If you were a tenant would you do this

ChirpyChicken

itsthelittlethings said:

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

Yes i would put a proposal together then draw up an agreement especially around issues of beneficial interest etc.

If I go ahead after discussing it with him and taking aboard points made on I think id post it up for some critique 

user1977

You’d each want independent legal advice. If you’re effectively setting the price now, the due diligence etc is much the same as a normal sale.

ChirpyChicken

user1977 said:

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?

I think the last point means consideration on my side and I think because they tenant will ultimately own a house via their only possible route.

SiliconChip

Is the money to pay the rent partly or fully funded by Housing Benefit? if so I wouldn't have thought it could be used to go towards a house purchase. Even if it's all his money I think he needs independent support (social worker perhaps?) in order to protect him when entering such an agreement.

XRS200

ChirpyChicken said:

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. 

If that's true, is home ownership and its obligations really for him?

user1977

ChirpyChicken said:

user1977 said:

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?

I think the last point means consideration on my side and I think because they tenant will ultimately own a house via their only possible route.

If they can’t complete the purchase I don’t see the logic in you keeping the property and their advance payments.

Grumpy_chap

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!

Sounds like an absolutely crazy idea with far too many opportunities for it to all go wrong.

The rent received so far is the rent to have the use of the house for the past 18 months.  That is your money.  The Tenant does not / has not accrued anything by way of property capital by making those payments.

What is the open market value for the house?  That is the only value that matters in terms of selling the property. 
It is not obvious that the £80k figure mentioned in the open market value for the house.

If you want to sell the house, then either the Tenant buys the house (at current market value or an appropriate discount to reflect the simpler process to sell to Tenant) or the Tenant moves out and you sell the house to whoever buys it on open market.

Section62

ChirpyChicken said:

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

Who would pay his stamp duty (or equivalent) ?

Emmia

Or if you really want the tenant to have the house, you could just gift it to him.

ChirpyChicken

user1977 said:

ChirpyChicken said:

user1977 said:

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?

I think the last point means consideration on my side and I think because they tenant will ultimately own a house via their only possible route.

If they can’t complete the purchase I don’t see the logic in you keeping the property and their advance payments.

I believe there is logic in this