Selling house moving to rented when to sign rental contract?

clairey22

Hi all,

Just a quick question. We are in the process of selling our house to someone who is buying it as a Buy-To-Let. The contracts are being prepared by our solicitor at the moment.

As our property has been on the market a while and also as we have new jobs in the next county we decided to go into rented rather than buy something straight away.

I have rented before (about 5 years ago) but never been in this situation (selling then renting).

My question is when do I sign a rental contract? would it be after I have exchanged? So that there is no chance the buyer could drop out and then I have to pay the mortgage and a rental contract?

Also should I request a 2 week gap between exchange and completion to give me time to find and move into a rental place?

Thanks
Clairey

pmlindyloo

We moved into rented accomodation after selling our house.

We thought it would be easy but it turned out to be a bit of a nightmare!

You really shouldn't sign a rental contract until you have exchanged in case your sale falls through because you will then be liable for the rent. (and the mortgage)

You can take a chance and look for a rental property near to exchange and put down a holding deposit (but not sign the tenancy agreement) which would then secure the property. However, you would lose the holding deposit if your sale fell through.

We asked for 4 weeks between exchange and completion to ensure we had plenty of time. However, rental properties in our area were very difficult to find and in the end we had to offer more rent to get our property.

If you can do a bit of research into the availability of rental properties it would give you an idea of any difficulties.

Be aware that your buyers may not want to wait 4 weeks (ours didn't!) which makes things even more difficult.

We had visions of being homeless so try to have a back plan - eg. storage for furniture and staying in a B&B for a short time.

I am sure people will be along to tell you how smoothly theirs went! Just wanted to give you a 'heads up'!.

may_fair

clairey22 wrote: »

My question is when do I sign a rental contract? would it be after I have exchanged? So that there is no chance the buyer could drop out and then I have to pay the mortgage and a rental contract?

When you sign a tenancy contract, it is binding, but if you pull out of the deal before you move in, the LL has a duty to mitigate his losses (e.g. find a new tenant asap).

The tenancy doesn't start until you physically take possession and move in. After this point, the LL has no obligation to mitigate his losses and could pursue you for rent for the whole of the fixed term (as it fell due).

Do not sign a tenancy contract until after you've exchanged.

DizzyDasher

I agree with the others that it's risky to sign a contract for the rental before you exchange and have a definite completion date. May be worth warning your buyers already that you will need e.g. a 4 week gap, so that they know if they are in a hurry they need to pull their finger out with the survey and searches etc.

As for how long you actually need between exchange and completion if you do that, I think it depends on the rental market where you are: I would definitely talk to some letting agents and see what kind of notice on a rental would work, but 2 weeks sounds tight to me.

In the past going from rental to rental I have usually signed up to the new one about 2.5-3.5 weeks before moving in - but I know in lots of areas the rental market is quite hot at the moment, so you may need longer (particularly if this is a long-term home, rather than a 6 month job, when I guess you might be prepared to live with something less than perfect!)

clairey22

thanks everyone I appreciate it! :-)