From Renting to Private Equity Share

cazz2013

I am hopeful that somebody would be able to advise me on the process of buying an equity share in my currently rented property.

I have been renting the same property for 8 years from a BTL landlord - who is slowly slimming down his portfolio. I have a good relationship with him - and he has assured us that he is only selling properties as they became vacant - to concentrate more on his other businesses.

After a recent sage with the local authority and their new 'selective license' scheme, for both my landlord and my family, we have kind of reached a solution but do not know how to go about it.

We are discussing the possible option of my family purchasing an equity share in the property that we live in, with my landlord initially holding 75-80% and us purchasing the rest. My problem is that the only information that I can find on this are the ones operating by housing trusts - what would be the procedure for this kind of purchase? and is it even possible.

I would be really grateful of any advice on this issue. Thank-you.

DandelionPatrol

If I were your Landlord and wanting to get out of Landlording in the long term, I would not entertain this. The reason is that you would tie up my 75% equity and it would be stuck there until you either bought me out or wanted to move. There is no real market for equity shares. Who wants to buy say 27.5% of a house?

cazz2013

DandelionPatrol wrote: »

If I were your Landlord and wanting to get out of Landlording in the long term, I would not entertain this. The reason is that you would tie up my 75% equity and it would be stuck there until you either bought me out or wanted to move. There is no real market for equity shares. Who wants to buy say 27.5% of a house?

Thank-fully for me my landlord also cares for his tenants - how many do you know that have never increased their rents in 8 years, because they have good relationships with their tenants. This would still guarantee a regular source of income for my landlord - whilst helping my family onto the security of the property ladder.. The question was not about what would you do if you were a landlord - but how would we move forward on this type of property sharing?

The_Earl_of_Streatham

What would happen under this arrangement if you wanted to move? Your landlord may be a decent sort but what if he can't or won't buy back your share and doesn't want to sell the property?

Buying a small proportion of somebody else's house, even if it's the house you're living in, is not a way of securing a place on the property ladder.

All the advantages fall to your landlord, you just get a very illiquid share in an asset that you are renting anyway.

Who pays for maintenance? The landlord can claim it against tax, you can't. Your landlord may be liable for capital gains tax if the place is sold. Where are you going to get the money to do this? It's unlikely to be a mortgageable proposition. The list of potential pitfalls is long and while you may be able to draw up a contract to cover them you may never be rich enough to go to court to enforce it. This is a business transaction, do not rely on someone being a good egg.

Use the money to save for a deposit on a house of your own.

Pixie5740

Do you have the cash to buy a share in the property as you won't be able to obtain a mortgage for a share on your own. The only way a mortgage would work is a joint mortgage with your landlord for the whole property owned as tenants in common.

HappyMJ

Does the landlord have a mortgage on this property? If he's had a property portfolio he should also have a BTL mortgage to reduce his tax bill. Landlord would have to pay that mortgage off in full as part of this transaction.