House swap advice needed

MsWils

We moved into a rental house in order to do a full renovation on our house. While in our rental we met a lovely elderly couple living next door. The rental is in a better area for us next to our sons school. The elderly couple suggested that we could buy their house off market as they want to move into sheltered accommodation as the house has become too much for them despite them being the fittest 80 odd year olds I've ever come across. We really want this house and our house that we are renovating is much smaller so we would like to figure out a fair way to make a deal for them and us.  

The old couple want to sell their house to get a lump sum to live off and also help their family. 
Their house is worth more than ours even though it needs modernising. We have paid for a valuation survey and all sides are ok with the result. Our house we would like to keep long term as its in a very popular and we would like to rent it out and we have no pension. We already have a limited company and thought the company could buy the house from us. Our house is a very unique property over looking the river and green and close to the city centre. The market rental value is too high for the old couple to afford. 

Is there some sort of deal to be done that would benefit all sides? What sort of professional could help us with this? 

MsWils

**** I realised I didn't add that they suggested while they wait for a suitable sheltered accommodation to become available they would like to stay in our house that we are renovating. Which is the main part of the question!

theartfullodger

What makes you think renting a property out will give you an income to compensate for not having a pension?  

What training or experience do you have of being a landlord, please?

Which country are you in please?? (eg Wales, NI).  The laws can be different.

What assets does the company have that it would use to buy a property please?  What is the company currently used for?

Do you have the financial AND emotional reserves to cope with the tenant-from-hell (or agent-from-hell)? 

Artful: Landlord since 2000.

TBagpuss

This sounds very complicated.

You buying their house is fairly simple, assuming you can get a mortgage.
Your selling your current property your limited company also a fairly simple conveyancing transaction,.
Your limited company becoming a landlord - obviously you (as directors) need to make sure that you are up to speed with the responsibilities of landlords, and equally, if your current neighbours were going to be your tenants then you'd need to finish the renovations firs.

I am not clear why they would move into your property first, rather than simply timing the sales to take place once they have found their permanent accommodation? Or are they saying that they feel your property would be more manageable than their so they would rent for a while before moving again to sheltered accommodation.

IF the idea is that they would sell you their house at a reduced price in return for you renting yours (the company's) to them at a lower-than-market rent then I am sure it would be possible, but everyone would need to get proper advice, they would presumably want some sort of guarantees about the length of their tenancy / no further rent rises. I think the fact that one half of the deal would be with you and one half with the company adds another layer of complication, it's likely it would make more sense for you to pay them full value for the house and then to then use some of the capital to pay full market rent for yours.
Can you be clearer about what the actual plan would be abd what sot of 'deal' you envision? 

sheramber

They might like your ( company's)  house too much to move out.

MsWils

theartfullodger said:

What makes you think renting a property out will give you an income to compensate for not having a pension?  

Because, we would pay off the mortgage and then sell the house when we need to later. 

What training or experience do you have of being a landlord, please?

What training or experience does anyone have with their first rental? Id imagine you need to start somewhere. 

Which country are you in please?? (eg Wales, NI).  The laws can be different.

England

What assets does the company have that it would use to buy a property please?  What is the company currently used for?
It has profit which can be reinvested. 

Do you have the financial AND emotional reserves to cope with the tenant-from-hell (or agent-from-hell)? 

It's an excellent property near a university. Once the old couple have found their permanent home we would look to do a furnished rental or possibly holiday rental. We set up and run a company from scratch, starting out working life as a cleaner and fast food worker. I think we'll be ok. 

Artful: Landlord since 2000.

What makes you think renting a property out will give you an income to compensate for not having a pension?  

Because, we would pay off the mortgage and then sell the house when we need to later. 

What training or experience do you have of being a landlord, please?

What training or experience does anyone have with their first rental? Id imagine you need to start somewhere. 

Which country are you in please?? (eg Wales, NI).  The laws can be different.

England

What assets does the company have that it would use to buy a property please?  What is the company currently used for?
It has profit which can be reinvested. 

Do you have the financial AND emotional reserves to cope with the tenant-from-hell (or agent-from-hell)? 

