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Scheme to buy property in 5 years, rent out until then
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dave_ave
Posts: 212 Forumite
My partner has been trying to sell a house for a year now. Estate agents have not worked, so we put up a private 'For Sale' sign. A local businessman calls and says he'd like to view the house.
He likes the house, but says he is in the rental market and has a proposition. Now at the outset I don't think this is a scam, but would like some advise from MSE'ers.
He says he will pay the asking price for the house, but in 5 years time at the price set now, but wants to rent the house out in the meantime and pay my partner the going rental rate. He will insure the house too.
He wants an agreement drawn up and solicitors to agree to it.
In 5 years, if he can't purchase the house, he'll pay £5,000 as compensation for not purchasing and the same the followng year, but says he fully intends to purchase the house before 5 years.
It seems like a good deal because if my partner rents the house the whole house will need to be decorated and repaired in 5 years anyway. Of course prices and rents will rise in 5 years, but the deal seems OK to us.
Are we missing anything? Thoughts please?
He likes the house, but says he is in the rental market and has a proposition. Now at the outset I don't think this is a scam, but would like some advise from MSE'ers.
He says he will pay the asking price for the house, but in 5 years time at the price set now, but wants to rent the house out in the meantime and pay my partner the going rental rate. He will insure the house too.
He wants an agreement drawn up and solicitors to agree to it.
In 5 years, if he can't purchase the house, he'll pay £5,000 as compensation for not purchasing and the same the followng year, but says he fully intends to purchase the house before 5 years.
It seems like a good deal because if my partner rents the house the whole house will need to be decorated and repaired in 5 years anyway. Of course prices and rents will rise in 5 years, but the deal seems OK to us.
Are we missing anything? Thoughts please?
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Comments
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I think this will all end in tears0
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so if he gets tenants in that absolutely demolish the place, he can then just give you £5k in five years (assuming you can find him !)and walk away, leaving you to try and sell it again ?
It's not something I'd go for personally0 -
Thoughts:
- The best way to do this is to mortgage it to him, taking at least 15% deposit
- He could get his own mortgage
- Why doesn't he have a mortgage?
- Don't touch him with a bargepole.
Hi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
i'm confused as to what the buyer gets out of this? they rent a house out but don't receieve the rent, yet still pay insurance ect?DEC GC £463.67/£450
EF- £110/COLOR]/£10000 -
Are they authorised by The Financial Services Authority?
http://yourmoney.moneyadviceservice.org.uk/products/mortgages/problems_paying_your_mortgage.html#saleThe FSA regulates the sale of these schemes. FSA-regulated firms must meet certain standards, for example they must give you a tenancy agreement for at least five years and their advertising must be clear, fair and not misleading. You can help the FSA by reporting misleading adverts or if you experience any other poor practices – see Related links. The FSA has banned firms from cold calling you or sending you promotional leaflets out of the blue, so report this to the FSA too – see Related links.0 -
This is not sale and rent back.FraudBuster wrote: »Are they authorised by The Financial Services Authority?
http://yourmoney.moneyadviceservice.org.uk/products/mortgages/problems_paying_your_mortgage.html#saleHi, we’ve had to remove your signature. If you’re not sure why please read the forum rules or email the forum team if you’re still unsure - MSE ForumTeam0 -
I cannot fathom why this would be an attractive offer. If you were looking to rent the property out I expect you would have done so by now. If you are intent on becoming landlords why would you need to do it via an intermediary? An intermediary whose credit-history you have no knowledge about and who may not have a brass farthing in five year's time so any promises of £5k in the future could be only so much hot air to distract you from the rental-risk you could be in danger of falling into. Do not touch this deal or anything like it with a barge-pole.
Just sell the damned thing in the conventional way! If you haven't received any offers it's either not been marketed properly or it's overpriced. You decide0 -
Does this guy want to live in it himself then buy it in 5 years or is his intention to rent from you, sublet and then buy it (or not).
If the first, it looks like a simple rent to buy scheme - huge in America and my Dad has actually done a couple in Scotland (although they are still in the rental bit just now).
If you were tempted to look into this however, I'd be negotiating on the purchase price. If he's paying market rent then you could be renting to anyone and I would assume the chances are the property price will increase in next 5 years and he'd be getting a bargain!0 -
Of course prices and rents will rise in 5 years, but the deal seems OK to us.
Are we missing anything? Thoughts please?
Yes if you believe house prices will be higher in 5 years. I believe they will be less with all the wage freezes and inflation on general goods.:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
Save our Savers
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OP - drop the price now and get it sold to a bog standard buyer. I agree with DVS - post 4, point 4.0
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