Should I allow my "buyers" to rent my house from me until my mortgage is approved?

moneypuddle

* * * * SORRY TITLE SHOULD READ .... until THEIR mortgage is approved * * *




Hi all

Am hoping you can help me with a *little* issue I have going on at the minute.

Background: My boyfriend and I bought a house for £177k, have spent a year doing it up, then we split up and it is now on the market for £245k. Has been on the market for approx 16 weeks

Back in June, the second day it was on the market, a couple contacted us and said they were very interested, offering £237k. We accepted. Hurrah! That couple then were turned down for their mortgage application, apparently because the man was in his overdraft and they were told they would need to overdraft free for 6 months, making it December before they would be approved for the mortgage. We put the house back on the market and kept our fingers crossed for a new buyer soon.

That hasn’t happened, and we gave notice to our estate agents a month ago wanting to try another. We should be with the new one by the end of the week. Today is the last day of our notice period with the initial
Estate agent and they called today to say the original couple from back in June have their hearts set on the house and still really want it, and would we consider renting the house to them for Oct, Nov and Dec until they could get their mortgage approved.

I am concerned over the risks involved in doing this. The house is absolutely immaculate at the moment – brand new carpets, furniture, lights, kitchen, boiler, bathroom etc and I’m worried that in the worst case scenario they would rent for two months, cause damage to the property, decide they didn’t want to buy it at the end of that two months (because the excitement of a new house undoubtedly wears off a few weeks in or they might change their minds about the area etc) and then leave me with re-having to do some of the work, plus I wouldn’t have had my house on the market for 2 months.

My ex partner and I just want to get of the house really, but apart from some very low ridiculous offers, we’ve not had anything near the £237k they offered and would really like to accept it.

Also what are the legal issues involved in renting to buyers prior to selling it to them? Am I legally allowed to do that?

What would you do? Please help! Getting stressed!

x

maninthestreet

Sounds like they want to 'try before they buy'. An assured shorthold tenancy can't be for less than 6 months, unless I'm mistaken.

HappyMJ

It can be for 6 months but if they buy it before the 6 months is up the agreement doesn't matter any more. If they decide they don't want it any more you've got them in for at least 6 months. Being a landlord means you need to comply with all the regulations although the estate agent will help you out with that ... for a fee.

moneypuddle

Thanks. Is a private agreement totally not allowed, where I could just set it at say 2 or 3 months? Surely its just effectively "house sitting" (kind of) :S

moneypuddle

Ah I see, sorry crossed post.

The thing is I don't actually WANT to be a landlord. I want to get the house sold, so I can move into a new home on my own, so a 6 month tennancy would not work for me. However if the tennants said they wanted to leave, I would want them to leave too, asap, so I could get the houlse back on the market? So actually thats good isn't it? Couldn't we just null and void the contract if both landlord and tennant want it to end? Who is to argue?

mjm3346

moneypuddle wrote: »

Thanks. Is a private agreement totally not allowed, where I could just set it at say 2 or 3 months? Surely its just effectively "house sitting" (kind of) :S

and if they decide to stop paying rent and squat it could take months to get them out.

It does not look likely that house prices are going to rise in the near future, probably the reverse is true so the longer you go without selling the lower the price you are going to get.

hazyjo

If you're happy to be a temporary landlord (and have somewhere to go!), fine. Personally, I wouldn't. If I'm selling, I'm selling - not renting it out.

I'd sit tight and wait for a buyer. Still no guarantee they'll get the mortgage. How big was his overdraft? What, so he could suddenly clear the o/d, or has he been paying it off and will, therefore, still need 6 months clear? This could turn into a nightmare for you. They might be thinking once they're in there renting - and it drags on for another 6 months+, you'll just go along with it not wanting to turf them out (plus you might actually feel somewhat vulnerable, having them in your house if you decide longer than 6 months isn't acceptable).

I know you're keen to sell, but tread very carefully and don't be afraid to say no. It's still your home!

Jx

pinkteapot

moneypuddle wrote: »

Thanks. Is a private agreement totally not allowed, where I could just set it at say 2 or 3 months? Surely its just effectively "house sitting" (kind of) :S

Complete minefield. Without a formal, legally binding contract you could have trouble getting them to pay rent or, worse still, leaving the house if they decide not to buy it!

If you go down this route, do it with a proper AST agreement and follow all the rules and regulations. However, as noted above, legal minimum length for an AST is six months.

They shouldn't be panicking as you don't have another buyer lined up. It's September now, just leave it on the market and if they're still willing to pay £237k in December and you haven't found another buyer at that price in the meantime, then proceed with the sale.

TBH, if all other offers received have been lower then you've struck gold by finding a buyer willing to pay that price. Odds are you won't get another offer that high before December.

HappyMJ

moneypuddle wrote: »

The thing is I don't actually WANT to be a landlord.

Well you have just answered your question then.

casperlarue

I would be wary, mortgages are becoming harder to get....your buyer says they will get a mortgage in December, what they mean is they can re-apply and see if they will be accepted.

Minimum AST (Assured Short Term Tenancy) is 6 months, legally they can't just move in for 3 months. There are a lot of pitfalls to this scenario.....sure they may be above board and totally honest with you and buy your house as per their plan or they may trash the place, leave you with rent unpaid and a whole lot of unwanted hassle.

Me....I would say "sorry, no can do"

Jowo_2

I know someone who rented to their 'buyer' for a year plus before they handed in their notice and decided not to buy.

You don't have the appetite to be a landlord and take that level of risk. It can take many, many months for a landlord to regain possession of a property back from a tenant who refuses to leave.

Tell them sorry and to come back when they have a mortgage and check if its still up for sale.