A word of warning on buying council houses

[Benedictine]

No they haven't... They've been renting out a house and have made less than the market rate for that.

They then sell the house to you for less than market rate.

 

They may have made a profit on the entire thing, but the profit is smaller than it should have been due to both the rent and the sale being subsidised by the taxpayer.

It's clearly not an efficient use of a state resource to sell it off cheaply just because the original cost of building it has been recouped.

 

The original cost of the building will have been paid over about tenfold, at least. So yes this is a highly efficient, money making business for them. (And they haven't really rented at less than market rate because this fails to take into account the fact that council properties are not furnished whereas the vast majority of rented accommodation is.) If RTB was scrapped and council home buyers replaced with the unemployed, then that is a loss. This is what you would do then have have tax payers subsidise full rent payments each month as opposed to selling the property for profit.

[samanco]

Its really important that people realise that council housing is a shrinking resource and that those who have bought them and taken them out of social housing will soon be wringing their empty hands at the Mortgage compny doors as they start to reposses them. the recession will see more and more homeless and less and less council houses..

[NatalieTan]

I think before you buy your concil house or purchase Ex council proprties you should bear some facts in mind:

If you are council, you will be crossing a class line. you will in effect become a 'middle class' Tory voter ( that's why the Tories are giving away social housing ) as such and you run into difficulties you will get no help ! Particularly bear in mind what happens when you are old. If the people near by are council and they move you can bet your bottom dollar that the local council housing agency will extract revenge by dumping a problem family in their place and take no notice of your complaints. In addition the whole area may go downhill and you will not be able to escape. And think very carefully as to whether you will be able to sell your house to move on - if no one will buy it is worthless!

If you intend to buy ex council, have a very good look at your potential neighbours and for Gods sake make sure you have very good insurance. I didn't - conncil neighbour , right cow, took a dislike to my complaining about her 24/7 barking Rotweiller - kids over fence 2am - fire started in back shed whole of house in flames - made homeless. Councils don't want the publicity of arson so the whole thing is covered up. Police won't investigate they don't for crime on a council estates. Fire brigade as usual claim it was a disgarded fag end in back garden. If you don't want to be in my place - take very good care when you purchase - better still forget it!

 

Hang on a second, this can happen anywhere and I think anyone thinking of buying any house anywhere should consider things such as neighbours, neighbourhood, schools etc.

 

For instance; when my partner and I first moved in together we rented a flat. It was in a block of 6, only a couple of years old. It was nice, spacious and in a cul-de-sac.

We wanted to leave after 3 months, but managed to stay for the 6 month term of our contract, then escaped.

It turned out that there were 3 other tennants in the building, and we were the only ones paying to be there. The rest were from the homeless (and jobless) register and the council was paying their rent and bills. We were stuck with a violent alcoholic that trashed the communal areas when his partner kicked him out every night. The prostitute thought the damage was by us (because the shrapnel landed at our door step) and got one of her suiters to use said shrapnel to break a light on my car. Then there was the nice alcoholic, he was ok but very loud at night and pee'd in the stairwell.

 

Point is, this wasn't council property, the estate was private.

If your buying a house, regardless of the circumstances, you should meet the neighbours, check out the area etc. Unfortunately you cant always tell where the scumbags live just from looking, and life can be hell if you get it wrong. Likewise, just because a property is council doesnt mean that the tennants are horrible!

 

I don't like the stigma attatched to council houses and their tennants, they're not all bad.

Unfortunately though, certainly in my experience, most of them are, and they spoil it for everyone else. It really annoyed me that we were paying for the benefits (therefore booze) of the people in those flats, for them to then make our lives a living hell. It might sound harsh but i'm sick of the 'good guys' getting zero help from the govt, and idiots like that being given everything - people like them should be turfed out and left on the streets so the good people who will take the help offered and look after what they are given can have a chance for once!

[Plain Talker]

Hang on a second, this can happen anywhere and I think anyone thinking of buying any house anywhere should consider things such as neighbours, neighbourhood, schools etc.

 

For instance; when my partner and I first moved in together we rented a flat. It was in a block of 6, only a couple of years old. It was nice, spacious and in a cul-de-sac.

We wanted to leave after 3 months, but managed to stay for the 6 month term of our contract, then escaped.

It turned out that there were 3 other tennants in the building, and we were the only ones paying to be there. The rest were from the homeless (and jobless) register and the council was paying their rent and bills. We were stuck with a violent alcoholic that trashed the communal areas when his partner kicked him out every night. The prostitute thought the damage was by us (because the shrapnel landed at our door step) and got one of her suiters to use said shrapnel to break a light on my car. Then there was the nice alcoholic, he was ok but very loud at night and pee'd in the stairwell.

 

Point is, this wasn't council property, the estate was private.

If your buying a house, regardless of the circumstances, you should meet the neighbours, check out the area etc. Unfortunately you cant always tell where the scumbags live just from looking, and life can be hell if you get it wrong. Likewise, just because a property is council doesnt mean that the tennants are horrible!