It's an excellent property near a university. Once the old couple have found their permanent home we would look to do a furnished rental or possibly holiday rental. We set up and run a company from scratch, starting out working life as a cleaner and fast food worker. I think we'll be ok. 

EssexHebridean

Can I suggest just having a read through the thread Jillconey currently has running near the top of the board before you make your minds up that life as a landlord is right for you? It's as well to hear the worst that can happen... 

MsWils

TBagpuss said:

This sounds very complicated.

You buying their house is fairly simple, assuming you can get a mortgage.
Your selling your current property your limited company also a fairly simple conveyancing transaction,.
Your limited company becoming a landlord - obviously you (as directors) need to make sure that you are up to speed with the responsibilities of landlords, and equally, if your current neighbours were going to be your tenants then you'd need to finish the renovations firs.

I am not clear why they would move into your property first, rather than simply timing the sales to take place once they have found their permanent accommodation? Or are they saying that they feel your property would be more manageable than their so they would rent for a while before moving again to sheltered accommodation.

IF the idea is that they would sell you their house at a reduced price in return for you renting yours (the company's) to them at a lower-than-market rent then I am sure it would be possible, but everyone would need to get proper advice, they would presumably want some sort of guarantees about the length of their tenancy / no further rent rises. I think the fact that one half of the deal would be with you and one half with the company adds another layer of complication, it's likely it would make more sense for you to pay them full value for the house and then to then use some of the capital to pay full market rent for yours.
Can you be clearer about what the actual plan would be abd what sot of 'deal' you envision? 

They have 2 over 55 properties they are waiting for a flat to come up in. They are on the waiting lists. They are worried being 84 that they need to get rid of the big house as soon as possible. They want in walking distance of city centre to continue their usual routine. I would love to just let them move in and not worry about rent but being owned by the business this wouldn't be possible or fair to us anyway. It's they that are suggesting take the rental into account for the asking price but I can't get my head around it. The agreed price for their house is reasonable already and Im sure if they wanted to put it on the market they may get some more for it - which we have told them. But they are happy to go with the valuation survey result. So I'm reluctant to ask them to take more off the asking price. 

MEM62

MsWils said:

What makes you think renting a property out will give you an income to compensate for not having a pension?  

Because, we would pay off the mortgage and then sell the house when we need to later.

Property is no substitute for a pension as you primary retirement planning.  It is high risk and nowhere near tax-efficient.  (And you can expect future governments to hit small time landlords in the pocket even more)     

What training or experience do you have of being a landlord, please?

What training or experience does anyone have with their first rental? Id imagine you need to start somewhere. 

You need a lot.  You are running a business that has a lot of regulation - not all of it landlord friendly.  You can do it properly and above-board and still take a financial kicking.  For example do you know that, as a landlord, you cannot terminate a tenancy?      

Which country are you in please?? (eg Wales, NI).  The laws can be different.

England

What assets does the company have that it would use to buy a property please?  What is the company currently used for?
It has profit which can be reinvested. 

Do you have the financial AND emotional reserves to cope with the tenant-from-hell (or agent-from-hell)? 

It's an excellent property near a university. Once the old couple have found their permanent home we would look to do a furnished rental or possibly holiday rental. We set up and run a company from scratch, starting out working life as a cleaner and fast food worker. I think we'll be ok.

And thinking that may just be your downfall.   

@MsWils Just to give you some perspective.    

TBagpuss

MsWils said:

TBagpuss said:

This sounds very complicated.

You buying their house is fairly simple, assuming you can get a mortgage.
Your selling your current property your limited company also a fairly simple conveyancing transaction,.
Your limited company becoming a landlord - obviously you (as directors) need to make sure that you are up to speed with the responsibilities of landlords, and equally, if your current neighbours were going to be your tenants then you'd need to finish the renovations firs.

I am not clear why they would move into your property first, rather than simply timing the sales to take place once they have found their permanent accommodation? Or are they saying that they feel your property would be more manageable than their so they would rent for a while before moving again to sheltered accommodation.

