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  • FIRST POST
    • Lvl_chg
    • By Lvl_chg 5th Mar 18, 10:08 PM
    • 17Posts
    • 5Thanks
    Lvl_chg
    Landlord is selling - offered 1st refusal
    • #1
    • 5th Mar 18, 10:08 PM
    Landlord is selling - offered 1st refusal 5th Mar 18 at 10:08 PM
    I received notice from my lettings agent that the landlord intends to sell the property I am currently renting. They've said that the landlord would offer me first refusal if I wanted to buy the property.

    I would be a first time buyer. I was not intending to buy right now but my wife and myself are really happy here and actually perhaps buying the property is a good idea. We should be able to cobble together enough for a minimum deposit. I have booked an appointment with a local mortgage broker to discuss my options and of course determine if I can even get a mortgage, full stop!

    I'll run through a few numbers.

    The landlady purchased the property in 2014 for 154,000 leasehold with 76 years remaining on the lease.

    The agent has said the landlord has recently purchased the freehold and they would be looking for 199,950 IF the property were to go into the open market. No formal valuation has obviously taken place and she said this was a value based on similar properties for sale in the area.

    I have done a couple of quick valuation (Zoopla) etc and they have suggested its value to be between 186,000-194,000.

    Would you suggest I get a proper estate agents valuation for myself?
    Can I do this as just a tenant in a property? If so what's a ball park figure cost for this?
    Do I have a good bargaining chip being the current tenant? Can I use this to my advantage in terms of an offer? I guess I would be saving the landlord certain fees etc right?

    I'm hoping I'll know more after seeing the broker later in the week but I thought I would put this out to the good people of MSE forums who might be able to shed a bit of light on this situation for this unsuspecting tenant!

    Many thanks in advance!
Page 1
    • Smodlet
    • By Smodlet 5th Mar 18, 10:53 PM
    • 3,195 Posts
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    Smodlet
    • #2
    • 5th Mar 18, 10:53 PM
    • #2
    • 5th Mar 18, 10:53 PM
    I don't see why you could not ask an Estate Agent (EA) to come out and give you a valuation. I just would not tell them you are a tenant; pretend you are looking to sell it.

    Getting a valuation should be free; it is not something anyone trying to sell a house would pay for. When doing so, it is usual (advisable) to get at least three valuations just as you would get three quotes for any work you wanted doing.

    Once a seller signs up with an EA to sell their property, they will pay typically 1-3%+ of the selling price in fees so that is how much you could save your LL and therefore knock off your offer price.

    It is a lucky seller who receives the asking price for their property. If you have ever bought a second hand car, you will know how to negotiate on price. Buying a house is just the same, only more expensive and probably scarier.

    Good luck and welcome to the forum. HTH.
    What is this life if, sweet wordsmith, we have no time to take the pith?
    Every stew starts with the first onion.
    I took it upon myself to investigate a trifle; it had custard, jelly, soggy sponge things...
    • ashe
    • By ashe 5th Mar 18, 11:04 PM
    • 530 Posts
    • 367 Thanks
    ashe
    • #3
    • 5th Mar 18, 11:04 PM
    • #3
    • 5th Mar 18, 11:04 PM
    Google postcode and sold prices and see what similar properties have sold for on rightmove / land registry
    • AnotherJoe
    • By AnotherJoe 5th Mar 18, 11:08 PM
    • 9,605 Posts
    • 10,683 Thanks
    AnotherJoe
    • #4
    • 5th Mar 18, 11:08 PM
    • #4
    • 5th Mar 18, 11:08 PM
    I received notice from my lettings agent that the landlord intends to sell the property I am currently renting. They've said that the landlord would offer me first refusal if I wanted to buy the property.

    I would be a first time buyer. I was not intending to buy right now but my wife and myself are really happy here and actually perhaps buying the property is a good idea. We should be able to cobble together enough for a minimum deposit. I have booked an appointment with a local mortgage broker to discuss my options and of course determine if I can even get a mortgage, full stop!

    I'll run through a few numbers.

    The landlady purchased the property in 2014 for 154,000 leasehold with 76 years remaining on the lease.

