Can My Child Buy My Council House for Me? Rules and Options Explained

For many council tenants, the Right to Buy scheme offers an exciting opportunity to achieve their dream of homeownership. After so many years of renting, the chance to own your own home brings a sense of pride and security for you and your family. But for many mortgage applicants, lending affordability poses a threat to fulfilling their property ambitions. As wage inflation in the UK has trailed behind property inflation in recent years, it takes even longer for many tenants to save for a deposit on their first property purchase. So it’s only natural to ask the question: “can my child buy my council house for me?”. Answering this question will be a focus for this article.

The rules around the Right to Buy scheme can be complex depending on your situation. It’s important to understand all criteria that applies to you, so you can determine if buying your council home is doable.

In this guide, we’ll explain the rules and options for your children assisting in your council house purchase.

Let’s dive in.

Does My Child Have to Live With Me to Buy My Council House?

Yes, your child must live with you if you need to include them on the Right to Buy application. Under the Right to Buy scheme rules, your child must live in your council home as their main residence to be included on the Right to Buy application. This will also apply to any mortgage application where Right to Buy is declared as the source of deposit.

To make a joint Right to Buy mortgage application with your child, they must have normally lived with you for at least 12 months before the application is submitted. The local council, who grants the Right to Buy approval, may request proof of their residency for this time period. In most cases, they may request bank statements, council tax or utility bills.

If your child does not live with you, they cannot be added as a joint buyer on the Right to Buy paperwork. The Right to Buy scheme is based on residency, rather than family connection.

To clarify, if your child can purchase your council house through their own means, such as with their own deposit and mortgage, they do not need to live with you. That brings us to the topic of whether your child can help you buy your council house through their financial means.

Can My Child Help Me Financially to Buy My Council House?

Yes, your child may be able to help you financially. If you qualify for Right to Buy in your own name, your child could support you by contributing towards your deposit, legal fees or mortgage payments.

Where money is provided to an applicant, mortgage lenders will usually ask whether it’s a gift or loan. If it is a gift, your child will normally need to sign a gifted deposit letter, declaring that the gift is non-repayable. This way, your mortgage affordability will not be negatively impacted by the gift. Gifted deposit Right to Buy mortgage applications are often quick for lenders to process as they can quickly verify the deposit declaration letter.

Whereas, if your child helps you by providing a loan, mortgage lenders will factor this into your mortgage affordability. Many lenders will treat the loan like any other financial commitment and account for the balance and monthly payments when determining your maximum loan sum.

Another option may be applying for a mortgage that is linked to the Right to Buy scheme. In this scenario, you and your child would need to be named on the paperwork to qualify for the scheme. A mortgage lender will then assess the income, age and credit profiles of both parties. If your child has an income, this may increase the maximum mortgage sum available to you. However, you need to consider potential negatives too. For example, if your child has a poor credit profile, this may reduce the number of mortgage lenders available to you.

Can I Pass My Right to Buy Discount to My Child?

No, you cannot transfer your Right to Buy discount to your child. The discount is directly linked to the qualifying tenant and the original Right to Buy scheme application. As a rule of the scheme, it cannot be separated from your tenancy and given to any other party.

However, as discussed, if your child meets the eligibility rules regarding their residency, you may be able to include them as a joint applicant. This way, they can still technically benefit from the council house discount as part of your shared purchase.

Some families consider transferring ownership after the five year discount period has passed. However, tax, mortgage, and legal consequences should be considered before making any changes.

What Happens if I Sell My Council House Within 5 Years?

You will usually have to repay some or all of your Right to Buy discount if you sell your home within five years of buying through the scheme.

The amount that you repay depends on how soon you sell. The repayment works on the following sliding scale:

After five years, no discount is repayable and the equity gained becomes yours.

You should also be aware of the “Right of First Refusal” rule in the scheme. If you sell the property within ten years, you may need to offer the property back to the council or housing association before selling on the open market.

Understanding these Right to Buy repayment rules is essential before you make any decision to sell. As there may be implications for your mortgage secured to the property, you should speak with a whole-of-market broker, like Boon Brokers. Our team of expert brokers process Right to Buy mortgage applications on a regular basis.

Do I Have to Repay My Right to Buy Discount?

Yes, you may have to repay your Right to Buy discount if you sell or transfer ownership of the property within five years of completing the purchase.

