Selling house to our tenants

luckypotato

Hi all and thanks in advance to any advice given.

My partner and I currently own a house which we lived in for three years. My partner was offered a job elsewhere in the country so we decided to rent out the house we owned whilst renting another property three hours away (where the new job was.) This was August '16. The twelve month tenancy is up in August '17. We obtained a consent to let from our mortgage company in order to do this.

Our tenants are great - always pay on time, when we have inspected the property they have kept it well and made it a home. We decided that we love the new area in which we live and will be selling up. We offered first dibs to our tenants on the off chance they may wish to buy and they do. We have agreed a price and they are in the process of getting a mortgage (shouldn't be an issue.)

We are keen to get the ball rolling now and would like it completed before the end of the tenancy. I have served notice (legal boxes ticked) anyway. Tenants are ok with this.

We have never sold a house, let alone to tenants. Is there anything we should be aware of or watch out for? We do have to pay a small EPC which is fine. We do not have estate agents as this will be a direct sale. Will this cause any issues? And finally how quickly can a house sale be completed?

Many thanks.

AdrianC

The EPC that you got when you bought it should still be valid, both for the tenancy and for the sale - they're valid for ten years.

The sale can be completed as quickly as the legals and their mortgage can do all the paperwork.

G_M

1) the fact you are selling to tenants makes no difference.

2) agree a price

3) either do the conveyancing yourself or instruct a solicitor if you prefer

4) you may have a Capital Gains Tax liability as it's not your main home

5) the time it takes will depend primarily on whether the buyers need a mortgage & how long that takes, along with other legal searches etc. Between 1 & 5 months?

6) you probably already have an EPC - needed by law for letting the property. Is it still in date(10 years)?

7) no estate agent? That should make communication easier- no middleman to play Chinese whispers!

kingstreet

We do have to pay a small EPC which is fine.

Likely the OP means ERC/ERP on mortgage repayment, not EPC.

luckypotato

Thanks

Yes - EPC is still valid. We will instruct a solicitor but good to know that not having an estate agent is no bad thing.

As for CGT, I am hoping there is an 18 month exemption? We will have rented it out for the final 12 months of our ownership so hopefully will not be liable for CGT. Please let me know if I am way off the mark here - I utilise google as my source of info only at the moment!

luckypotato

Yes meant ERC on mortgage. Thanks for clarifying @kingstreet.

franklee

luckypotato wrote: »

We do not have estate agents as this will be a direct sale.

Did you use a letting agent? If so check the contract in case it says they are due a fee if selling to tenants they found.

Also it's the usual selling stuff. Make sure you have all the paperwork ready if you did anything that requires it, new windows, boiler etc. You will have to fill in forms about the property so worth collecting that info and certificates if any. It may be the tenants are happy to cut corners as they know the property but their mortgage lender will likely want all the usual boxes officially ticked.

Maybe worth asking your solicitor how long the local searches take in some areas this can be quite slow so probably worth knowing.

Guest101

Who told you to serve notice? Just curious as there's absolutely no need in this case.

DumbMuscle

Guest101 wrote: »

Who told you to serve notice? Just curious as there's absolutely no need in this case.

Not only is there no need, but surely it's an actively bad idea? If there's a delay in the sale, then you could end up in a situation where the tenancy has ended before the sale completes. Not serving notice would just lead to a situation where the tenants are renting to themselves, which is simple to resolve.

You need a solicitor, the tenants will need a solicitor (can't use the same one due to conflicts of interest). Get them instructed ASAP and get the ball rolling on their searches.

Is there anything on the inventory you provided when renting the property that will not come with the house when it's sold? If so, make sure to let the tenants know (otherwise this might cause delays later due to negotiations).

If they are planning to get a survey, this is also worth doing quickly (to allow time to negotiate around any issues) - but given that they've been living there for a year, they might well skip that.

Celesse

We are currently buying from our Landlord.
We got DIP, agreed price, instructed solicitors. Currently we are 2 months in, just sending our deed for mortgage signed and back to solicitors today so almost ready to complete.

As far as I can tell its been pretty much the same process as if we had bought a house we weren't living in. Only difference is we don't have to move at the end of it.

We haven't been served notice or anything, we will mutually end the tenancy agreement on the day we complete.

Guest101

Celesse wrote: »

We are currently buying from our Landlord.
We got DIP, agreed price, instructed solicitors. Currently we are 2 months in, just sending our deed for mortgage signed and back to solicitors today so almost ready to complete.

As far as I can tell its been pretty much the same process as if we had bought a house we weren't living in. Only difference is we don't have to move at the end of it.

We haven't been served notice or anything, we will mutually end the tenancy agreement on the day we complete.

Even that is not necessary, you become your own landlords and just end it. I mean you can do as you suggest, but I wouldn't panic about it.