    The agent has said the landlord has recently purchased the freehold and they would be looking for 199,950 IF the property were to go into the open market. No formal valuation has obviously taken place and she said this was a value based on similar properties for sale in the area.

    I have done a couple of quick valuation (Zoopla) etc and they have suggested its value to be between 186,000-194,000.

    Would you suggest I get a proper estate agents valuation for myself?
    Can I do this as just a tenant in a property? If so what's a ball park figure cost for this?
    Do I have a good bargaining chip being the current tenant? Can I use this to my advantage in terms of an offer? I guess I would be saving the landlord certain fees etc right?

    I'm hoping I'll know more after seeing the broker later in the week but I thought I would put this out to the good people of MSE forums who might be able to shed a bit of light on this situation for this unsuspecting tenant!

    Many thanks in advance!
    Originally posted by Lvl_chg
    Freehold or leasehold?
    • Lvl_chg
    • By Lvl_chg 5th Mar 18, 11:16 PM
    • 17 Posts
    • 5 Thanks
    Lvl_chg
    • #5
    • 5th Mar 18, 11:16 PM
    • #5
    • 5th Mar 18, 11:16 PM
    The landlord has recently purchased the freehold
    • Cakeguts
    • By Cakeguts 5th Mar 18, 11:26 PM
    • 4,424 Posts
    • 6,358 Thanks
    Cakeguts
    • #6
    • 5th Mar 18, 11:26 PM
    • #6
    • 5th Mar 18, 11:26 PM
    The letting agent probably had a clause in the contract with the landlord that says that they will get paid commission if the landlord sells the property to the tenant. This means that selling to you probably won't make any difference to the selling costs. What it will save is having to evict you before selling.
    • pollyanna24
    • By pollyanna24 5th Mar 18, 11:31 PM
    • 3,816 Posts
    • 4,703 Thanks
    pollyanna24
    • #7
    • 5th Mar 18, 11:31 PM
    • #7
    • 5th Mar 18, 11:31 PM
    The landlord has recently purchased the freehold
    Originally posted by Lvl_chg
    But does zoopla know this though?
    Pink Sproglettes born 2008 and 2010
    House Worth (approx) - 400,000
    Mortgages (3rd Nov 2017) - 180,813.85
    Equity - 219,186.15
    • Lvl_chg
    • By Lvl_chg 5th Mar 18, 11:40 PM
    • 17 Posts
    • 5 Thanks
    Lvl_chg
    • #8
    • 5th Mar 18, 11:40 PM
    • #8
    • 5th Mar 18, 11:40 PM
    Apparently so. The price Zoopla quotes is with freehold.
    • eddddy
    • By eddddy 5th Mar 18, 11:50 PM
    • 6,488 Posts
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    eddddy
    • #9
    • 5th Mar 18, 11:50 PM
    • #9
    • 5th Mar 18, 11:50 PM
    The letting agent probably had a clause in the contract with the landlord that says that they will get paid commission if the landlord sells the property to the tenant.
    Originally posted by Cakeguts
    The High Court has ruled that those types of clauses are unfair and unenforceable.

    But I suspect that some letting agents might have still have them in their contracts - and will try to get people to pay them.

    If that happens to your landlord, you could point your landlord towards this article (and/or other similar ones):
    https://www.tpos.co.uk/images/documents/media-articles/property-drum-sept-12.pdf
    Last edited by eddddy; 06-03-2018 at 8:40 AM.
    • mije1983
    • By mije1983 6th Mar 18, 12:30 AM
    • 3,189 Posts
    • 19,096 Thanks
    mije1983
    I would take the Zoopla 'valuation' with a pinch of salt. As an example, I looked at my house and my neighbours. Both identical, but Zoopla thinks one is worth 15k more than the other. And neither are at the price that 2 different houses (also same layout etc) a few doors down have sold for in the last 4 months.

    Far better to look at other similar properties in the area and see what they have sold for to give you a better idea, or as said, get an EA or 3 round to value.
    Last edited by mije1983; 06-03-2018 at 12:34 AM.

