Advice on buying the property I rent

alal211

Hello all.

I am currently renting a property that I have lived in with my partner for 3 and a half years and we have a 4 year tenancy agreement in place.
My landlord approached us back in November to give us a few options going forward as they are planning on relocating to Spain. The options she gave us are as follows:
1. Move out in September (when agreement is up) and she will sell the property
2. We purchase the property
3. She remortgages to take equity out of the house to support the relocation (may affect rent payments) but would require us to commit to renting for a few more years to make it worth while for her. (she would be selling her own house in England but would need money from her rented house for the renovations).
4. We get a mortgage on a certain percentage of the property, and in effect owe her the remaining and pay that after a fixed period (eg. we take out a mortgage at 60% value of the property and pay the remaining 40% to her after 5 years - I hope this makes sense). It is pretty much like 'Shared Ownership' but it would be jointly owned because us and the landlord and not an housing association.
Due to Covid-19, everything has come to a halt anyway so it's very unlikely anything would be happening in September but I just wanted to some advice - especially regarding option 4. I think it would be quite difficult to obtain a mortgage that is not for full ownership - especially because it's not a new build.
Unfortunately we are in no position to be able to purchase the property, so in our eyes the best option would be to go with option 3 even though it'll increase our rent. We love the house and definitely want to buy it, and we are prepared to commit to a few more years renting. She isn't pushing us but she has mentioned option 4 a good few times now and and I'm still not sure. If anyone has any advice it would be greatly appreciated!

Comms69

Youre biggest stumbling block is going to be that you basically dont own the property, and as such lenders arent going to touch it with a bargepole. 

Now if she's willing to give up interest in the property, IE sell to you on the cheap, with a personal loan to cover the rest, that might be possible. - however is the LL posted that here, i'd be explaining the pitfalls such as you could simply stop payments and this would be a long and protracted legal case with ultimately no guarantee of payment. 

[Deleted User]

alal211 said:

Hello all.

I am currently renting a property that I have lived in with my partner for 3 and a half years and we have a 4 year tenancy agreement in place.
My landlord approached us back in November to give us a few options going forward as they are planning on relocating to Spain. The options she gave us are as follows:
1. Move out in September (when agreement is up) and she will sell the property
2. We purchase the property
3. She remortgages to take equity out of the house to support the relocation (may affect rent payments) but would require us to commit to renting for a few more years to make it worth while for her. (she would be selling her own house in England but would need money from her rented house for the renovations).
4. We get a mortgage on a certain percentage of the property, and in effect owe her the remaining and pay that after a fixed period (eg. we take out a mortgage at 60% value of the property and pay the remaining 40% to her after 5 years - I hope this makes sense). It is pretty much like 'Shared Ownership' but it would be jointly owned because us and the landlord and not an housing association.
Due to Covid-19, everything has come to a halt anyway so it's very unlikely anything would be happening in September but I just wanted to some advice - especially regarding option 4. I think it would be quite difficult to obtain a mortgage that is not for full ownership - especially because it's not a new build.
Unfortunately we are in no position to be able to purchase the property, so in our eyes the best option would be to go with option 3 even though it'll increase our rent. We love the house and definitely want to buy it, and we are prepared to commit to a few more years renting. She isn't pushing us but she has mentioned option 4 a good few times now and and I'm still not sure. If anyone has any advice it would be greatly appreciated!

Option 4 is highly unlikely to be possible.  You can't get a mortgage to just buy a share of a property unless you're buying through HTB Shared Ownership, which you wouldn't be.

Option 3 isn't a given.  Just because your landlords costs increase it doesn't necessarily follow that your rent should increase.  Rent prices are set by the supply and demand of the rental market in your area, not the costs faced by your particular landlord.  Unless the rent you are paying now is significantly below the market rent for the area you can tell your landlord to jog on if she tries to increase the rent.  Maybe that will result in a Section 21 being issued, maybe it won't.  Your landlord would have to weigh up the pros and cons of increasing the rent versus a potential void.

