Rent to buy - proposal help please

Boobydoo

Hello all

My Partner and I have our eye on a property which we both like very much. We have sent a letter to the seller asking if there was any possiblity of renting for a fixed period and then buying at the end of the rental period.

The seller has come back asking for our proposal. The house is up at £250,000. We don't want to upset him etc with a low offer.

Is there anyone on here who could give me some advice on pitfalls, negotiation etc as this is something we've never done before.

We currently have our own property, which we feel we could rent out to cover our rental costs. The new property is a three bed cottage which is empty and has been on the market for just over a year.

HappyMJ

Pitfalls are many. The seller could get a better offer elsewhere and sell to someone else. You should sell your current property to buy the new one. Despite everyone saying there is a lot of money to be made in buy-to-lets there isn't really.

Boobydoo

Thanks HappyMJ, although I was looking for more detailed advice really. We intend to sell our property at some stage, but right now is not the time.

Anyone on here that has done or is doing a similar thing?

BitterAndTwisted

The things to consider are your exposure: both to the risks of becoming landlords when it's never been part of your long-term investment plans, dependent on strangers to pay your mortgage for you and becoming tenants of another person who had never intended to become a landlord either.

Becoming a tenant also means that you will have little security beyond whatever length your AST is: six or twelve months and either your tenancy could be ended or the house sold to another buyer while you're in there.

Try this one on for size: you find yourselves tenants who at first seem utterly reliable but end up not paying their rent, they trash the place and cause thousands of pounds-worth of damage. It takes you about six months and a fair sum to get shot of them. Then you have to find the money from savings to get all the damage repaired because the tenant has scarpered and you can't find them to recover the money from. Meanwhile, your tenancy is ended by your new landlord but you can't move into the house you do own because you haven't got shot of your tenant yet.

Still sounding as attractive a prospect now?

My own advice would be to never, ever gamble with the only asset you own. Sell the property and move into a rental owned by a newby landlord on a "maybe"? Perhaps, if you like poker and have nerves of steel. I wouldn't go near a plan like that. Far too much potential for utter misery and disappointment.

aless02

Hi Boobydoo, did you get anywhere with this? We're possibly looking at doing something similar (though we currently rent so no house to leave behind) and just wanted to know how receptive your vendor was?

Has anyone else done something similar recently? We need to move cross-country on a very tight timescale and there simply wouldn't be time to complete a sale & relocate before my baby is due! So we were thinking if we found a receptive vendor, renting on a 3-6 month AST with lease option would be perfect to prevent moving twice (to save cost AND headache).

(just to clarify, it would be purely a timing thing and not a money thing. We'd be happy for the rent to just be 'bonus' money to the vendor, not to be discounted from the purchase price or anything)

DannyboyMidlands

If I was a vendor I wouldn't go anywhere near this kind of "offer". If I'm selling a house, then I'm selling a house. Why would I want to be bothered with timewasters who want to rent my house?

I can't see why people just don't rent a house that's being advertised for rent. Although I suspect many are in it to secure a nicer house at cheaper rent by dangling the "I'll buy it off you in 6 months time" carrot.

And in the OP's case - renting out the current place in order to rent another place that isn't advertised for rental and then maybe buy it somewhere down the line and maybe sell the existing one - sounds like a complete disaster waiting to happen.

Keep it simple.

Mrs_Z

Is it worth taking the risk of renting your property to cover the costs (ie. not for profit)? I think you should really familiarise yourself what being a landlord entiles before entertaining this option. Even if you think to let it via an agency, you should be knowledgeable with at least the basics. What is the plan b if the tenants turn out to be non-paying, nuisance causing, etc... Can you afford to go down the eviction route that could take months - in such a scenario you'd have to fork out for your own rent as well as mortgage payments. Worst case scenario, yes, but unfortunately not uncommon.

aless02

DannyboyMidlands wrote: »

If I was a vendor I wouldn't go anywhere near this kind of "offer". If I'm selling a house, then I'm selling a house. Why would I want to be bothered with timewasters who want to rent my house?

I can't see why people just don't rent a house that's being advertised for rent. Although I suspect many are in it to secure a nicer house at cheaper rent by dangling the "I'll buy it off you in 6 months time" carrot.

Not everyone is a timewaster - some people just need a home ASAP and don't want to move twice. We are quite happy to pay full market rent for the short AST period. From what I can tell, the vendor potentially gains a sale and some extra dosh from the rental and if it doesn't work out, they lose a few months (during which they may not have sold it anyways) but are still up a few thousand pounds in rent. It obviously only works on a chain-free sale where the vendor has no time-constraints, so yes it is quite a select few that this arrangement would work for.

Just sayin' .

Stargirl12

I would also be interested in if anyone else has done this as we are considering this as an option should our house purchase not go through before we need to move e.g. move in and pay rent whilst we exchange and complete...

DannyboyMidlands

aless02 wrote: »

Not everyone is a timewaster - some people just need a home ASAP and don't want to move twice. We are quite happy to pay full market rent for the short AST period. From what I can tell, the vendor potentially gains a sale and some extra dosh from the rental and if it doesn't work out, they lose a few months (during which they may not have sold it anyways) but are still up a few thousand pounds in rent. It obviously only works on a chain-free sale where the vendor has no time-constraints, so yes it is quite a select few that this arrangement would work for.

Just sayin' .

But what's in it for me as a vendor?

I have to get agreement from my mortgage company and possibly pay a fee, change my insurance, get gas/leccy safety certificates organised, sort out the contract, withdraw my house from the market and possibly pay a fee, register with HMRC, move all my belongings, risk that you won't move out at the end of the tenancy and/or you'll smash the place up and probably loads of other things that I haven't considered.

And all this for a bit of rent money that I never wanted and a potential sale somewhere down the track. No thanks. If I wanted to be a landlord I would be advertising it for let not for sale.