    • Tom99
    • By Tom99 6th Mar 18, 3:42 AM
    • 2,252 Posts
    • 1,526 Thanks
    Tom99
    Is this a house or a flat?
    If its a flat, how many in block?
    If say 10 flats in block then having purchased the freehold would mean a 74 year lease on the flat and a 1/10th share of the freehold. So your flat still only has 74 years to go after which you hand it back to yourself and 9 other people. Ie you still need to be concerned about the lease term
    • franklee
    • By franklee 6th Mar 18, 4:59 AM
    • 3,688 Posts
    • 3,975 Thanks
    franklee
    You can look at the sold prices at the land registry for comparable properties, see what they sold for. I would not confuse asking prices with sold prices as initial asking price a property goes on the market for isn't necessarily what it's worth. That's why I would be wary of getting an estate agent's valuation without telling them the reason for it. If they think you are a prospective seller they are likely to value on the high side to get your business.

    Frankly I'd rather engage my own RICS surveyor but of course that will cost you money. Would you want it valued and surveyed in any case? I probably would.

    Your mortgage lender would do a valuation for their own purposes, which may or may not be that accurate depending how they do it.

    Advantages to the landlord of your buying it:

    There is no chain to less chance of the deal taking ages while five or so households arrange to move and less likely for it to fall through.

    It avoids the costs, hassles and wait to evict you that selling to someone else would bring.

    The landlord gets rent right up to completion day rather than having the property sit empty while a sale to someone else completes.

    I am also unclear by the freehold you mention, is it a house so you would be buying a freehold house, or is it a flat so still leasehold but you would also get a share of the freehold? That's assuming the freehold the landlord just purchased is part of the sale?
    Last edited by franklee; 06-03-2018 at 5:12 AM.
    • Smodlet
    • By Smodlet 6th Mar 18, 6:49 AM
    • 3,195 Posts
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    Smodlet
    Is there not some law which says LLs have to give the tenant of a property they want to sell first refusal?
    What is this life if, sweet wordsmith, we have no time to take the pith?
    Every stew starts with the first onion.
    I took it upon myself to investigate a trifle; it had custard, jelly, soggy sponge things...
    • Lvl_chg
    • By Lvl_chg 6th Mar 18, 8:39 AM
    • 17 Posts
    • 5 Thanks
    Lvl_chg
    Far better to look at other similar properties in the area and see what they have sold for to give you a better idea, or as said, get an EA or 3 round to value.[/QUOTE]

    The property is a house. End of terrace.

    My road is a little strange as it is a mix of detached, semi detached and terrace. A house with the same layout sold in June 2016 for 170,000.

    Thank you all for all the information.
    • AnotherJoe
    • By AnotherJoe 6th Mar 18, 8:50 AM
    • 9,605 Posts
    • 10,683 Thanks
    AnotherJoe
    Is there not some law which says LLs have to give the tenant of a property they want to sell first refusal?
    Originally posted by Smodlet
    No there is not
    • AdrianC
    • By AdrianC 6th Mar 18, 9:22 AM
    • 17,602 Posts
    • 15,968 Thanks
    AdrianC
    The landlady purchased the property in 2014 for 154,000 leasehold with 76 years remaining on the lease.
    Originally posted by Lvl_chg
    Sorry, but that's completely irrelevant to today's value. Comparable sales are the only guide.

    The agent has said the landlord has recently purchased the freehold
    Good, so at least you won't have a problem because of that unmortgageably short lease.

    and they would be looking for 199,950 IF the property were to go into the open market.
    This is all you need to know.

    I have done a couple of quick valuation (Zoopla) etc and they have suggested its value to be between 186,000-194,000.
    You're as well asking the weather forecast what next summer's going to be like.

    Do I have a good bargaining chip being the current tenant?
    It's got you first refusal.

    Can I use this to my advantage in terms of an offer? I guess I would be saving the landlord certain fees etc right?
    Yes, no EA fees (unlikely to be outside the 1-1.5% range for a proper agent, probably nearer the low end, less if they go cheapie-online) - although the LA contract might include some fees liable in that situation. There's also the simplicity-and-speed factor.

    I'm hoping I'll know more after seeing the broker later in the week
    That really is your make-or-break.

