Buyer involving his company in house purchase

TheGoonies1985

What does your solicitor say?

Have they seen this sort of process before?

Do they have any concerns?

A few days I suggest you give it a week and ask for regular updates and take a view as this progresses.

El_Torro

I agree with those who say there's nothing major to be worried about here. A bit annoying perhaps, especially since the OP doesn't know how long the delay is going to be exactly.

If the buyer is planning to rent out their property and live in the property they are buying from the OP then yes, doing it through a Limited Company makes sense, especially if they already own other properties within that Company. It's more tax efficient than owning the properties privately. Less stamp duty for one, also there are more expenses that can be offset against the profit (for example interest on the mortgage).

One thing to bear in mind about Buy To Lets in a Limited Company is that when getting a Buy To Let mortgage the lender wants the property to be ready to rent out straight away. The OP's buyer has probably waited this long to try to make sure the sale to the Limited Company takes place on the same day as the purchase. There are ways to get around this, with a bridging loan for example, but doing it this way is probably simplest for the buyer.

So yeah, keep an eye on it, but I wouldn't be overly concerned. Backing out of the sale now will mean finding a new buyer and experiencing much longer delays.

daveyjp

It is perfectly normal if the buyers are property investors. If it is their first time doing this it may take longer if they don't already have mortage broker and solicitor contacts as part of their 'team'.

Herzlos

If it's only a few days delay, then does it matter what financial setup the buyer has as long as you get paid?

I mean, it seems weird to be looking at it now, but would you want to go back to the start and relist when it may be solved in a few days?

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82106206#Comment_82106206

Cgt, would not be an issue if buyer were selling his personal residence to the company but SDLT certainly would be. If it transpires the company does not have sufficient funds to pay full market value, the SDLT would still be based on market value.

It is undoubtedly an expensive way to raise finance for the purchase from you, and the suggestion this was his plan from the outset seems dubious since a sale to his own corporate entity need not have been delayed until last moment. All relevant contingent paperwork could have been in place well in advance of negotiations and pre contract enquires with you .

Certainly check out the company ( very easy to do and no fees involved). If you cannot see sufficient cash on the balance sheet you are well within your rights to ask if his company would need to raise mortgage finance for its purchase from him, thereby triggering additional delays.

An organised developer with established lines of finance behind him does not operated in this seemingly slap dash manner ( personally dealt with a couple, and advised another).

Jewelscollectingdust

Thank you everyone - it’s been really useful

To be clear It wasn’t my intention to pull out or remarket - only to gain a better understanding of what the possible reasons for being in this situation were / plus understand a bit more buyers potential motives / reasons why things took this turn

I had asked the questions I asked here of the estate agents representing us - but like somebody here picked up - the estate agents themselves seemed to be grappling with what the reasons were !

I am told my buyer just needs a couple of days - which isn’t a problem - perfectly happy to allow that to happen - if it drags on though without good info coming forward - we would then need to take advice and possibly re-evaluate situation

TheGoonies1985

https://forums.moneysavingexpert.com/discussion/comment/82106679#Comment_82106679

Sounds sensible hope it all works out

Jewelscollectingdust

Update

Both buyers and us have signed at solicitors for the sale / purchase to take place but our solicitors are unable to set exchange / completion dates because the only information she has on file from buyers solicitor is that the transaction is dependant on buyer selling their own house - non of the intricacies of what the buyer is doing regarding raising funds has been forwarded to our solicitor and our solicitor says their solicitor is hard to contact - many times phones are not answered

I am not sure but suspect I am in the middle of some degree of stalling. I feel a bit as if we have been duped as there is no way we would have countenanced accepting an offer from a buyer who hadn’t sold their own property

We were told when we accepted their offer - they didn’t have a house to sell - now it materialises they do - even if it’s an internal transfer of ownership to buyers own company

BTW - companies house checks out - company supposedly buying house looks solvent with no bad debt

Whilst I am prepared to give some leeway here - I am not prepared have this situation linger unresolved for any lengthy period of time so I think we are now of the opinion that we give them a deadline and if this is not met we go back to putting the property back on the market

martindow

This is where a good estate agent should be actively working to ensure the sale doesn't collapse. It's in their interest to do this although some are much better than others … Hopefully it will soon be resolved but it is unsettling to find this rather late in the day.

Two days of 'the couple of days' have already passed, so it is quite reasonable to seek an update from your buyers via the agent.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82107895#Comment_82107895

Sadly does sound like classic stalling tactics. They have graduated from not having to sell their house at all ( but needing to remortgage it), then to an apparently bogus intent to sell his home to his own company, and now a vague statement of no exchange or completion date until house is sold. Therefore keep you hanging but without any substantive upfront cash or contractual commitment.

The last time I sold to a developer they candidly admitted a few days before exchange, they could not complete for 2 .5 months .

However to show they were very serious about the deal, we did exchange with a very substantial 10% deposit lodged, a 'time of the essence' clause inserted with regard to the agreed deferred completion date which would result in them forfeiting deposit if date not met. This coupled with them paying a separate upfront £5,000 commitment fee for the inconvenience to me, was enough to convince me of their bona fides. The deal went through on the assigned date with no problems.

However the difference in my case was the developer had made an unsolicited direct approach to me, the property was never formally on the market, so I felt entitled/empowered to play hardball on all aspects of the pre contract negotiations.

At this point I can see no aspect of this developer's behaviour which can be described as a serious commitment to you, and frankly there now appears to be no material difference dealing with him compared to any other normal homebuyer needing to sell their own home to fund the purchase of yours.

Suggest seeing what materialises by end of next week, if nothing substantive move on.