 

I don't like the stigma attatched to council houses and their tennants, they're not all bad.

Unfortunately though, certainly in my experience, most of them are, and they spoil it for everyone else. It really annoyed me that we were paying for the benefits (therefore booze) of the people in those flats, for them to then make our lives a living hell. It might sound harsh but i'm sick of the 'good guys' getting zero help from the govt, and idiots like that being given everything - people like them should be turfed out and left on the streets so the good people who will take the help offered and look after what they are given can have a chance for once!

 

I think the point you are making is really just that "You can put pigs in palaces, but it only means it's a very expensive pig sty!"

 

The "types" you refer to, would turn Buckingham palace into a hell hole, by the sound of it.

[Cyclone]

The original cost of the building will have been paid over about tenfold, at least.

But the original investment will have consistently under performed compared to having been invested in a private house. So in effect the council looses money on the investment in a house for the entire lifetime of that house.

So yes this is a highly efficient, money making business for them. (And they haven't really rented at less than market rate because this fails to take into account the fact that council properties are not furnished whereas the vast majority of rented accommodation is.) If RTB was scrapped and council home buyers replaced with the unemployed, then that is a loss.

Who suggested replacing all the tenants with the unemployed?

This is what you would do then have have tax payers subsidise full rent payments each month as opposed to selling the property for profit.

They aren't selling for a profit, they're selling for a loss.

I'd change it so that you could buy at the market rate, or so that the money had to be immediately used to replace the house and that the sale price had to be enough to do that.

[Cyclone]

Its really important that people realise that council housing is a shrinking resource and that those who have bought them and taken them out of social housing will soon be wringing their empty hands at the Mortgage compny doors as they start to reposses them. the recession will see more and more homeless and less and less council houses..

 

That seems unlikely given the massive discounts they are given when they buy the houses.

[purdy]

What a stupid thread. The price of any property is governed by market forces and an ex-council property is no diffrent. It has a value and is no more difficult to sell than any other property. Their price is usually low because of location and other factors and this is reflected in the price you would pay when buying one and the price you would expect to get when selling it.

House prices have fallen considerably in the last 4 years. If trying to sell today, people who had bought an ex-council house in 2008 would be looking at far less of a loss than someone who had bought a detached in Bradway.

[Benedictine]

But the original investment will have consistently under performed compared to having been invested in a private house. So in effect the council looses money on the investment in a house for the entire lifetime of that house

 

This is what I meant by your twisted logic. A tenfold profit is a tenfold profit, it is not a loss. By your logic the council have lost money because they didn't invest in gold instead of housing.

 

Who suggested replacing all the tenants with the unemployed?

 

It was an example but if you stop people buying, those who can afford to get out and go private will, leaving some properties to be filled by the unemployed, thus costing your tax payer a large sum each week and no sale. Plus you are always talking about those who need council housing so one would assume you meant the unemployed, as by definition they are the most needy.

 

They aren't selling for a profit, they're selling for a loss.

 

They are selling for a profit when the rent paid is taken into consideration - 85k for 62k as in my example.

 

I'd change it so that you could buy at the market rate, or so that the money had to be immediately used to replace the house and that the sale price had to be enough to do that.

 

Which is it? A moment ago you were completely against the RTB now you are for it with conditions.

[truman]

 

It was an example but if you stop people buying, those who can afford to get out and go private will, leaving some properties to be filled by the unemployed, thus costing your tax payer a large sum each week

 

 

.

 

No matter where the unemployed live the tax payer will be paying their rent..and as rent in a council house is cheaper than in private accomodation it's actually saving the tax-payer money..?

[Cyclone]

A tenfold profit is a poor return if the expected ROI over that period through renting housing is a twenty fold profit.

There's nothing twisted about it, the problem is that you've no idea how an organisation or business should be looking at it's investments.

By comparison with gold they have had a poor return on the investment, but gold is a risky investment and they are obliged to provide a service which requires them to invest in housing...

Given that they're obliged to provide that service, selling off the means to do so seems to be rather foolish.

 

You've got a really weird way of looking at house sales. If a BTL landlord sells up, and they sell for less than they purchased the house, do you think they consider that to be a profit? Is it even likely that they'd accept a sale at significantly under the market value, of course not because they want to maximise their return.

 

The sale of the house is completely separate to any amount of money made through renting it, and even that money isn't a good return on the investment. So the house generates a lower than market rate of return throughout it's lifetime of rental, and is then sold off below market value at the end. The council consistently make a poor return on the money they had to invest.

 

Those who can afford to go out and buy private should do so now, or at least should be offered no discount on buying a council house.

 

I'm not sure you actually bother to read entire posts, I've said several times that I'd changed my mind and that the RTB would be acceptable if it was modified to ensure that the houses were replaced. The problem with it is the reduction in social housing, that can be solved without completely scrapping it.