buying house from our landlord

absyandtigger

Hi all,
We're in the unusual position of being offered the oppurtunitity to purcahse our house from our landlord.
We are Rent Act Tenants (sitting tenants) having live here since 1984, and pay a registared rent. The tenancy can be passed once on the death of my husband, which hopefully will be in the distant future as we are only in our forties!!
The landlord says the house is valued at £325.000 on the open market, but worth only £179.000 on the open market with us in residence. He wants us to pay a marriage value which would bring the price to £250.000.
This seems like a bargain, but with falling prices and mortgages difficult to get is this a as good a deal as it sounds?
Also whats to stop us buying it at auction for the lower price?
Many thnks for any advice we're new to all this and don't really know where to go for advice.

clutton_2

why would you want to buy and pay a mortgage when you have security for life as tenants ?

do you have a hefty deposit saved up ? how much rent do you pay at present and how much money would you have to borrow to buy the house ?

JonnyBravo

I bet he'd love 250k off you...... lets face it no-one else is going to pay him that, so I cant understand why you would want to!

As you say it isn't going to be worth 320 (without a tenant) for long either. The market value without you may go lower than 250 (without a tenant) in a year or two. Sit tight is my advice. If he is forced to sell then go along to the auction as you mentioned. Would he auction it? You know that?

neverdespairgirl

absyandtigger wrote: »

The landlord says the house is valued at £325.000 on the open market, but worth only £179.000 on the open market with us in residence. He wants us to pay a marriage value which would bring the price to £250.000.
This seems like a bargain,

Doesn't sound remotely like a bargain to me, to be honest.

He can't get rid of you (secure tenancy) and could only sell it to someone else for £179k, so why would you pay £60k over that price?

His estimates might also be waaay optimistic.

Bargain for the LL? Definintely!

absyandtigger

Well, they certainly says they'll go to auction,(the landlord is a huge pharmacuetical company), though not sure who would want to buy it even at £179.00, with us still in it.
Our rent is currently £600 per month, and we would have to borrow almost the whole amount.
Perhaps we'll just stay renting and see how things go.

neverdespairgirl

absyandtigger wrote: »

Well, they certainly says they'll go to auction,(the landlord is a huge pharmacuetical company), though not sure who would want to buy it even at £179.00, with us still in it.
Our rent is currently £600 per month, and we would have to borrow almost the whole amount.
Perhaps we'll just stay renting and see how things go.

£600 a month would pay the interest portion only on a mortgage of about £105k, at the moment. So you'd be paying more than you do now if you were to buy it.

And if you need more than 90% of the price, mortgage rates are significantly higher at the moment than if you borrow less.

mlz1413

At £600pm you're looking at approx £120k mortgage on 6% - not sure if you will get that, but the 'equity' of it being 'worth' over £300k could mean you don't need a deposit.

So with that in mind go to the auction and if goes for less than £120k you could buy it (make sure you have seen mortgage advisors by that point!) and be home owners.

Otherwise why worry you can stay there as long as you wish for £600 new owners or not.

Only thing I will ask is the condition of the house? Just wondering if owners will bother to keep in good repair if you are sitting tenants, so if this maybe a consideration on buying.

pinkshoes

absyandtigger wrote: »

Well, they certainly says they'll go to auction,(the landlord is a huge pharmacuetical company), though not sure who would want to buy it even at £179.00, with us still in it.
Our rent is currently £600 per month, and we would have to borrow almost the whole amount.
Perhaps we'll just stay renting and see how things go.

To buy it at £250k, you'd need a £25k deposit to get the mortgage, and have a joint salary of about £57k.

If you're in your 40s, you're looking at only a 20 year mortgage, so if you borrowed £225k, then you'd be paying about £1630 a month, of which £1125 will be interest.

You need to compare the interest portion of the mortgage to your rent (mortgage interest is equivalent of renting from bank!), so you're paying £600 now, but would be paying almost double to the bank to "rent" this property!!

I'd say even if it went to auction, given the new owner would only get £600 a month in rent, then it would be unlikely to sell for maybe even £130k!

Use the BBC mortgage calculator:
http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml

absyandtigger

Perhaps we should make them a lower offer, if they really want to be rid of it.
I think because their a drugs company they can't be bothered with the maintenence and management side.

pinkshoes

absyandtigger wrote: »

The landlord says the house is valued at £325.000 on the open market, but worth only £179.000 on the open market with us in residence.

OR... if it've valued at £325k on the open market, tell him that for £150k cash lump sum, you'll move out!

franklee

I think you should appoint your own surveyor and get the property valued for yourself. Explain the details of your tenancy and he should be able to value it taking your tenancy into account and also open market value. Be sure to tell him your husbands age etc.

Then look into getting a mortgage etc.

Then you will know if you are interested in buying or not and roughly how much you want to pay.

Then *if* you want to buy either negotiate or go try at the auction. If you buy at auction then you have limited time to complete so make sure you have the funds organised etc. Read up on how auctions work first, what deposit will be needed on the day and how long you will have to complete so you know what you are getting into if you go that route.