    If you can't buy it, then there's the possibility they'll consider selling to an investor with sitting tenant, so you don't necessarily have to move.
    • saajan_12
    • By saajan_12 6th Mar 18, 9:54 AM
    • 1,253 Posts
    • 874 Thanks
    saajan_12
    I received notice from my lettings agent that the landlord intends to sell the property I am currently renting. They've said that the landlord would offer me first refusal if I wanted to buy the property.

    I would be a first time buyer. I was not intending to buy right now but my wife and myself are really happy here and actually perhaps buying the property is a good idea. - make sure you think about whether it makes sense for you e.g. can you afford mortgage + repairs, do you want to be relatively tied down to one property (selling + buying is harder & longer than moving rentals), do you want to be responsible for repairs etc? We should be able to cobble together enough for a minimum deposit. - you won't have Stamp Duty, but don't forget solicitor fees, mortgage valuation fees.. I have booked an appointment with a local mortgage broker to discuss my options and of course determine if I can even get a mortgage, full stop!

    I'll run through a few numbers.

    The landlady purchased the property in 2014 for 154,000 leasehold with 76 years remaining on the lease. - okay, irrelevant now though

    The agent has said the landlord has recently purchased the freehold and they would be looking for 199,950 IF the property were to go into the open market. - so that's the starting point. No formal valuation has obviously taken place and she said this was a value based on similar properties for sale in the area. - that's a large part of the valuation process.

    I have done a couple of quick valuation (Zoopla) etc and they have suggested its value to be between 186,000-194,000. - ignore this

    Would you suggest I get a proper estate agents valuation for myself?
    Can I do this as just a tenant in a property? If so what's a ball park figure cost for this? - you can do, it'd involve pretending you're looking to sell the place but would be free.

    Do I have a good bargaining chip being the current tenant? Can I use this to my advantage in terms of an offer? I guess I would be saving the landlord certain fees etc right? - LL may save EA fees (1-2% of price unless their contract with letting agent demands a commission if LL sells to the tenant. Further, they'll continue to earn rent upto completion instead of a void and they'll save any redecorating costs to get ready for sale. However on the flip side you'll save moving costs, survey costs if you already know the property well, and potential overlap in rent + mortgage. If you're taking LL's savings into account,
    expect them to account for these too.


    I'm hoping I'll know more after seeing the broker later in the week but I thought I would put this out to the good people of MSE forums who might be able to shed a bit of light on this situation for this unsuspecting tenant!

    Many thanks in advance!
    Originally posted by Lvl_chg
    Start with the mortgage broker and deposit to see what you can afford. Then think about valuations and or whether this is a non starter.
    • Smodlet
    • By Smodlet 6th Mar 18, 3:41 PM
    • 3,195 Posts
    • 6,328 Thanks
    Smodlet
    No there is not
    Originally posted by AnotherJoe
    Nope, that is about freehold, not actual property sales, you are correct.
    What is this life if, sweet wordsmith, we have no time to take the pith?
    Every stew starts with the first onion.
    I took it upon myself to investigate a trifle; it had custard, jelly, soggy sponge things...
    • Mahsroh
    • By Mahsroh 6th Mar 18, 3:53 PM
    • 339 Posts
    • 330 Thanks
    Mahsroh
    In terms of your bargaining position i'd say you are in a strong position. It depends on your landlord, but if my tenants made an offer to buy, i'd be inclined to accept a slightly lower offer than I would on the open market, simply because i'd save in estate agents fees but most importantly, it would remove the need to have the property vacant during the period whilst the property is on the market (although this wouldn't be essential for the LL, but ideal).

    But that's just me. Your LL may feel different, but i'd certainly use that as a bargaining tool if I was in your position.
    • steampowered
    • By steampowered 6th Mar 18, 4:07 PM
    • 2,592 Posts
    • 2,539 Thanks
    steampowered
    The only thing which matters is what this property is worth to you.

    You should value this property in exactly the same way as you would value any other property.

    I.e. you should look at other properties in the area at a similar price point. And make a decision as to how much you would be prepared to pay based on what else is available in the market.

    The key question is - if you were buying a new property from scratch at 185 - 190k, would you choose to buy the property you are in now, or another property nearby?
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