Option 1, just because your fixed term end in September it doesn't mean you have to move out.  A tenancy can only be ended by the tenant or a court.  To legally evict your landlord would need to serve valid notice, which can't end before your fixed term, and then go to court for a possession order.  Courts aren't processing possession orders now during the pandemic and who knows when that will change or how much of a backlog there will be.

Option 3, how short are you for buying it yourself?  Would your landlord be willing to offer a bit of a discount since she could avoid estate agent fees and a void?  Then you could do a concessionary purchase and use the discount towards the deposit, I think there's at least one lender who will allow this.

alal211

Lover_of_Lycra said:

alal211 said:

Hello all.

I am currently renting a property that I have lived in with my partner for 3 and a half years and we have a 4 year tenancy agreement in place.
My landlord approached us back in November to give us a few options going forward as they are planning on relocating to Spain. The options she gave us are as follows:
1. Move out in September (when agreement is up) and she will sell the property
2. We purchase the property
3. She remortgages to take equity out of the house to support the relocation (may affect rent payments) but would require us to commit to renting for a few more years to make it worth while for her. (she would be selling her own house in England but would need money from her rented house for the renovations).
4. We get a mortgage on a certain percentage of the property, and in effect owe her the remaining and pay that after a fixed period (eg. we take out a mortgage at 60% value of the property and pay the remaining 40% to her after 5 years - I hope this makes sense). It is pretty much like 'Shared Ownership' but it would be jointly owned because us and the landlord and not an housing association.
Due to Covid-19, everything has come to a halt anyway so it's very unlikely anything would be happening in September but I just wanted to some advice - especially regarding option 4. I think it would be quite difficult to obtain a mortgage that is not for full ownership - especially because it's not a new build.
Unfortunately we are in no position to be able to purchase the property, so in our eyes the best option would be to go with option 3 even though it'll increase our rent. We love the house and definitely want to buy it, and we are prepared to commit to a few more years renting. She isn't pushing us but she has mentioned option 4 a good few times now and and I'm still not sure. If anyone has any advice it would be greatly appreciated!

Option 4 is highly unlikely to be possible.  You can't get a mortgage to just buy a share of a property unless you're buying through HTB Shared Ownership, which you wouldn't be.

Option 3 isn't a given.  Just because your landlords costs increase it doesn't necessarily follow that your rent should increase.  Rent prices are set by the supply and demand of the rental market in your area, not the costs faced by your particular landlord.  Unless the rent you are paying now is significantly below the market rent for the area you can tell your landlord to jog on if she tries to increase the rent.  Maybe that will result in a Section 21 being issued, maybe it won't.  Your landlord would have to weigh up the pros and cons of increasing the rent versus a potential void.

Option 1, just because your fixed term end in September it doesn't mean you have to move out.  A tenancy can only be ended by the tenant or a court.  To legally evict your landlord would need to serve valid notice, which can't end before your fixed term, and then go to court for a possession order.  Courts aren't processing possession orders now during the pandemic and who knows when that will change or how much of a backlog there will be.

Option 3, how short are you for buying it yourself?  Would your landlord be willing to offer a bit of a discount since she could avoid estate agent fees and a void?  Then you could do a concessionary purchase and use the discount towards the deposit, I think there's at least one lender who will allow this.

Thank you for your response!
We haven't had our rent increased in the time we've lived here, but doing a bit of research it looks like it may potentially increase slightly to be in line with others in the area. This wouldn't be a problem for us.

I did think Option 4 was probably a no-go, and to be honest I was very wary of it any way.
I think it all really depends on the value of the property and cost of renovations to the house they're looking to purchase in Spain. I know they did have one lined up but fell through because of the current pandemic. Unfortunately we realistically would have less than 5% of what we think the house is worth saved. I do know if nothing drastic happens over the next couple of years we will comfortably able to save what we need for a deposit/fees so Option 3 is our best bet.

Thanks again

davidmcn

As above, "shared ownership" only works for the types of landlords which offer it, because they enter into an agreement with the lender about what happens if either of them wants to repossess. It doesn't work for anybody else (which is why you'll never have heard of anybody else doing it!).