Buyer wants to rent until completion

Pewit

I have a buyer for my flat in NW London and her solicitors have taken months to respond to mine. As a result, we are likely to miss the target date for completion of 8th May.

As her existing tenancy where she is currently living (not my flat) ends on that date, she wants to rent my property until completion.

I an naturally wary of doing the above, but given that I have a buyer and have already incurred costs to get this far, I would like any suggestions as to how to do this while protecting my interests if she pulls out of the sale.

I have asked my letting agent to draw up a 2 week contract with a week to week extension.

Apart from asking her to pay for the costs of the above (and any solicitors fees) and a 1 month deposit, are there any other suggestions as to how to arrange this safely and push the sales process forward?

Emmzi

do you have a buy to let mortgage, landlord insurance, a gas safety certficate?

do you know how long and how much it costs to evict?

crazygeordiegirl

I hope you get on well as this is exactly what I have proposed to the vendor of a house I will be making an offer on today.
We need to rent before we can buy as we can't get the mortgage to buy before we have let out our existing flat.I am going to make sure something is down in paper to say we will buy as soon as we physically can, the vendor did say he was going to rent it out if it didn't sell so hopefully it will go well.

tbs624

Pewit wrote: »

I have a buyer for my flat in NW London and her solicitors have taken months to respond to mine. As a result, we are likely to miss the target date for completion of 8th May.

As her existing tenancy where she is currently living (not my flat) ends on that date, she wants to rent my property until completion.

I an naturally wary of doing the above, but given that I have a buyer and have already incurred costs to get this far, I would like any suggestions as to how to do this while protecting my interests if she pulls out of the sale.

I have asked my letting agent to draw up a 2 week contract with a week to week extension.

Apart from asking her to pay for the costs of the above (and any solicitors fees) and a 1 month deposit, are there any other suggestions as to how to arrange this safely and push the sales process forward?

Your buyer is still only a potential buyer. The proposal that she rents the property from you is fraught with difficulties, not least the fact that you cannot seek repossession of a property let under an AST until a min of 6 months has expired ( except under specific grounds, such as non payment of rent)

You presumably have the property on a residential mortgage, so would need consent from your Lender to let the property out.

You would need to comply with all relevant LL& T legislation, on gas safety, insurances etc , as metioned by Emmzi above, plus tenancy deposit regs

You will need to declare all rental income to HMRC.

Have you discussed any of this with your own qualified legal adviser?

Your potential buyer was daft to give notice on her current rental property before reaching exchange of contracts on your property and ought to be chasing up her own solicitor.

tbs624

crazygeordiegirl wrote: »

I hope you get on well as this is exactly what I have proposed to the vendor of a house I will be making an offer on today.
We need to rent before we can buy as we can't get the mortgage to buy before we have let out our existing flat.

Not wanting to sidetrack from OP but have you obtained Consent to Let from the lender on your flat? Got a sizeable contingency fund in place for dealing with statutory repair obligations and tenancy voids/non paying Ts? You may want to search the board for G_M's monumental post on guidance for newbie LLs.

LandyAndy

I don't think I'd consider it. The chances are it would be fine but what happens if having given her possession she pulls out of the sale, refuses to pay rent and trashes the place before you can regain possession?

crazygeordiegirl

tbs624 wrote: »

Not wanting to sidetrack from OP but have you obtained Consent to Let from the lender on your flat? Got a sizeable contingency fund in place for dealing with statutory repair obligations and tenancy voids/non paying Ts? You may want to search the board for G_M's monumental post on guidance for newbie LLs.

I am in the process of getting consent,have some money in savings for any repairs (fingers crossed their will be none however we all know things can happen!) I have researched this in full :beer: (thank you for the advice however)

Landy Andy I understand what you are saying to the OP here however I would have something legal in writing to say what the plan is. I intend to do that with the vendor so all parties are covered.

princeofpounds

would have something legal in writing to say what the plan is. I intend to do that with the vendor so all parties are covered.

There is nothing legal short of exchanging contracts. Whatever you write would be nothing more than a memorandum of understanding.

Personally I wouldn't let a buyer rent a house unless I was desperate. You run the risk of them being in place for minimum 6 months, refusing all other viewers and trashing the property in order to try to blackmail you into a sale at a cheaper price.

Of course most people are not so vindictive, but it's a question of thre risk you take.

This sort of arrangement can work, but only really in a situation where the vendor is actually fairly happy to be a landlord or sell. That sort of ambivalence is not the normal situation.

I would imagine it is more practical to rent out a property between exchange and completion - the tenant would then become the owner and their own landlord on completing. Of course contracts would need to reflect that.

JQ.

crazygeordiegirl wrote: »

Landy Andy I understand what you are saying to the OP here however I would have something legal in writing to say what the plan is. I intend to do that with the vendor so all parties are covered.

You're vendor would be mad to allow this. It does not matter what you have in writing, the legal obligations of an Assured Shorthold Tenancy and the security of the Landlord and Tenant Act are automatically applied where a residential landlord and tenant situation arises. If you put that proposal to me there's no way I'd accept, and if I wanted to let the property I'd do so to a third party and not a potential buyer.

OP - I would not allow your buyer to do this, there are sooo many pitfalls involved. It is you who will take on all the risk and the buyer who will be placed in a much stronger position of power. Tell the buyer to extend their tenancy or sleep on a friends floor - their current predicament is not your problem.

DannyboyMidlands

There is absolutely no reason to do this. She sounds flaky as it is and could easily pull out of the "sale" and leave you as an accidental landlord with a difficult tenant. It has nightmare written all over it.

Just find a buyer who is able to proceed in the normal manner.

blackshirtuk

DannyboyMidlands wrote: »

There is absolutely no reason to do this. She sounds flaky as it is and could easily pull out of the "sale" and leave you as an accidental landlord with a difficult tenant. It has nightmare written all over it.

Just find a buyer who is able to proceed in the normal manner.

Actually happened to me!

Buyer pulled out after moving his daughter in at the peak of the market in 2007
. Stuck with reduced rent for 10 months. but blessing in disguise as we still have the property 5 years later earning decent rent