Landlord is selling - offered 1st refusal

franklee · 6 March 2018 at 5:59AM

You can look at the sold prices at the land registry for comparable properties, see what they sold for. I would not confuse asking prices with sold prices as initial asking price a property goes on the market for isn't necessarily what it's worth. That's why I would be wary of getting an estate agent's valuation without telling them the reason for it. If they think you are a prospective seller they are likely to value on the high side to get your business.

Frankly I'd rather engage my own RICS surveyor but of course that will cost you money. Would you want it valued and surveyed in any case? I probably would.

Your mortgage lender would do a valuation for their own purposes, which may or may not be that accurate depending how they do it.

Advantages to the landlord of your buying it:

There is no chain to less chance of the deal taking ages while five or so households arrange to move and less likely for it to fall through.

It avoids the costs, hassles and wait to evict you that selling to someone else would bring.

The landlord gets rent right up to completion day rather than having the property sit empty while a sale to someone else completes.

I am also unclear by the freehold you mention, is it a house so you would be buying a freehold house, or is it a flat so still leasehold but you would also get a share of the freehold? That's assuming the freehold the landlord just purchased is part of the sale?

Smodlet · 6 March 2018 at 7:49AM

Is there not some law which says LLs have to give the tenant of a property they want to sell first refusal?

Lvl_chg · 6 March 2018 at 9:39AM

Far better to look at other similar properties in the area and see what they have sold for to give you a better idea, or as said, get an EA or 3 round to value.[/QUOTE]

The property is a house. End of terrace.

My road is a little strange as it is a mix of detached, semi detached and terrace. A house with the same layout sold in June 2016 for £170,000.

Thank you all for all the information.

AnotherJoe · 6 March 2018 at 9:50AM

Smodlet wrote: »

Is there not some law which says LLs have to give the tenant of a property they want to sell first refusal?

No there is not

AdrianC · 6 March 2018 at 10:22AM

Lvl_chg wrote: »

The landlady purchased the property in 2014 for £154,000 leasehold with 76 years remaining on the lease.

Sorry, but that's completely irrelevant to today's value. Comparable sales are the only guide.

The agent has said the landlord has recently purchased the freehold

Good, so at least you won't have a problem because of that unmortgageably short lease.

and they would be looking for £199,950 IF the property were to go into the open market.

This is all you need to know.

I have done a couple of quick valuation (Zoopla) etc and they have suggested its value to be between £186,000-£194,000.

You're as well asking the weather forecast what next summer's going to be like.

Do I have a good bargaining chip being the current tenant?

It's got you first refusal.

Can I use this to my advantage in terms of an offer? I guess I would be saving the landlord certain fees etc right?

Yes, no EA fees (unlikely to be outside the 1-1.5% range for a proper agent, probably nearer the low end, less if they go cheapie-online) - although the LA contract might include some fees liable in that situation. There's also the simplicity-and-speed factor.

I'm hoping I'll know more after seeing the broker later in the week

That really is your make-or-break.

If you can't buy it, then there's the possibility they'll consider selling to an investor with sitting tenant, so you don't necessarily have to move.

saajan_12 · 6 March 2018 at 10:54AM

Lvl_chg wrote: »

I received notice from my lettings agent that the landlord intends to sell the property I am currently renting. They've said that the landlord would offer me first refusal if I wanted to buy the property.

I would be a first time buyer. I was not intending to buy right now but my wife and myself are really happy here and actually perhaps buying the property is a good idea. - make sure you think about whether it makes sense for you e.g. can you afford mortgage + repairs, do you want to be relatively tied down to one property (selling + buying is harder & longer than moving rentals), do you want to be responsible for repairs etc? We should be able to cobble together enough for a minimum deposit. - you won't have Stamp Duty, but don't forget solicitor fees, mortgage valuation fees.. I have booked an appointment with a local mortgage broker to discuss my options and of course determine if I can even get a mortgage, full stop!

I'll run through a few numbers.

The landlady purchased the property in 2014 for £154,000 leasehold with 76 years remaining on the lease. - okay, irrelevant now though

The agent has said the landlord has recently purchased the freehold and they would be looking for £199,950 IF the property were to go into the open market. - so that's the starting point. No formal valuation has obviously taken place and she said this was a value based on similar properties for sale in the area. - that's a large part of the valuation process.

I have done a couple of quick valuation (Zoopla) etc and they have suggested its value to be between £186,000-£194,000. - ignore this

Would you suggest I get a proper estate agents valuation for myself?
Can I do this as just a tenant in a property? If so what's a ball park figure cost for this? - you can do, it'd involve pretending you're looking to sell the place but would be free.

Do I have a good bargaining chip being the current tenant? Can I use this to my advantage in terms of an offer? I guess I would be saving the landlord certain fees etc right? - LL may save EA fees (1-2% of price unless their contract with letting agent demands a commission if LL sells to the tenant. Further, they'll continue to earn rent upto completion instead of a void and they'll save any redecorating costs to get ready for sale. However on the flip side you'll save moving costs, survey costs if you already know the property well, and potential overlap in rent + mortgage. If you're taking LL's savings into account,
expect them to account for these too.

I'm hoping I'll know more after seeing the broker later in the week but I thought I would put this out to the good people of MSE forums who might be able to shed a bit of light on this situation for this unsuspecting tenant!

Many thanks in advance!

Start with the mortgage broker and deposit to see what you can afford. Then think about valuations and or whether this is a non starter.

Smodlet · 6 March 2018 at 4:41PM

AnotherJoe wrote: »

No there is not

Nope, that is about freehold, not actual property sales, you are correct.

Mahsroh · 6 March 2018 at 4:53PM

In terms of your bargaining position i'd say you are in a strong position. It depends on your landlord, but if my tenants made an offer to buy, i'd be inclined to accept a slightly lower offer than I would on the open market, simply because i'd save in estate agents fees but most importantly, it would remove the need to have the property vacant during the period whilst the property is on the market (although this wouldn't be essential for the LL, but ideal).

But that's just me. Your LL may feel different, but i'd certainly use that as a bargaining tool if I was in your position.

steampowered · 6 March 2018 at 5:07PM

The only thing which matters is what this property is worth to you.

You should value this property in exactly the same way as you would value any other property.

I.e. you should look at other properties in the area at a similar price point. And make a decision as to how much you would be prepared to pay based on what else is available in the market.

The key question is - if you were buying a new property from scratch at £185 - 190k, would you choose to buy the property you are in now, or another property nearby?

Mahsroh · 6 March 2018 at 5:09PM

Quizzical_Squirrel wrote: »

You might be not saving the landlord any fees as his letting agent may very well have a sales commission clause in his contract with the letting agent.
It might even be a higher rate than he would be normally paying an estate agent.

Edddys post above suggests this practice is now unenforceable?

I know with my previous letting agent, it was written into my contract that any sale between myself and tenant and they would be entitled to a 1% fee, but with my new letting agents such clause does not exist, which I thought was strange, until I read Edddy's post above.

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Landlord is selling - offered 1st refusal

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