Buyer threatening to pull out.

zzzLazyDaisy

antrobus wrote: »

Interesting point. Yes, 'sale and rent back' is now a regulated activity, but whether that would apply to a private arrangement between two individuals, I do not know. After all, the Consumer Credit Act imposes all sort of rules on businesses that provide credit to consumers, none of which prevents any particular individual from lending money to someone else, and charging interest on it.

I would suggest that this is not a 'private arrangement between two individuals' though. The buyer is an investor purchasing in a business capacity to rent out the property. The fact that his intended tenants are the very same people who he is purchasing the house from is likely to bring him within the scope of a regulated transaction. If that is not the case, the floor is open for any business to carry out this practice completely unregulated, as long as they keep it relatively informal and rely on word of mouth rather than openly advertising.

But I suspect it may be a moot point because a) there is a reasonable likelihood of him needing a a mortgage, and b) and even greater likelihood of his solicitor giving him some fairly robust advice.

p00hsticks

GDB2222 wrote: »

The point about mortgages is a new one on me. Why would lenders object?

I'm not an expert, but isn't it usually a condition of the mortgage that the house is purchased with vacant possession at completion ? If the buyer is going to remain in the house then this isn't going to be satisfied...

antrobus

zzzLazyDaisy wrote: »

I would suggest that this is not a 'private arrangement between two individuals' though. The buyer is an investor purchasing in a business capacity to rent out the property. The fact that his intended tenants are the very same people who he is purchasing the house from is likely to bring him within the scope of a regulated transaction....

I'm not that convinced by the 'business capacity' argument. After all, if someone had a company and was looking for investors, they'd have to jump through a number of legal hoops before they could offer the shares for sale to the public. But I don't think that would prevent them from getting their best friend or brother to invest in the company. It's the public offer bit that matters.

zzzLazyDaisy wrote: »

....If that is not the case, the floor is open for any business to carry out this practice completely unregulated, as long as they keep it relatively informal and rely on word of mouth rather than openly advertising.

Well it goes on, apparently.

The property is also available with the current owners as tenants at £1280 pcm until January 2014 and would make a highly desirable Buy to Let investment.

http://www.rightmove.co.uk/property-for-sale/property-39152707.html

zzzLazyDaisy wrote: »

... But I suspect it may be a moot point because a) there is a reasonable likelihood of him needing a a mortgage, and b) and even greater likelihood of his solicitor giving him some fairly robust advice.

Oh, very probably. It's just that I find the moot point interesting.:)

Annisele

I'm not an expert in this area, but the situation the OP describes does sound to me like a regulated sale and rent back agreement.

If the OP's buyer isn't authorised to enter into such agreements, the FCA will (eventually) be most upset with him. Even if he is authorised, he'll have to comply with a bundle of rules and regulations, including MCOB.

I suspect zzzLaisyDaisy is right, and buyer's solicitor will be giving him robust advice once he gets wind of this.

JuicyJesus

GDB2222 wrote: »

1. There's no need for a tenancy agreement to be 6 months in these circumstances.
2. I'd be more worried that it will be hard to find a place you want to move to, or prices increase whilst you are renting.

The minimum term for an AST, which is virtually the only option in this case, is six months.

It is a can of worms and would be idiotic for the OP to go through with.

tim123456789

JuicyJesus wrote: »

The minimum term for an AST, which is virtually the only option in this case, is six months.

No it's not,

that rule was abolished aeons ago.

(though the minimum period of residence before a LL can evict remained at 6 months, but that doesn't stop a T voluntarily having a shorter term)

tim

zzzLazyDaisy

antrobus wrote: »

Well it goes on, apparently.

The property is also available with the current owners as tenants at £1280 pcm until January 2014 and would make a highly desirable Buy to Let investment.

http://www.rightmove.co.uk/property-for-sale/property-39152707.html

Just because an EA advertises a property as being for sale with existing tenants in situ, does not mean that any Tom, !!!!!!, or Harry will be able to buy it. This advert screams 'desparation' and yes, it may well be that all sorts of 'investors' will crawl out of the woodwork and make pathetically low offers, but it doesn't mean that, in the end, they will meet the legal requirements.

EA's are not legally trained and frequently make suggestions that will never be followed through due to legal constraints, just to draw viewers in. Have a search on the forums for threads like 'can I pay £10k for the carpets to avoid stamp duty' and 'Sellers offering to pay stamp duty' both regular suggestions still made by estate agents, despite HMRC and Lenders making it clear that such schemes are likely to result in a fine and a bill for SD and/or the lender refusing to lend.

Honeyapple

Thank you for all your replies. Well our offer got rejected, so we are still looking. Have decided not to rent from buyer, going to wait a week then tell the estate agent. Our house was very easy to sell, first person to look put in the offer, so feel we can sell again at probably a slightly higher cost!