Renting the property we are buying before exchange/completion?

geoguy

We are selling our property to a FTB and are ready to exchange on the sale. Meanwhile, progress on conveyancing our purchase has lagged behind due to some miscommunication, but the reasons seem genuine. We have the surveys in and are confident that there should not be any major hold-ups. We were targetting synchronised completion dates in early August, but this now seems unrealistic. Nevertheless, we would like to move at that time for a variety of reasons (keep the sale, convenience with work commitments etc). The house we are buying is currently empty. It would therefore make sense to propose a short-term rental agreement to bridge the interim before we are ready to exchange on the purchase. I realise that we are putting ourselves into a weaker position and are taking the risk of having to move out again if the purchase falls through, but this seems unlikely and in any case preferable to moving into temporary accommodation and having to put our belongings into storage. What are the issues with such a solution and how do we go about drafting the rental agreement?
Many thanks,
gg

theartfullodger

You'd be in a much stronger position if you were a tenant: A Landlord cannot get a tenant out who keeps paying the rent for many months - can't even start legal proceedings until 6 months after start of tenancy. A house with a resident tenant is very usually worth significantly less than one with vacant possession.

Ensure the agreement is an AST (Assurred Shorthold tenancy).. it can be made (the initial fixed term) any period you like (5 days, 2 weeks, 2 years) ...

angelsmomma

It is unlikely the vendor will agree to this. When I was buying my vendors solicitor advised her not to even let me borrow the keys to shampoo all the carpets.

I needed them to be shampooed as they were filthy and my baby son could not yet walk and has a severe skin condition so I could not move in with them as they were.

missjy

To go in and shampoo the carpets you were not 'renting' the property and therefore did not have a legal agreement in place stating who had liability for anything if something was to happen to you or the property - see the 'broken glass tablle' thread. Hence solicitor advised that you were not given access. However maybe with a tenancy agreement is place your role as a 'tenant' rather than a 'visitor' would be defined.

Sensible_Jess

Hi OP
I'm reading from your post that your sale is ready to go to exchange but your purchase is not.
If the survey for your new house has been done already and you have no major issues you must be fairly advanced in the process. Would you not be in a position to exchange on your purchase in Mid August and set the completion date for later on?
That way you could finalise your sale, rent the house you want to buy but have the peace of mid that the sale will go through.

IMHO you're taking a bit of a risk if you move and have no guarantee that the sale will go through.
How many are there in your chain? Are you the top? Would it be worth talking to your buyer to see what they say about postponing the completion date - after all you may find they are OK about waiting another couple of weeks for your purchase to be sorted - maybe they think mid august is a bit optimistic too!

geoguy

@theartfullodger
Good point - in other words, if we managed to get a short-term tenancy agreed with the vendor, it would be less attractive to kick us out again.

@missyj
That's exactly the point. At least a formal tenancy agreement should help define the financial risks in case anything was to happen.

@Sensible_Jess
There is no chain in the conventional sense, as our buyer is FTB and not renting, and our vendor no longer lives at the new property. Good point though about trying to exchange at least, before renting the new property. But the key point is the time window for removal - both our buyer and ourselves would really need to move during the first half of August.

Werdnal

Does the vendor your are buying from still have a mortgage on that property? If so, it would likely be void if you rented as the terms of residential mortgages often prohibit letting. This could cause vendor untold problems, including their loan being recalled - is it worth possibly losing the house you are buying?

Infact we tried it the other way around! When we bought our current home in '93, we sold and completed on the one we were selling, but our purchase didn't match up by about 6/7 weeks. We approached the buyers of our house, asking of we could possibly draw up something legal as a short-term let for us to "rent" from them before we moved out. They took legal advice and were told under no circumstances to entertain it!

Eventually this worked out better for us, as we rented another place for 12 weeks, giving us and overlap to get the new place sorted before we moved.

Yorkie1

The vendor would also have to get a gas safety certificate and inform their buildings insurance. The vendor's solicitor will be advising them not to touch this proposal with the proverbial 10' bargepole.

gld73

I did this a few years ago - the chain below me fell through, but I didn't want to lose the house I was buying and I was confident I could get a new buyer for my house quickly as I'd priced it for a quick sale. I was moving with work and wanted to move to the area on the original timescales.

It worked out well for me, we exchanged contracts but made the completion date 3 months later from what I remember. I then moved in and paid rent until we completed. Bit of a risk on my part as I would have had to complete even if I hadn't sold my house, but as I say, I'd underpriced it, it was in a desirable area, and I knew that by not going for maximum profit I would sell it pretty quickly. My vendors got the rental agreement drawn up.

In my circumstances there were no problems, but as other people have posted, there are potential pitfalls to consider!

jimjames

This is something we were considering but round the opposite way. We are buying a property for tenants to move into, the family we are buying from are in a chain and one option to help them was to complete on the purchase of their property so they are then in a better position with the property they are buying. They could then rent the property back short term - as it is a BTL mortgage then consent would not be an issue. Rent would be more than mortgage so there would be no incentive for them to drag out the process. The chain has now changed so this is no longer under consideration but we did look at it being one option.