Buying house from Landlord - first and next steps

sluisdejesus

We have decided to buy the house we're living in from our landlord. They've known about this for the last couple of years and are in agreement (landlord is in his 80s and one of his sons does his best to manage it for him)

The house needs quite a lot of work - new electrics, plaster is crumbling in the walls, new carpets, new kitchen and bathroom, some repairs to windows etc. Basically it's a project house and if it was listed to rent through an agency it would not be accepted as we don't have any of the electrical certificates etc (we pay way below market rent so have never made a fuss)

What I'm wondering is what our next steps are, we're about 3 months away from being able to make a mortgage application now so want to get our ducks in a row. Do we get a survey so we can use this to negotiate price? Sweet talk a couple of estate agents to value?

Any advice will be much appreciated!

Alter_ego

Electrical certificates etc are not voluntary, they are legal requirements.

A survey/valuation would be a good first step

JellyphantCastle

I’m (hopefully) very near the end of this same process. We did a lot of research into the local market and got an idea of what we thought it might be valued at. We then agreed with LL that we would get an independent RICS valuer to come and value the property (we paid for the survey). It gave us the leverage to make an offer knowing it was fair for all parties. Then, when the mortgage app went in the lender had another valuation done which was exactly the same as our independent chap’s value. 

The local estate agents however advised it could reach a good £60k more on the open market than it was valued at. So, your LL might get the dollar signs in their eyes - at least by having an independent you don’t get caught up in the silliness and you can have a fair negotiation process. 

Not sure if you’re renting furnished or unfurnished but it’s worth considering any fixtures and fittings in the property that you would want to keep - this isn’t formalised until much further into the conveyancing process but worth you having it on your radar if you, like me, use this stuff on a daily basis and would expect to keep it if the house became yours. 

I have since learned that LL’s are often advised against selling with sitting tenants as they can be a nightmare to get rid off. The other major advantage (apart from saving on agency fees) is that there would be no loss in income, you would literally continue to rent until the point at which you purchase the house from them. 

Hope this helps and good luck! 

steampowered

You can get a reasonable idea of what the property might be worth by having a careful look at listings for similar size properties on Rightmove and Zoopla. Focus on square footage, location and condition of the property.

Independent valuation is a good idea - gives both you and the landlord confidence that an independent third party has valued the property.

I wouldn't go to estate agents. Not in your interest as a buyer to get an estate agent valuation. Most estate agents will value property for more than it is actually worth - to try and win business (some sellers will list with the agent that thinks they will achieve the highest price, so agents are incentivised to over value) and to provide room for negotiation (often people offer less than the asking price).

theoretica

I agree - it is worth getting a RICS valuer.  I don't know if you would be able to get a valuation that way that would be accepted by your mortgage lender - in Scotland many lenders use the home report value.  The question to consider, and maybe think about asking for two values, is that the value of the property would be different if it were empty.  As a tenanted property, especially a tenanted property that does not meet legal requirements, it would likely have a lower value.  Having both values on the table might be useful for negotiating - and demonstrates the financial value of selling to you, not trying to sell to someone else.

dimbo61

So No EICR

What is the EPC of the property as you talk about the windows need repairing !
New kitchen, New bathroom ? Plaster falling off the walls.
So the Landlord,s are breaking the law and if you reported it then any S21 eviction notice would fail and it could take many  months for the LL to evict you.
Please tell me you get a Gas Safe Certificate every year if you have gas ?

sluisdejesus

dimbo61 said:

So No EICR

What is the EPC of the property as you talk about the windows need repairing !
New kitchen, New bathroom ? Plaster falling off the walls.
So the Landlord,s are breaking the law and if you reported it then any S21 eviction notice would fail and it could take many  months for the LL to evict you.
Please tell me you get a Gas Safe Certificate every year if you have gas ?

Thanks, I was aware of the legislation but was not in a position to be able to move (we have been here 7 years and I our rent is now almost half the market equivalent) I'm now almost able to buy a property but I need to make sure it is the lower end of the market so this makes perfect sense.

PS. gas certificate has been kept up as I have a friend who is a gas engineer

sluisdejesus

JellyphantCastle said:

We then agreed with LL that we would get an independent RICS valuer to come and value the property (we paid for the survey). It gave us the leverage to make an offer knowing it was fair for all parties. Then, when the mortgage app went in the lender had another valuation done which was exactly the same as our independent chap’s value.

What level RICS survey did you go for in the end? I'm wondering if level 3 is overkill?JellyphantCastle said:

The local estate agents however advised it could reach a good £60k more on the open market than it was valued at. So, your LL might get the dollar signs in their eyes - at least by having an independent you don’t get caught up in the silliness and you can have a fair negotiation process. 

I'm not sure if it would go for a great price if it was listed to be fair, it needs a fair bit of investment to get it up to scratch even for an investor!

theoretica said:

The question to consider, and maybe think about asking for two values, is that the value of the property would be different if it were empty.  As a tenanted property, especially a tenanted property that does not meet legal requirements, it would likely have a lower value.  Having both values on the table might be useful for negotiating - and demonstrates the financial value of selling to you, not trying to sell to someone else.

Thanks, yes this is something that we'd considered before, the property is habitable but not rentable at any rate. The main people buying up houses here at the moment are investors and most just want to market it as soon as they the keys!steampowered said:

I wouldn't go to estate agents. Not in your interest as a buyer to get an estate agent valuation. Most estate agents will value property for more than it is actually worth - to try and win business (some sellers will list with the agent that thinks they will achieve the highest price, so agents are incentivised to over value) and to provide room for negotiation (often people offer less than the asking price).

Thanks, that's a very good point!

JellyphantCastle

sluisdejesus said:

JellyphantCastle said:

We then agreed with LL that we would get an independent RICS valuer to come and value the property (we paid for the survey). It gave us the leverage to make an offer knowing it was fair for all parties. Then, when the mortgage app went in the lender had another valuation done which was exactly the same as our independent chap’s value.

What level RICS survey did you go for in the end? I'm wondering if level 3 is overkill?JellyphantCastle said:

The local estate agents however advised it could reach a good £60k more on the open market than it was valued at. So, your LL might get the dollar signs in their eyes - at least by having an independent you don’t get caught up in the silliness and you can have a fair negotiation process. 

I went for a valuation only survey to begin with, and then much later down the line for my own peace of mind I had a level 2 done. I believe level 2 comes with the valuation option as an add-on so you could go for that, the company I used charge around £500 for this (level 2 plus value). 

If the house is very old and has lots of “quirks” you might benefit from a level 3 but I found the 2 to be enough assurance to confirm a lot of what I already suspected. From what you’ve said though regarding the condition and the compliance issues, be prepared for it all to look quite bleak on paper. 

theoretica

sluisdejesus said:

Thanks, yes this is something that we'd considered before, the property is habitable but not rentable at any rate. The main people buying up houses here at the moment are investors and most just want to market it as soon as they the keys!steampowered said:

Even more than that - a house which is 'not rentable' but currently rented is an extra liability.  Because the landlord needs to meet the legal requirements, but can't make the tenant leave.