Rent to buy?

danboy775

I currently have a mortgage on a property that is currently vacant, i have no desire to move back in due to personal reasons so i am now looking to either sell or rent it out.

I have been contacted by an individual on gumtree who has asked if i would rent it out with a view to him buying it once he has a deposit saved.

I have never heard of this before so i asked what his proposition was, see below:

"Dan I do not have any hard and fast proposition to lay before you as at the moment it is merely an option, however having looked at the many web sites regarding 'rent to buy' options here is a very brief run through, a legal agreement is drawn-up and this fixes the price at £175,000 with an option to purchase the house at this price say during a 5 year period, at the start I pay a small deposit of 1 to 2% along with a set amount over the monthly rental cost, when I am ready to buy the house the initial deposit and additional rental premium are used as my deposit for the mortgage.

The advantages to myself are clear but from your stand point you have a tenant who looks after the property and covers the cost of any repairs as if it was their own house, you receive monthly rental and if after the 5 years I say for some reason fail to raise the money for the purchase you get to keep my deposit and the additional rental payments and get back a very well looked after house!

Dan please look into the option and if you feel that it is a viable possibility please let me know what you would propose with a view to deposit and monthly rental and we can look at taking this further provided we are both happy, I am due offshore on Wednesday for my 2 weeks away so please take your time to investigate the option and see if it is indeed a possibility"

Can anyone on here give me any advice on the pro's & con's of going down this route, what should i look out for and what questions should i be asking ?

Kind Regards

Dan

Mojisola

Could be a pro or a con - who knows what house prices will be like in 5 years? If they drop, you could win out; if they shoot up, your tenant/buyer will gain.

minniemaus1970

Be careful, people that rent first may find fault with the property and not want it after all, due to all 'those repairs'
what if he changes his mind? Does his rent cover YOUR mortgage payments and insurance? what happens if either of you changes their mind?
Personally I wouldn't, it seems like a con to me

chances are properties will recover in the next few years
MM

hazyjo

As soon as I heard gumtree, I thought scam.

Just rent it as normal. Then promise to give him first refusal if/when you do come to sell. Simple.

I wouldn't touch any 'agreement' with a bargepole. Don't overcomplicate things. Just shouts 'dodgy' to me!

Jx