Renting our buy- to- let back to previous owner

kickingk50

Hello

I wonder if anyone can give me some advice? My husband and I are currently in process of buying a property to rent out.We have got a buy to let mortgage for this.The seller has just asked us would we consider renting the property back to them on completion of sale? They were looking to rent another property but that has just fallen through(she says due to the sale of this property taking longer than they had originally thought)Can anyone foresee any problems with this arrangement? We would obviously get a proper tenancy agreement,but it seems a good idea to us as we wouldnt need to advertise and feel that the sellers would look after the property(they seem a decent couple although we have only met them once and spoken a few times on phone)
Any advice would be gratefully received.

Thanks!

Guest101

As long as you do the usual checks, I can't see any problems.

A niggle in back of my mind says something about becoming assured tenants (?!?!) but I think I'm wrong on that one

theartfullodger

That would then be a sale-and-lease-back deal.

Tenancy must be for at least 5 years: Tenant gets 14 day cooling-off time after signing:You need some sort of licence, from the (now new name) FCA..
see
http://www.theguardian.com/money/2012/feb/03/fsa-sale-and-rent-back-shut-down
- and other conditions....
&
http://www.adviceguide.org.uk/england/debt_e/debt_mortgage_problems_ew/debt_how_to_sort_out_your_mortgage_problems_e/sale_and_rent_back_schemes.htm

Rent to ANYBODY but the owner... He can rent it again in 6, 12 months time but not immediately, IMHO..

Are you by any chance hoping (or have been told ) this is a "below market value" scheme/scam??

Guest101

theartfullodger wrote: »

That would then be a sale-and-lease-back deal.

Tenancy must be for at least 5 years: Tenant gets 14 day cooling-off time after signing:You need some sort of licence, from the (now new name) FCA..
see
http://www.theguardian.com/money/2012/feb/03/fsa-sale-and-rent-back-shut-down
- and other conditions....
&
http://www.adviceguide.org.uk/england/debt_e/debt_mortgage_problems_ew/debt_how_to_sort_out_your_mortgage_problems_e/sale_and_rent_back_schemes.htm

Rent to ANYBODY but the owner... He can rent it again in 6, 12 months time but not immediately, IMHO..

Are you by any chance hoping (or have been told ) this is a "below market value" scheme/scam??

Thank u, I thought there was something, but I just couldn't think clearly.

kickingk50

Thanks for your reply.We have agreed a price a little below market value but not much.Seller only put it to us today,we have not said yes or no yet,still need to work out the pros and cons....

silvercar

Take legal advice, but I thought the outlawing of such schemes was to shut down the dodgy firms that operated in this market. Certainly the links that were posted above refer to firms buying properties to rent back, not to individuals.

kickingk50

Yes,I thought that.We didn't buy this property thinking about renting it to the current owner at all.The sale is almost complete,just a few more enquiries for the solicitor to finalise.It was only put to us today by the seller, as the house she was going into has fallen through.We didn't know such schemes existed.If the seller doesn't rent it from us we will simply find another tenant.We just thought it would be easier for us,and would help the seller.I understand the mortgage company needs to protect their interest and that's why I posted on here to see if there were maybe some issues I hadn't thought of.

Argghhh

what if you rented to a friend for a fortnight (on paper) then they left by mutual consent and then the old owners signed tenancy agreement or is there a set time period required

kickingk50

yes,we were told that the mortgage co. could insist on the property having' vacant posession 'on completion-but-how would they know? Do they do checks when giving buy to let mortgages?
Nothing is simple is it?

silvercar

kickingk50 wrote: »

yes,we were told that the mortgage co. could insist on the property having' vacant posession 'on completion-but-how would they know? Do they do checks when giving buy to let mortgages?
Nothing is simple is it?

Plenty people buy on a buy-to-let mortgage and take on existing tenants, I can't see a lender having an issue with vacant possession if the occupier is there under a legal tenancy agreement.

PaulLuke

Slightly different from buying a property and letting the current owner stay there. Legally I suspect they have to move out before you complete to ensure the new mortgage charge takes precedence over their occupancy, although I don't think there is any specific rule which would then stop them renting from you and moving back in afterwards.