Selling my house and renting it back.

JuliaL

My partner and I are both in our 50's we have both been made redundant and are unable to find other employment. We have a house which is valued at 225,000 and have had a cash offer ofr 180,000. We can clear the mortgage and rent the house back and have money in the bank. We have been advised that we can stay in the house long term. Has anyone heard or participated in this type of scheme?

silvercar

your losing £45k, why not sell it quickly priced for a quick sale at £215k?

If you rent back you will be paying rent forever, how long will the cash in the bank last?

What GUARANTEES do you have that you can stay in the house long term?

JuliaL

We just can't afford the morgate and loan anymore, but we have pu t so much into this house and it's been adapted because my partner is disabled it will be hard to find another property the same. We only have the guarantee on paper.

NorthernAngel_2

my question would be..how much rent are they asking and would you be able to get help from housing benifit?

silvercar

You could get housing benefit to pay the mortgage interest though not the capital.

check you are getting all the benefits you are entitled to.

https://www.entitledto.co.uk

BrunoM

This sounds a lot like "equity release" by the way? Unless I'm just dumb.

JuliaL

Thanks for all your replies. We could get help with the rent. My main concern is once we have sold is actually staying in the property. I can't find any information from other people who have done this ie the positive and neg of the situation

silvercar

JuliaL wrote: »

Thanks for all your replies. We could get help with the rent. My main concern is once we have sold is actually staying in the property. I can't find any information from other people who have done this ie the positive and neg of the situation

singingpig.co.uk has plenty of people who do this, look for the BMV board.

I think the bottom line is that lenders don't like borrowers offering more than 1 year ASTs, so effectively you've only ever got an absolute guarantee of 1 year.

Bobrover

I regularly purchase houses and rent them back to the seller. Finance for the purchase of the property is usually via a buy to let mortgage.

Silverback is quite correct in saying that the lenders will only allow an AST agreement for One year. After the fixed term AST ends a periodic tenancy arises by default. A periodic is subject to exactly the same terms as the original AST agreement. However tenants can now leave on a months notice, and the landlord can serve 2 months notice to get them to leave.
This point is only a problem if you deal with someone who wants to realise the full equity in the property.

When I negotiate a rent back I need to build a level of trust with them and I play heavily on the fact that,

1. I will be their landlord and I am local to them, just a regular guy who loves dealing with people and property

2. I can supply references from other clients who have done exactly the same thing

3. This is my favoured deal as the tenants don’t act like normal tenants – they act like homeowners and respect the property and myself. Whilst this happy relationship is growing hopefully the property is growing in value.

Item 2 will help you greatly in being satisfied as to the buyers dealings with his present clients. It does not matter what other peoples experiences are, you need to research your own buyer.


I am however concerned about the housing benefit aspect of your post. You need to be very careful that the council do not see this as making yourself intentionally homeless. If they do you will not get housing benefit. Research this before making the leap – your potential buyer should have raised this with you – assuming you told him of your intentions.

Hope this helps and good luck
Bob

suelongman

Bobrover wrote: »

I regularly purchase houses and rent them back to the seller. Finance for the purchase of the property is usually via a buy to let mortgage.

Silverback is quite correct in saying that the lenders will only allow an AST agreement for One year. After the fixed term AST ends a periodic tenancy arises by default. A periodic is subject to exactly the same terms as the original AST agreement. However tenants can now leave on a months notice, and the landlord can serve 2 months notice to get them to leave.
This point is only a problem if you deal with someone who wants to realise the full equity in the property.

When I negotiate a rent back I need to build a level of trust with them and I play heavily on the fact that,

1. I will be their landlord and I am local to them, just a regular guy who loves dealing with people and property

2. I can supply references from other clients who have done exactly the same thing

3. This is my favoured deal as the tenants don’t act like normal tenants – they act like homeowners and respect the property and myself. Whilst this happy relationship is growing hopefully the property is growing in value.

Item 2 will help you greatly in being satisfied as to the buyers dealings with his present clients. It does not matter what other peoples experiences are, you need to research your own buyer.


I am however concerned about the housing benefit aspect of your post. You need to be very careful that the council do not see this as making yourself intentionally homeless. If they do you will not get housing benefit. Research this before making the leap – your potential buyer should have raised this with you – assuming you told him of your intentions.

Hope this helps and good luck
Bob

i know this is a old thread but i am looking into doing the same thing buying and renting back as i have lived in my home 30years do all these people that wont to buy your homes wont to sell it after a year

silvercar

The problem is that most of the buy and rent back deals are funded by buy-to-let mortgages. These mortgages generally have a condition set by the lender that the tenancy must be based on an AST for a year or less. Although the tenancy would be renewable, as a potential tenant you have no way of knowing when the landlord will decide to sell. You may find a buyer like Bobrover who is happy to hold onto the property and rent it out longterm. Equally, you could find a buyer who intends selling very quickly, or one whose circumstances change and needs to sell after a year.