If you were a tenant would you do this

ChirpyChicken

I have rented a house out to someone ive known for many years and helped out his family .he has rented the house for 18 months 
To help him i am thinking of offering him the option to buy the house 
He has paid anout 10k in rent so far
Ive told him I want 80k in rent for the house plus as he is not taking out a mortgage in order to get the house an additional payment of £65 per month on top of the rent at £600 a month 

Ive said i want 80k for the house  which would allow for modest growth in house prices in this area

The £65 would be a token interest payment to further my return in lieu of them taking any form of mortgage.

On completion of the 80k payment i have said I would transfer the house title and and thus all beneficial interest to him

He would have to stay in the house for the full term in order to get the house and no payments would be refundable if he moved etc

If however I died the house would be left to him ( or his son in trust )

In addition whilst I would carry out any works within the agreement he would have to agree to pay for upkeep and works

Now if you were good friends with your landlord and knew them well would you go for this?

This really isnt a question about this 'agreement'  from my angle as the property owner  as I understand what I am doing and can afford to do so its more from the person renting 

Thoughts please. Happy for any constructive criticism!

RedFraggle

No I wouldn't as private "rent to buy" is legally complex. 
My questions would be:
On what basis have you arrived at £80k?
What is the current value (sold prices not advertised prices) 
What happens if I change my mind due to change of circumstances including downturn in area, property price fall, bad neighbours.

There's little protection on a private rent to buy. If it was something I wanted I'd go through and official scheme. 

Emmia

ChirpyChicken said:

I have rented a house out to someone ive known for many years and helped out his family .he has rented the house for 18 months 
To help him i am thinking of offering him the option to buy the house 
He has paid anout 10k in rent so far
Ive told him I want 80k in rent for the house plus as he is not taking out a mortgage in order to get the house an additional payment of £65 per month on top of the rent at £600 a month 

Ive said i want 80k for the house  which would allow for modest growth in house prices in this area

The £65 would be a token interest payment to further my return in lieu of them taking any form of mortgage.

On completion of the 80k payment i have said I would transfer the house title and and thus all beneficial interest to him

He would have to stay in the house for the full term in order to get the house and no payments would be refundable if he moved etc

If however I died the house would be left to him ( or his son in trust )

In addition whilst I would carry out any works within the agreement he would have to agree to pay for upkeep and works

Now if you were good friends with your landlord and knew them well would you go for this?

This really isnt a question about this 'agreement'  from my angle as the property owner  as I understand what I am doing and can afford to do so its more from the person renting 

Thoughts please. Happy for any constructive criticism!

What happens if he stops paying? 

Personally if you want to sell the house to him, do so in the usual manner where he pays you the purchase price, and takes out a mortgage to do so.

ChirpyChicken

RedFraggle said:

No I wouldn't as private "rent to buy" is legally complex. 
My questions would be:
On what basis have you arrived at £80k?
What is the current value (sold prices not advertised prices) 
What happens if I change my mind due to change of circumstances including downturn in area, property price fall, bad neighbours.

There's little protection on a private rent to buy. If it was something I wanted I'd go through and official scheme. 

Current value is around the 72k mark
The agreement would be a full payment in order to secure the property.  It would be spelt out in black and white . 

ChirpyChicken

Emmia said:

ChirpyChicken said:

I have rented a house out to someone ive known for many years and helped out his family .he has rented the house for 18 months 
To help him i am thinking of offering him the option to buy the house 
He has paid anout 10k in rent so far
Ive told him I want 80k in rent for the house plus as he is not taking out a mortgage in order to get the house an additional payment of £65 per month on top of the rent at £600 a month 

Ive said i want 80k for the house  which would allow for modest growth in house prices in this area

The £65 would be a token interest payment to further my return in lieu of them taking any form of mortgage.

On completion of the 80k payment i have said I would transfer the house title and and thus all beneficial interest to him

He would have to stay in the house for the full term in order to get the house and no payments would be refundable if he moved etc

If however I died the house would be left to him ( or his son in trust )

In addition whilst I would carry out any works within the agreement he would have to agree to pay for upkeep and works

Now if you were good friends with your landlord and knew them well would you go for this?

This really isnt a question about this 'agreement'  from my angle as the property owner  as I understand what I am doing and can afford to do so its more from the person renting 

Thoughts please. Happy for any constructive criticism!

What happens if he stops paying? 

Personally if you want to sell the house to him, do so in the usual manner where he pays you the purchase price, and takes out a mortgage to do so.

The agreement would be full payment as part payment would negate the outcome 
He is unfortunately not the sort of person to be able to do that nor would he ever likely to be
I see this as an opportunity to give him that chance of ownership

user1977

As tenant I would want a security over the property to ensure you keep to your side of the deal (otherwise what's to stop you selling the property to a landlord who isn't a party to this option agreement).

Also, why am I paying for repairs while you're still collecting rent?

Why nothing refundable if I have to move, die etc?

molerat

Absolute madness from both points of view.

Who is responsible / pays for repairs, landlord responsibilities and insurance ?

What happens if one of you changes your mind ?

What happens if the house burns down ?

Either do it properly or don't do it at all.

ChirpyChicken

molerat said:

Absolute madness from both points of view.

Who is responsible / pays for repairs, landlord responsibilities and insurance ?

What happens if one of you changes your mind ?

What happens if the house burns down ?

Either do it properly or don't do it at all.

This is the kind of open feed back i am after  
Lots of questions and not sure of the answers

I guess my offer is the house and in return the tenant has to agree to paying a token amount extra per month and as its going to be their home they would agreed to fund any repairs that I would carry out as the land lord since they are are going to benefit when they own the house 

But I do think I need to sit and work it out
My heart is in the right place I know that for sure its how I get it right that matters (if we did it)

Albermarle

So putting the issues aside already mentioned.

He currently pays £600 per month rent now and nothing at the end of it.
You are proposing he continues to pay £600 per month rent, but after about 10 years he will own the house.

Seems quite a good offer for the tenant.

You say that he is not the sort of person to be able to buy the house himself. However the monthly mortgage payments would be significantly less than £665, over say a 20 year period. Although a deposit of a few grand would be needed.

ChirpyChicken

Albermarle said:

So putting the issues aside already mentioned.

He currently pays £600 per month rent now and nothing at the end of it.
You are proposing he continues to pay £600 per month rent, but after about 10 years he will own the house.

Seems quite a good offer for the tenant.

You say that he is not the sort of person to be able to buy the house himself. However the monthly mortgage payments would be significantly less than £665, over say a 20 year period. Although a deposit of a few grand would be needed.

Yes that is true. It would cheaper. But he is not of the intelligence to put it bluntly or the wherewithall to save £££ for a deposit to be able to do that. He does not understand what a mortgage is
He has said he does not want to move from here and has never had his own place before. 

So its offer to help someone who with all the best Internation cant help himself

The idea I think is right its how I get it right for both parties 

itsthelittlethings

You would need to get something drawn up legally to protect you, the tenant especially.