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To clarify -
Why are you are moving out of the property you are buying because it is too crowded?
and who will be paying the mortgage?
Surprising though it may seem, there is nothing to stop someone having local authority housing and even owning another house.
But what you can’t do is move out of the local authority house and let it to someone else.
So there is no problem with it provided you remain in the local authority house
You must continue to live in the local authority house.
You may find that the landlord or the agent will not let you have a tenancy in your name unless you are an occupier and they may insist that whoever is in the property is on the tenancy agreement or as a permitted occupier.
Don’t be at all surprised if they insist that the occupier is the tenant although you could go as guarantor