If you were a tenant would you do this

saajan_12

BikingBud said:

As the tenant would you not wish to protect this position?

If the OP changes their mind, becomes incompetent or dies who will ensure the verbal agreement is respected and the tenant gets the property transferred after the £80k + "interest" ?

The tenant doesn't currently have a position to protect. They are being given one, so I'm just suggesting that gift could be later rather than sooner, ie when the rental ledger racks up to 80k or whatever, the OP gifts the property at that point. If the OP changes their mind, the tenant is no worse off than they are now. The OP could include this in a will so if the OP dies sooner no issue. 

Reason being if the worry over signing something 'legal' when the tenant isn't necessarily able to understand the implications is perhaps more stress than its worth. 

ayupmeduck

Think from the OPs position, he's guaranteeing a rental income for the next 10 years above the mortgage amount and not having to pay out for repairs. 

TheJP

What if the tenant wants to sell up after 5 years, what then? How do you split the equity, fees etc.

Emmia

TheJP said:

What if the tenant wants to sell up after 5 years, what then? How do you split the equity, fees etc.

Surely if it's effectively a gift, the current landlord would have no interest in the property once it's been transferred. The current tenant (future owner) could sell it, or in the normal course of things it would be inherited by someone when the current tenant/future owner dies

TheJP

Emmia said:

TheJP said:

What if the tenant wants to sell up after 5 years, what then? How do you split the equity, fees etc.

Surely if it's effectively a gift, the current landlord would have no interest in the property once it's been transferred. The current tenant (future owner) could sell it, or in the normal course of things it would be inherited by someone when the current tenant/future owner dies

The OP has said the tenant would pay him £80k in monthly 'rent' payments which is about 11 years. What im asking is what if after 5 years the tenant wants to leave the agreement. Does the OP have to sell the house and then figure out what to give the tenant as equity, what if the value in the house has risen considerably will the tenants equity? To me this just sounds like a nightmare.

ChirpyChicken

TheJP said:

Emmia said:

TheJP said:

What if the tenant wants to sell up after 5 years, what then? How do you split the equity, fees etc.

Surely if it's effectively a gift, the current landlord would have no interest in the property once it's been transferred. The current tenant (future owner) could sell it, or in the normal course of things it would be inherited by someone when the current tenant/future owner dies

The OP has said the tenant would pay him £80k in monthly 'rent' payments which is about 11 years. What im asking is what if after 5 years the tenant wants to leave the agreement. Does the OP have to sell the house and then figure out what to give the tenant as equity, what if the value in the house has risen considerably will the tenants equity? To me this just sounds like a nightmare.

No and ive figured this out thanks to a posters input and worked out how i am going to do this and set this out
The tenant would as part of the agreement  simply pay an increased rent over the period and then at the end of the period the house would be gifted.
They would gain no equity should they leave in the meantime

molerat

And you will still be responsible for repairs, buildings insurance and other landlord responsibilities ?

ChirpyChicken

molerat said:

And you will still be responsible for repairs, buildings insurance and other landlord responsibilities ?

the agreement will be that i will carry these like any landlord out BUT the tenant will pay these costs

steve866

In answer to your original question - yes I would consider this if I was in your tenants shoes due to lack of other options.

However if I understand correctly you want to:

-charge higher than market rent 
-value the property at above market rates
-exclude yourself from your landlord responsibilities in paying upkeep
-he loses everything put in to date if he moves out prior to paying the full £80k

To me I wouldn’t discuss this as ‘helping him out’ it seems like a business arrangement with good terms for you.

Could he not get a mortgage with you providing a discount as the deposit? Or just generally set it up with a private mortgage with you putting a charge against the property’s 

saajan_12

ChirpyChicken said:

TheJP said:

Emmia said:

TheJP said:

What if the tenant wants to sell up after 5 years, what then? How do you split the equity, fees etc.

Surely if it's effectively a gift, the current landlord would have no interest in the property once it's been transferred. The current tenant (future owner) could sell it, or in the normal course of things it would be inherited by someone when the current tenant/future owner dies

The OP has said the tenant would pay him £80k in monthly 'rent' payments which is about 11 years. What im asking is what if after 5 years the tenant wants to leave the agreement. Does the OP have to sell the house and then figure out what to give the tenant as equity, what if the value in the house has risen considerably will the tenants equity? To me this just sounds like a nightmare.

No and ive figured this out thanks to a posters input and worked out how i am going to do this and set this out
The tenant would as part of the agreement  simply pay an increased rent over the period and then at the end of the period the house would be gifted.
They would gain no equity should they leave in the meantime

To be clear is this increased vs the current amount or vs the market rate? What if in 5 years time, the market rent is £750 ?