallacy of right to buy and getting people onto property ladders. I mentioned earlier how before right to buy, the salary to house price equation meant that many council tenants who were in full time work were able to buy homes on the private market. It was a myth perpetuated in the aftermath of the 70s recession that right to buy would somehow liberate people. You are spot on about the one time windfall and the consequnces.

And just to add (for numbers benefit) that the legislation prior to 1980 (allowing a council to sell property) had been introduced and in existence since 1936. The government of the time was Conservative and one Stanley Baldwin was Prime Minister!

Sadly Jeremy is right LadyD. These regulatons were desigend to prevent instant 'profiteering' (for want of a better word). You might be better staying in the home for five years (and/or rent rooms if you want to) until you are clear of those regulations. There might not be the finacial gain you expect otherwise.