Selling house to buyers, offered me to rent back

Abrown057

I am in the process of selling my house due to moving abroad in the next 6 months. As I don’t have an exact date for my overseas move I was planning on moving into short term rented accommodation however my buyers have offered to rent my home back to me for 6 months at a discounted rate. This obviously is of interest to me as it will save me the hassle of moving twice as I can stay at the property in the short term.

Im really just wondering what if any risks there were to this for me and the buyer. Is there any type of regulations as I feel it could abused by both parties, i.e early eviction If they find more long term tenants or anything that protects me as the previous homeowner?

Just want to be fully informed 

JGB1955

Don't even consider it, unless you always hankered after being a landlord.  Do you have a mortgage?  If so, is it's likely to be a no-go anyway.

Abrown057

JGB1955 said:

Don't even consider it, unless you always hankered after being a landlord.  Do you have a mortgage?  If so, is it's likely to be a no-go anyway.

Yes I have a mortgage on the property which would be paid off when I sell, however I wouldn’t be the landlord? I am the person selling the house so would be the new tenant.

Schwarzwald

JGB1955 said:

Don't even consider it, unless you always hankered after being a landlord.  Do you have a mortgage?  If so, is it's likely to be a no-go anyway.

He wouldnt become a LL, would become a tenant.

Slinky

The risk is on them, that they've bought a house with a sitting tenant who refuses to leave, trashes the place and doesn't pay rent. Are they buying with a mortgage? It's unlikely their mortgage company would allow this arrangement if they knew about it.

Abrown057

Sorry probably should have mentioned the new buyers have a buy to let mortgage agreed as that is their long term plan for the property. 

BarelySentientAI

Doesn't "sell and rent back" need to be done to an FCA-authorised company, not a private buyer?

Abrown057

BarelySentientAI said:

Doesn't "sell and rent back" need to be done to an FCA-authorised company, not a private buyer?

It would be completed as 2 separate transactions. I would sell them the house correctly and then only we had completed, we would then both sign the 6 month tenancy agreement. 

Olinda99

I personally can't see any problem with this if they are going to let the place out they might as well let it to you

the only practicality is that you would have to give them vacant possession when you sell it - that means probably giving them the keys, spending a night in a hotel or wherever and then moving back in the next day as a tenant

RHemmings

I did a bit of search on this, but the results are swamped by commerical sell and rent back companies. 

This page is the closest I found. And it's not good - it's about renting to family, mainly parents. It includes the situation whereby someone buys their parents' home and rents it back to them, and the advice given is that this is possible. https://www.thepropertysourcingcompany.co.uk/buy-to-let/rent-out-to-my-parents/  But, this is far from conclusive information that the scheme described in the OP is OK.

Buying my parents house and renting it back to them

Yes, you can. But when you purchase the property, you will need to make your lender aware that the property will be rented to a family member. As we have already mentioned, renting to a family member can be viewed as high risk and failing to inform your lender may be viewed as mortgage fraud. 

If you plan to purchase your parent’s house outright and rent it back to them then you will not need to inform a lender. However, you may need to pay stamp duty land tax, capital gains tax, and income tax, so you will need to become familiar with the different taxes you may be liable for. 

The main issue raised is renting to family, but this doesn't apply in the situation described in this thread.

If it is OK, it seems to me that it's the buyers who are taking the biggest risk, not the OP. And, if both buyer and OP/seller are reasonable people this could work out for both. 

EDIT: 'Sale-leaseback' appears to be different from what is described in the OP as it's one transaction. 

https://www.marketplacehomes.com/blog/real-estate-education/leaseback-definition-what-is-it/

But, it might be possible to do a single sale-leaseback. I can't see anything saying that the buyer has to be a company. But, it's not started explicitly that the buyer can be a private individual. 

SarahB16

RHemmings said:

I did a bit of search on this, but the results are swamped by commerical sell and rent back companies. 

This page is the closest I found. And it's not good - it's about renting to family, mainly parents. It includes the situation whereby someone buys their parents' home and rents it back to them, and the advice given is that this is possible. https://www.thepropertysourcingcompany.co.uk/buy-to-let/rent-out-to-my-parents/  But, this is far from conclusive information that the scheme described in the OP is OK.

Buying my parents house and renting it back to them

Yes, you can. But when you purchase the property, you will need to make your lender aware that the property will be rented to a family member. As we have already mentioned, renting to a family member can be viewed as high risk and failing to inform your lender may be viewed as mortgage fraud. 

If you plan to purchase your parent’s house outright and rent it back to them then you will not need to inform a lender. However, you may need to pay stamp duty land tax, capital gains tax, and income tax, so you will need to become familiar with the different taxes you may be liable for. 

The main issue raised is renting to family, but this doesn't apply in the situation described in this thread.

If it is OK, it seems to me that it's the buyers who are taking the biggest risk, not the OP. And, if both buyer and OP/seller are reasonable people this could work out for both. 

That is my opinion too (highlighted in bold).  If I was the OP I would take up this offer from the buyers.