Would you complete and pay rent to your buyer whilst waiting for complete on new house?

zonifer

Our seller is buying a new build which has almost finished being built and all hopefully for January. However they are pressuring him to do a long stop completion, so exchange but put mid March as completion incase something happens to slow it down.

Our buyer can't get their mortgage extended further past beginning Dec. They are buying our house as a buy to let. It has been suggested to us that we could exchange with our buyer and seller and also complete with our buyer but stay in our house and rent from him in a 'gentleman's agreement' until our seller is ready to complete. Apparently our seller is not in a position to move into rented. Is this feasible? Sensible? Stupid? We would exchange on both sides first before doing so.

Mojisola

zonifer said:

It has been suggested to us that we could exchange with our buyer and seller and also complete with our buyer but stay in our house and rent from him in a 'gentleman's agreement' until our seller is ready to complete.

It's very likely that his solicitor will say not to do this.

zonifer

Oh really why is that? It was suggested to us by him and our estate agent. It is a buy to let mortgage he is getting. 

Slithery

A good idea for you, yes. But a terrible idea for your buyer. Their solicitor will advise them not to.

zonifer

Slithery said:

A good idea for you, yes. But a terrible idea for your buyer. Their solicitor will advise them not to.

Even if we have all exchanged in the chain?

davidmcn

Almost certainly impossible for anybody buying with a mortgage anyway. The lender will want vacant possession at the start - and then proper tenancy agreements, not "gentlemen's" ones.

luvchocolate

When we were buying from someone who was having a delayed new build..we went ahead with our sale...moved into rented and it was arranged through solicitors that our seller would pay the rent on our temporary house until their house was ready. 
Worked for us as we stayed an extra month to get decorating done 

greatcrested

As your buyer is a BTL investor I disagree with the comments above. He will be getting a BTL mortgage.

Providing he is willing to take you on as tenants it seems to solve the problem all round.

However

* forget 'gentleman's agreement' - make sure you have a tenancy agreement

* ensure that the TA clearly states terms eg rent, utilities etc

* ensure that fixtures and fittings and furnishings are clearly designated as yours, (unless you are selling them to him as part of his purchase)

* your tenancy needs to be flexible (ie NOT a 12 month fixed term!) so that you can leave when ready. I would suggest a Monthly Contractual Periodic Tenancy, so no fixed term at all.

* the CPT should specify what notice is required to end it. I suggest 1 contractual period by the tenant (ie a month ending with a period, so depending when notice is served it could be up to 7 weeks) Or you could even request the TA says 2 calender weeks - if so, ensure the TA also states rent due is pro rata (so that if you've just paid a month in advance and then serve 2 weeks notice, you get 2 weeks refunded.)

zonifer

greatcrested said:

As your buyer is a BTL investor I disagree with the comments above. He will be getting a BTL mortgage.

Providing he is willing to take you on as tenants it seems to solve the problem all round.

However

* forget 'gentleman's agreement' - make sure you have a tenancy agreement

* ensure that the TA clearly states terms eg rent, utilities etc

* ensure that fixtures and fittings and furnishings are clearly designated as yours, (unless you are selling them to him as part of his purchase)

* your tenancy needs to be flexible (ie NOT a 12 month fixed term!) so that you can leave when ready. I would suggest a Monthly Contractual Periodic Tenancy, so no fixed term at all.

* the CPT should specify what notice is required to end it. I suggest 1 contractual period by the tenant (ie a month ending with a period, so depending when notice is served it could be up to 7 weeks) Or you could even request the TA says 2 calender weeks - if so, ensure the TA also states rent due is pro rata (so that if you've just paid a month in advance and then serve 2 weeks notice, you get 2 weeks refunded.)

Thanks for that - very informative. I was just worried that if we complete with the buyer but not the seller, then worst case scenario we end up homeless if they pull out but if we all exchange together then I'm assuming that would be very unlikely? Thanks 

davidmcn

zonifer said:

greatcrested said:

As your buyer is a BTL investor I disagree with the comments above. He will be getting a BTL mortgage.

Providing he is willing to take you on as tenants it seems to solve the problem all round.

However

* forget 'gentleman's agreement' - make sure you have a tenancy agreement

* ensure that the TA clearly states terms eg rent, utilities etc

* ensure that fixtures and fittings and furnishings are clearly designated as yours, (unless you are selling them to him as part of his purchase)

* your tenancy needs to be flexible (ie NOT a 12 month fixed term!) so that you can leave when ready. I would suggest a Monthly Contractual Periodic Tenancy, so no fixed term at all.

* the CPT should specify what notice is required to end it. I suggest 1 contractual period by the tenant (ie a month ending with a period, so depending when notice is served it could be up to 7 weeks) Or you could even request the TA says 2 calender weeks - if so, ensure the TA also states rent due is pro rata (so that if you've just paid a month in advance and then serve 2 weeks notice, you get 2 weeks refunded.)

Thanks for that - very informative. I was just worried that if we complete with the buyer but not the seller, then worst case scenario we end up homeless if they pull out but if we all exchange together then I'm assuming that would be very unlikely? Thanks 

You'll have somewhere to live under the terms of whatever tenancy agreement you sign up to. Though I suspect once your buyer realises how difficult it will be to kick you out at short notice in favour of a more profitable tenant, they may well change their mind about the idea.

ameliarate

zonifer said:

greatcrested said:

As your buyer is a BTL investor I disagree with the comments above. He will be getting a BTL mortgage.

Providing he is willing to take you on as tenants it seems to solve the problem all round.

However

* forget 'gentleman's agreement' - make sure you have a tenancy agreement

* ensure that the TA clearly states terms eg rent, utilities etc

* ensure that fixtures and fittings and furnishings are clearly designated as yours, (unless you are selling them to him as part of his purchase)

* your tenancy needs to be flexible (ie NOT a 12 month fixed term!) so that you can leave when ready. I would suggest a Monthly Contractual Periodic Tenancy, so no fixed term at all.

* the CPT should specify what notice is required to end it. I suggest 1 contractual period by the tenant (ie a month ending with a period, so depending when notice is served it could be up to 7 weeks) Or you could even request the TA says 2 calender weeks - if so, ensure the TA also states rent due is pro rata (so that if you've just paid a month in advance and then serve 2 weeks notice, you get 2 weeks refunded.)

Thanks for that - very informative. I was just worried that if we complete with the buyer but not the seller, then worst case scenario we end up homeless if they pull out but if we all exchange together then I'm assuming that would be very unlikely? Thanks 

If you have exchanged and have a proper tenancy agreement I dont see a major problem. I know friends who have done this