If you were a tenant would you do this

ChirpyChicken

Section62 said:

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) ?

No stamp duty would be due

ChirpyChicken

Grumpy_chap 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!

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.

The open market of the property is currently around 72k

itsthelittlethings

I think it would be legally a bit dodgy if they were responsible for the repairs as you could still be the landlord with landlord responsibilities. A lot could go wrong.

ChirpyChicken

Emmia said:

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

I think i could drop the interest payments part which would resolve a few issues and say this .

If you pay x amount of rent up to a certain value and pay for the repairs during that period which I will carry out etc then at the end of the period I will gift you the house under an agreement

Which would be a more simplified arrangement 

If not it would just continue as it is

Tabieth

I think it sounds like a recipe for total disaster. At the bare minimum you’d both need individual legal advice. What jumps out as me is - what happens if one party changes their mind? You might think that will never happen but life has a habit of throwing up surprises. If I were your tenant I’d be very wary of this proposal. 

ChirpyChicken

I think what i am after is the Tennant making a commitment to future home ownership by putting something in rather then just being handed something on a plate
Does that make sense?

Baldytyke88

ChirpyChicken said:

Which would be a more simplified arrangement 

If not it would just continue as it is

Is the rent he pays below market value?

Let him have below market value rent and then make a will leaving him the house? You could change your mind in 10 years or just give him the house.

Section62

ChirpyChicken said:

Section62 said:

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) ?

No stamp duty would be due

If the property was transferred to him now under the current system, no.  But you are talking about a long-term arrangement in which he only gets ownership at the end.

None of us know what the property transfer taxation system might look like at the later point in time (hence the "(or equivalent)") - so the question is if he doesn't have the ability/capacity to purchase conventionally, will he be in the position to fund whatever tax liability they may be at the time?  And if not, will you/your estate underwrite that cost in addition to the benefit of the property itself?

...the agreement you need to get him to sign is getting longer and more complicated.  And I suspect a solicitor would have concerns whether he has the capacity to enter into such an agreement.  Even if the intent is to benefit him.

ChirpyChicken

Baldytyke88 said:

ChirpyChicken said:

Which would be a more simplified arrangement 

If not it would just continue as it is

Is the rent he pays below market value?

Let him have below market value rent and then make a will leaving him the house? You could change your mind in 10 years or just give him the house.

No the rent is slightly above market rate tbh given i brought the house specifically for him to have some where to live

ChirpyChicken

Section62 said:

ChirpyChicken said:

Section62 said:

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) ?

No stamp duty would be due

If the property was transferred to him now under the current system, no.  But you are talking about a long-term arrangement in which he only gets ownership at the end.

None of us know what the property transfer taxation system might look like at the later point in time (hence the "(or equivalent)") - so the question is if he doesn't have the ability/capacity to purchase conventionally, will he be in the position to fund whatever tax liability they may be at the time?  And if not, will you/your estate underwrite that cost in addition to the benefit of the property itself?

...the agreement you need to get him to sign is getting longer and more complicated.  And I suspect a solicitor would have concerns whether he has the capacity to enter into such an agreement.  Even if the intent is to benefit him.

He doesn't lack mental capacity he is simply a person who does not have a lot of common sense 

A lot of people have no clue about stuff a lot of people on here take for granted and understand without issue

Like he didn't know to wipe the side of the bath after a shower until someone told him.....

And yes my estate would have no issue in that score.

They say where there is muck there is brass
Where there are parking tickets there is a pot of gold 😅