Sale of an ex-council house – This story is set in Aberdeen, but it could be applied anywhere in Scotland
On or around 2007, an Stonehaven couple reaching retirement age (lets call them Dougal & Ermitrude) purchased their council flat at a knockdown price of £21,000. They took out a mortgage to cover the cost of the purchase plus fees.
Formal advice, given to them in writing was that they could not sell the flat for at least 3 years without returning, to the council a significant part of any profit that might be realised from any such sale.
Their children, both adult were now married with children of their own. They lived locally, in Aberdeen, about 10 miles distant.
Ideally Dougal and Ermitrude would have preferred to be located nearer to their grandchildren but Aberdeen housing was extremely expensive and in any event they would need to sell their flat first. They were stuck. The years passed.
Around 4 years later a friend provided a possible solution which if implemented would provide opportunity allowing Dougal & Ermitrude to sell their house for much more than they had paid for it.
The plan formulated required only that they would be able to display an pressing need supported by medical evidence (if possible) to be nearer their immediate family, in Aberdeen. All necessary measures were put in place.
Dougal & Ermitrude completed and submitted application forms to two Housing Associations, in Aberdeen. They struck lucky. The Hanover Housing Association, (provider of sheltered housing for the over 60’s) undertook to provide a one bedroom flat in Aberdeen (http://www.hanover.scot/).
There was only one catch. Housing provision was on a first come first served basis, meaning that refusal of accomodation considered suited to their needs could signifacntly delay any other offer. Normally housing would not be forthcoming for around 3-6 months, which gave Dougal & Ermitrude time to sell their flat in good time.
Then the bombshell. Roughly 3 weeks after submitting the application forms they recived a letter of offer of accomodation from Hanover advise that a one bedroom flat would be ready for occupation within the month. The location of the flat was ideal, being within walking distance of their grandchildren’s homes. What a quandry.
Dougal had made arrangements placing details of their flat with a local solicitor so that it could be sold. There had been a couple of viewings but no offers had been forthcoming due to the extensive refurbishment that would be necessary to bring the flat up to an acceptable standard. An added difficulty was that the local housing sales market had taken a downturn. Things did not look good.
The friend who first muted the move to Aberdeen came to the rescue once more with a recommendation that they consider selling the flat to an equity buyer. The price realised would be much reduced over the market rate,(between 25-30%) but in the circumstances it seemed to be the only viable option. Arrangements were put in place so that such a sale would be achieved without undue delay. Dougal & Ermitrude accepted the offer of accomodation from Hanover.
The equity buyer valued the flat at £75,000 and offered to purchase it for £50,000. The offer would be available for 48 hours after which it would be withdrawn. Dougal was inclined to hold out for more money but Ermitrude insisted he accept. Which he did. The outstanding amount of the mortgage loan taken out on the flat was £15,000. This provided Dougal & Ermitrude with a windfall cash sum of £35,000 after paying off the mortgage.
In 2011, Dougal & Ermitrude moved into their new one bedroomed flat located within walkng distance of their grandchildren. They were content and reasonably well off in their retirement since their needs were centred around their grandchildren.
The moral of the story: It is within the grasp of any ex-council house buyer under the right to buy scheme to do what Dougal and Ermitrude did. But they should have sold their flat before completing the application form seeking sheltered accomodation.
Afternote. The SNP government brought the right to buy scheme to an end since it had brought about an appalling shortage of council owned property for rent. Many properties sold off under the right to buy scheme had been susequently sold on to entrepreneurs increasing housing in the private sector which brought with it much increased rental charges for vulnerable Scots. http://www.scotsman.com/news/politics/top-stories/right-to-buy-council-homes-to-be-scrapped-1-2986947
The scheme, introduced by the Thatcher govenment was supported by Labour government’s under Blair or Brown and the three Labour governments in Scotland led by Dewar, McLeish and McConnell. Indeed Labours council house building record in Scotland is disgraceful. In the first 6 years of the SNP government 4,432 new council homes were completed – compared to only 6 under in the last 4 years of the Labour-Lib Dem administration.
An aside: The couple in the news, Douglas and Jacqueline Wright sold their Cumbernauld property to M & F Property Solutions 2011. They took up residence in a one bedroomed flat, in pristine condition in a sheltered home complex in Bishopbriggs, (about 10 miles from Cumbernauld). The complex is one of a number of similar amenities built throughout Scotland over the last 10 years. It is run by the Hanover Housing Association