If a house doesn't sell, how realistic is it the owners will make it let-to-buy?

JammieDodger

Hello,

I am trying to buy a house. I am the only person who has put in an offer (and a reasonable one at that) but it has been rejected. The owners withdrew the house from the market at the same time, after 3 weeks and are deciding whether to let the house, or sell it as a 'let to buy.'

How realistic is a let-to-buy? Will they get as much money from it compared to if they were just going to sell it? Is withdrawing the house just a tactic to get me to up my offer?

Any advice appreciated!

JD

AlexMac

Confusing Question- a 'let to buy' mortgage is a fairly obsure financial product which works by allowing a would-be mover to borrow money at a possibly higher than average interest rate (not unlike a 'buy to let' mortgage)to buy a new home to move into, while their former home is let out to tenants.
So do the maths- you know the approx value of the property. Will they get rent equivalent to about 6%, 7% or even 8% pa of value to service such a mortgage? You could get an idea by enquiring about the cost of buy to let mortgages locally, noting that some lenders will only advance a low% of value - say 75% (I don't know if let to buy lenders might go higher in terms of loan-to-value).

Or do they mean they want to sell it as a 'buy to let' ie to a Landlord? If so, they'll expect to get it cheap as they're in it for the money. But in marketing terms there's no difference, unless thay plan to take it tp an auction.

Either way, it's not likely to be something you do much about, nor can you double guess whether its a tactic or practicable financially fo them; it's their call whether they want to rent out their former home. There are lots of similar 'accidental landlords' out there; people who want to sell but have an unrealistic expectation about price and hope that if they wait, prices will rise (I think they won't - not for a couple of years at least) or who cannot sell because of a lack of buyers or local glut of properties.

Let 'em stew, wait a week, pump the agent for info and then make your 'best and final' offer. preferably in writing, setting out how strong a buyer you are (e.g. 'in funds; or at least with a deposit and an in principle offer of a mortgage, no chain, prepared to stop looking at other places and ready to instruct a solicitor as soon as they accept... or whatever). And anyway, it's not the only place in the world; in several cases in 30+ years of ownong homes I've lost the bidding war on the place of my dreams, only to stumble on a better palce the next week!

kingstreet

Most lenders' let to buy products and buy to let products are interchangeable.

As AM has said, if the vendor decides to "let to buy" they will be letting the current property, not selling it.

Are you interested in becoming a tenant?

amcluesent

If the sell to a professional LL, then they will get a ruthless push down on price. The LL will seek a return of 10%+ on their capital, after allowing for gaps in rent and their costs. If you know what rents are in you area, it's easy to calculate what a LL would offer, I'd be thing minimum of 15% less than a private buyer.

JammieDodger

AlexMac wrote: »

Confusing Question- a 'let to buy' mortgage is a fairly obsure financial product which works by allowing a would-be mover to borrow money at a possibly higher than average interest rate (not unlike a 'buy to let' mortgage)to buy a new home to move into, while their former home is let out to tenants.

Yes you're right AM, the estate agent said that they were going for a let-to-buy financial arrangement on the property. However, I was in HSBC at the same time as the vendor (I don't think she saw me!) and I can't find a buy-to-let mortgage by HSBC anywhere, so I think it's the estate agent pulling a fast one!

I put in my final offer today at 1pm and I haven't heard back yet. I am wondering if this means I have hit the LL/let-to-buy price and they are deciding what to do about my offer?

JD

Notmyrealname

JammieDodger wrote: »

Yes you're right AM, the estate agent said that they were going for a let-to-buy financial arrangement on the property. However, I was in HSBC at the same time as the vendor (I don't think she saw me!) and I can't find a buy-to-let mortgage by HSBC anywhere, so I think it's the estate agent pulling a fast one!

!!!!!!...

They are looking for a LET TO BUY mortgage, not a Buy To Let. They may have been in HSBC to look for a mortgage for their new home, the deposit financed by a Let To Buy mortgage on their current home.

I am wondering if this means I have hit the LL/let-to-buy price

There is no such thing. The LTB valuation of the property is the market value of the property. It doesn't suddenly become cheaper because the owners are wanting a LTB mortgage. The only way it would be sold lower is if a professional LL offered them a lower price and they wanted a quick sale.

If, like I did, they don't want to drop it for a quick sale and are quite happy to draw equity from it to fund the deposit for a new house and use the rent on their current one to pay off a LTB mortgage then the price they'd want to sell it to you is the market price, not a kick in the nuts "we buy any house" one.