buying house from our landlord

absyandtigger

Only just worked out how to thaank people.:o
I often read without being logged in.
Thank you all anyway!

absyandtigger

Hi All,
thank you again to all those who gave advice when I first posted.
Update is....
We took advice from a chartered surveyor who valued the house at £310k although admitted that it wouldn't sell at that price in the current market!!!He thinks we should be paying 33% of the current market value because of the length of the tenancy.
We put an offer in to our landlord of £102.300 which has been refused, as we knew it would be. They say unless we come back quickly with a sensible offer they will sell on the open market.
We may put one more offer in then walk away, we are happy to carry on renting, with complete security of tenure. The housing market is so uncertain at the moment it hardly seems worth causing ourselves the finacial hardship of paying a mortgage.
One more victim of the credit crunch!!

Incisor

absyandtigger wrote: »

Hi All,
thank you again to all those who gave advice when I first posted.
Update is....

Thanks for coming back!

We took advice from a chartered surveyor who valued the house at £310k although admitted that it wouldn't sell at that price in the current market!!!He thinks we should be paying 33% of the current market value because of the length of the tenancy.
We put an offer in to our landlord of £102.300 which has been refused, as we knew it would be. They say unless we come back quickly with a sensible offer they will sell on the open market.
We may put one more offer in then walk away, we are happy to carry on renting, with complete security of tenure. The housing market is so uncertain at the moment it hardly seems worth causing ourselves the finacial hardship of paying a mortgage.
One more victim of the credit crunch!!

I have taken a look back and you are paying £600/month. The value of the house on the open market is whatever anyone will pay to get a yield of £7200 less maintenance. It all depends what sort of yield someone will expect.

Assume 5% yield:

Value = [rent - maintenance] / yield

= [7200 - 2000] / 0.05

= £104000

Of course, if someone is happy with 3% yield, that becomes £173000. On the open market, the highest bidder is the one who is happy to accept least yield. I am surprised that the surveyor just went for 33% rather than doing a yield calculation for you.

For you, again the yield calculation applies, but you already 'own' equity in the place, to the difference between the valuation with you in it and with vacant possession, so you can afford to be the highest bidder.

absyandtigger

What do most landlords expect for a reasonable yeild, or is that a how long is a peice of string question?

beingjdc

Old-school professional landlords expect at least 10%; Reasonable amateur landlords expect 6.5%; landlords who learnt their trade at an Inside Track seminar are happy with 3.5-4%, it's only the capital appreciation that really matters...

absyandtigger

So we need to offer between the £102.300 and £179.000
to be in line with an investor landlord?
Perhaps we'll just go up in stages and see how we get on. Will the current housing market difficulties make it less interesting to a landlord?

andrewmp

Don't do it, wait for prices to drop further, you can live in the house forever as it stands. Buy it when it makes financial sense. Remember you'll have to pay when things go wrong too.

absyandtigger

We would wait if we could but Landlord (large company) desperate to sell.

andrewmp

absyandtigger wrote: »

We would wait if we could but Landlord (large company) desperate to sell.

If they are desperate then they'll accept your offer. It is worth no more with you there as a tenant. Don't overpay!!

pinkshoes

How much do you love the property?

You could tell the owner that for £100k, you'd move out of the property (and thus use the £100k as a deposit to buy elsewhere...) so that they can sell it on the open market at the higher valuation.