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Is this deal too good to be true ?

2

Comments

  • GDB2222
    GDB2222 Posts: 26,465 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Is the rent fixed for five years or variable? If variable, what arrangement is there for arbitration if the parties don't agree? I suspect that the small print in a contract like this is terribly important. Get a magnifying glass.
    No reliance should be placed on the above! Absolutely none, do you hear?
  • Jinto
    Jinto Posts: 50 Forumite
    Part of the Furniture Combo Breaker
    That is something that I had considered, I was going to get an agreed increase limit put into the contract.
  • GDB2222
    GDB2222 Posts: 26,465 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    I think this Contract is individually negotiable. So, go for whatever you think is reasonable.
    No reliance should be placed on the above! Absolutely none, do you hear?
  • Definately sounds like a good deal. I would go through the small print a thousand times tho.

    I would be interested in a scheme like this as i'm also a would be first time buyer who is currently renting.

    Does anyone know if these sorts of deals are common place? Or more specifically if there is anyone in the essex area doing it.
  • Jinto
    Jinto Posts: 50 Forumite
    Part of the Furniture Combo Breaker
    I believe there are various rent to buy schemes about, you can google them but I have not come across any which have offered 100% rent back against the house. I believe you normally pay a rent + a surplus payment which is towards the option to buy and that is the only bit you get back.
    This is a small developer and he just wants to get the property moving so he's trying to come up with atractive offers.
  • poppysarah
    poppysarah Posts: 11,522 Forumite
    Jinto wrote: »
    That is something that I had considered, I was going to get an agreed increase limit put into the contract.

    And what about a reduction if rents drop?
  • Jinto wrote: »
    I believe there are various rent to buy schemes about, you can google them but I have not come across any which have offered 100% rent back against the house. I believe you normally pay a rent + a surplus payment which is towards the option to buy and that is the only bit you get back.
    This is a small developer and he just wants to get the property moving so he's trying to come up with atractive offers.

    Yeah this is all i had managed to find which isn't nearly so attractive.

    Sound like you/your son has found a good deal. If your solictor can make it watertight then happy days.
  • Jinto
    Jinto Posts: 50 Forumite
    Part of the Furniture Combo Breaker
    Talking to some FAs, I have hit the problem with this deal, It seems that it is unlikely that the developer could return the money in any way which would be acceptable to the mortgage lenders as being a deposit.
    Whether it was done as a discount or the money was actually returned, I have been advised that it would just be seen as a discount on the house and therefore would not qualify as a deposit.
  • If the deal is attractive, on the face of it, is there any reason why your son could not save for a deposit over the next 3-5 years :confused:
    Warning ..... I'm a peri-menopausal axe-wielding maniac ;)
  • Jinto

    That's only a cashflow problem.

    e.g.

    In 5 years time house is valued @ £ 200k, Developer owes your son £ 50k rental return. You (or A.N.Other) lend your son £ 50k and he obtains a £ 150k mortgage. He then repays you from the proceeds the developer owes him.

    BUT, it's still too good to be true IMHO.
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