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Clare
Clare, Solicitor
Category: UK Property Law
Satisfied Customers: 34105
Experience:  25 years exeperience
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My grandad is in the process of purchasing s council

Customer Question

Hi Thomas,
My grandad is in the process of purchasing his council property through the right to buy scheme. The forms are filled and the council has accepted to sell the property and he is waiting for the property to be valued. While waiting for the council to value the property he has asked around to take out a mortgage but due to his age this is not possible. As his grandson I have agreed to borrow the money on behalf of my grandad from my uncle at a very low interest rate. The agreement between my grandad and myself is that after he passes away I will own the property, so a will is to be written stating this. Recently my grandad spoke to a friend of his and this friend has stated to him that all of his benefits will be cancelled. My grandad receives benefits of the following:
1. Housing benefit
2. Council tax benefit
3. State Pension
4. Pension Credit
5. Attendance allowance
He does understand that housing benefit and council tax benefit will be cancelled once he owns the property
The question here is will his other benefits be effected? Such as state pension, pension credit or attendance allowance.
Because the council wants the money in my grandads account before he can purchase the property which mean that I will have to transfer the funds over to my grandads account when the council asks for this payment. Looking around the area I would estimate the property to be worth around £60,000 to £70,000 after the council applies the discount.
If his benefits will be effected is there a way we can avoid this from occurring?
Thank you for your time, I have written a long question but I wanted for you to understand the situation fully.
Submitted: 1 year ago.
Category: UK Property Law
Expert:  Clare replied 1 year ago.

Hi

Thank you for your question

My name is Clare

I shall do my best to help you but I need some further information first.

When did the council say that the money had to be in his account - bearing in mind that if he had a mortgage then it would not be?

Customer: replied 1 year ago.
Hi Clare,
Right now there is no set date as the council is still in the process of obtaining a value for the property themselves, but according to the council I would be between now and 4th January 2016 latest for them to advise us on the value of the property. After 4th January 2016 we have 3 months for the money to be in my granddads account. I will be borrowing the full cost for the property from my uncle at a reasonable interest ready for me to deposit the funds into my granddads account when the council needs it. So it will be a cash straight out purchase no mortgage.
Expert:  Clare replied 1 year ago.

Hi

In that case there will be no problem.

Your loan will go into his account the day before the purchase is completed and will go out the next day

This will be a documented loan and will not effect his benefits.

From your point of you it shoudl also be backed up with a Declaration of Trust confirming that whilst the property is in his name he holds it on your behalf.

However do be aware that if he needs care then the Local Authority will view him as owning as a minimum the percentage equivalent of the deposit

I hope that this is of assistance - please ask if you need further details

Clare

Customer: replied 1 year ago.
Hi Clare,
Thanks you for that. When I transfer the money into my granddads account will I have to indicate to the council that i'm giving this money to my granddad as a loan therefore he has to repay me or as a gift?
And also I didn't really understand this:
"However do be aware that if he needs care then the Local Authority will view him as owning as a minimum the percentage equivalent of the deposit"
Many Thanks,
Hasan
Expert:  Clare replied 1 year ago.

The Council will simply not be interested - they want the purchase price nothing more.

However if your grandfather has to go into a Care Home and needs help with the fees, he will be assessed on the basis that he doe shave a share in the property equivalent to the percentage discount received

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