The Right to Buy repayment rules are designed to prevent people from exploiting the system by purchasing at a discount and then quickly selling for a profit. If these repayment rules were not in place, it’s likely that the government would see a significant surge in Right to Buy applications.

Is it Illegal for My Child to Buy My Council House in My Name?

It can become a serious issue if the arrangement is not fully disclosed to the council or your mortgage lender.

When applying for a mortgage under the Right to Buy application process, the person named on the mortgage must be the one responsible for the loan. If your child provides the funds, makes repayments, and this is not declared to the lender, this may be treated as mortgage fraud.

Mortgage lenders conduct checks to confirm who will live in the property and who will repay the loan. Giving incorrect information, regardless of your good intentions, may leave you exposed to legal consequences.

Buying a council house from parents is perfectly legal if done in the right way. You should consult with a regulated mortgage adviser to learn more about how your child can help you buy your council house.

Can I Transfer My Council House to My Child After Buying?

Yes, once you have completed your purchase, the property becomes your asset. This means that you directly benefit from equity gains if the property increases in value. But similarly, you are directly exposed to reduced equity if the property falls in value. Once the property becomes your asset, you can later transfer ownership to your child, but there are rules to consider.

If you transfer the property within five years of buying it, this may trigger a discount clawback under the scheme’s conditions. This applies even if you gift the property rather than selling it.

If there is a mortgage in place, you will need the lender’s consent before completing a transfer of equity. The lender will reassess the mortgage affordability based on your child’s financial position. If you will still be a co-owner of the property, and are just partly transferring the property, you will also need to be named on the mortgage deed.

Many homeowners choose to remortgage to a different lender in order to process a transfer of equity to their child, as the current mortgage charge needs to be replaced by another.

There may be tax implications, including potential Stamp Duty liability if property ownership is transferred, and future capital gains tax considerations depending on how the property is used.

So in short, transferring ownership of your council house is possible, but you should receive expert advice from Right to Buy specialists, like Boon Brokers, before you make a decision.

What are the Right to Buy Rules for Family Members?

Family members can sometimes be included in a purchase, but only if they meet specific eligibility conditions.

Under the Right to Buy eligibility criteria, the main applicant must be a qualifying public sector tenant with enough years of living in a council or housing association property. Another family member cannot apply independently unless they are a joint tenant.

A relative may be added as a joint buyer if they have lived in the property, as their only main residence, for at least 12 months prior to the application.

It’s important to understand that the rules of the Right to Buy scheme are based on secure tenancy rights, rather than simply family connection. Being a son, daughter, or other relative does not grant entitlement to the scheme.

Before applying, it’s sensible to check the official council house purchase rules to confirm whether your situation meets the requirements.

Can My Child Inherit My Council House After I Buy it?

Yes. Once you have purchased the property, it becomes your home and forms part of your estate for inheritance purposes. This means that it will be passed to your beneficiaries under normal UK inheritance laws.

If you leave a valid will, your child can inherit the property in line with your wishes. If there is no will, the property will be distributed according to the rules of intestacy. These rules set out who is set to inherit the property without a valid will in place.

If there is still a mortgage on a property at the time of death, your children will need to repay it or refinance. They can do this by repayment from their own liquid funds, sale of the property, or through a remortgage. If your child proceeds with a remortgage, the lender will conduct standard affordability checks to ensure that the mortgage is affordable.

When exploring the topic of your children inheriting property it’s worth considering how estate planning and potential inheritance tax thresholds could impact what your child receives.

Get a Mortgage Broker to Help You

Buying your council property through the Right to Buy scheme may seem straightforward, but arranging a suitable mortgage has many variables for you to consider. Your financial situation and plans for the future need to be properly assessed, ideally by a professional broker, before you can proceed with a suitable mortgage.

Boon Brokers is a qualified Right to Buy mortgage broker. Our team of expert advisers frequently assist council tenants with their Right to Buy purchase. Not only will the team review your Right to Buy application to ensure it’s submitted properly but they will advise and arrange your mortgage with your most suitable lender. From the initial consultation right through to the completion of the purchase transaction, your broker can be on hand to help.

Contact Boon Brokers today to discuss your Right to Buy mortgage application.

It’s important to remember that your home may be repossessed if you do not keep up repayments on your mortgage.