IF the idea is that they would sell you their house at a reduced price in return for you renting yours (the company's) to them at a lower-than-market rent then I am sure it would be possible, but everyone would need to get proper advice, they would presumably want some sort of guarantees about the length of their tenancy / no further rent rises. I think the fact that one half of the deal would be with you and one half with the company adds another layer of complication, it's likely it would make more sense for you to pay them full value for the house and then to then use some of the capital to pay full market rent for yours.
Can you be clearer about what the actual plan would be abd what sot of 'deal' you envision? 

They have 2 over 55 properties they are waiting for a flat to come up in. They are on the waiting lists. They are worried being 84 that they need to get rid of the big house as soon as possible. They want in walking distance of city centre to continue their usual routine. I would love to just let them move in and not worry about rent but being owned by the business this wouldn't be possible or fair to us anyway. It's they that are suggesting take the rental into account for the asking price but I can't get my head around it. The agreed price for their house is reasonable already and Im sure if they wanted to put it on the market they may get some more for it - which we have told them. But they are happy to go with the valuation survey result. So I'm reluctant to ask them to take more off the asking price. 

I wasn't suggesting that you ask them to take more off, I was asking what they are suggesting in relation to the rent? You seem to be aying that they can't afford the market rent (but presumably if they have just been paid a big chuck of capital for their house they could use some of that, unless they expect to need all of it to buy a property) and that if the plan is that you'd charge them rent ut at a below market rent you would presumably want some end date to that. 

Practically anything ids possible but you need to be clear about specifically they are proposing.

It wouldn't be hard to agree that for instance) market rent for your places £1500 a month but you will rent it to them at £1,000 with  provision that you cannot raise the rent within the first 6 months, for example, (so you would effectively be giving them a £3,000 discount over six months)  BUT the key point is that you need to be clear on the specifics of what they are suggesting and then you and they and the company will all need to take your own separate legal advice.

You/the company also need to be very sure that you are aware of any fully compliant with the responsibilities of being a landlord and. There is also the issue that the company would potentially be giving them a good deal on rental in return for you getting good deal on the house - if you are the only owners and shareholders in the company that probably isn't a massive issue although you'd want to run it by your accountant / tax advisor, but would be massive issue if there are any other shareholders.

It may be much more straightforward for you to pay a bit more for their house and for them to use that extra to cover the rent , as tha avoids messing about with the difference beteeen the comapny and you as individuals.

MsWils

MEM62 said:

MsWils said:

What makes you think renting a property out will give you an income to compensate for not having a pension?  

Because, we would pay off the mortgage and then sell the house when we need to later.

Property is no substitute for a pension as you primary retirement planning.  It is high risk and nowhere near tax-efficient.  (And you can expect future governments to hit small time landlords in the pocket even more)     

What training or experience do you have of being a landlord, please?

What training or experience does anyone have with their first rental? Id imagine you need to start somewhere. 

You need a lot.  You are running a business that has a lot of regulation - not all of it landlord friendly.  You can do it properly and above-board and still take a financial kicking.  For example do you know that, as a landlord, you cannot terminate a tenancy?      

Which country are you in please?? (eg Wales, NI).  The laws can be different.

England

What assets does the company have that it would use to buy a property please?  What is the company currently used for?
It has profit which can be reinvested. 

Do you have the financial AND emotional reserves to cope with the tenant-from-hell (or agent-from-hell)? 

It's an excellent property near a university. Once the old couple have found their permanent home we would look to do a furnished rental or possibly holiday rental. We set up and run a company from scratch, starting out working life as a cleaner and fast food worker. I think we'll be ok.

And thinking that may just be your downfall.   

@MsWils Just to give you some perspective.    

Yes I didn't ask advice about being a landlord. I asked the question I asked. We have an accountant and are aware of the tax implications. Im not sure why you think we haven't thought through being a landlord. My father owns 8 properties and Im well aware of possible problems and pitfalls. Again, it wasn't my question. However, given that you don't know the property, you don't know our personal circumstances or its kinda annoying when people just come on forums to get a kick out of being negative nancies.