Letting to previous owners
I have recently signed for a property (completing next week), and the estate agent (with whom I have had a long business relationship) indicated that the previous owners would be interested in renting it back from me.
I must point out that the property was a repossessed house and therefore sold by the bank as a mortgagee in possession.
I do not have a mortgage on the house, but I have noted from other BTL mortgages which I hold on other houses that often there is a clause prohibiting renting back to a previous owner. Is there a reason why banks do not like this? If there is this would make me cautious about doing it, but on the other hand, renting back to the previous owners might save me money as the house is currently decorated to their tastes (and a very high standard, not perhaps to everyone’s tastes!!).
The thoughts of those more knowledgeable and experienced than me would be very much appreciated.
Many thanks
William
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Member Since May 2014 - Comments: 4
2:28 PM, 16th October 2014, About 11 years ago
Reply to the comment left by “Mark Alexander” at “16/10/2014 – 14:26“:
Thank you for your comment Mark, this crystallises for me the entire debate, if I would have difficulty evicting the tenant for non-payment of rent, I would not consider renting to them.
Member Since June 2013 - Comments: 3237 - Articles: 81
2:40 PM, 16th October 2014, About 11 years ago
Reply to the comment left by “Mark Alexander” at “16/10/2014 – 14:24“:
I like your word ‘probably not’. I’m trying to look for glass half full here, so if no evict & no mortgage, I’m creeping up to 80% yes ha ha.
But no, I am listening to someone wise here, & I would REALLY REALLY look into my next one, talk to FCA & no doubt the robots wouldn’t be able to tell me anything.
Member Since January 2011 - Comments: 12196 - Articles: 1396
3:00 PM, 16th October 2014, About 11 years ago
Reply to the comment left by “Mick Roberts” at “16/10/2014 – 14:40“:
Mick
At best there is no more than a drop is the glass you are contemplating picking up.
If you want me to give you odds on a Sale and Rent Back between “friends” on the verge of repossession being a safe investment then 1 in a million is as close as I’d dare go.
Sorry my friend, if it could work I would know how and I would happily tell you.
.
Member Since June 2013 - Comments: 3237 - Articles: 81
7:21 AM, 17th October 2014, About 11 years ago
Reply to the comment left by “Mark Alexander” at “16/10/2014 – 15:00“:
Mark, if you say there’s a drop in that glass, I’m sure me & you could get it full ha ha.
Your comments taken on board though, & who knows, now I’m scaling down, I might never have to encounter it again.
Member Since January 2011 - Comments: 12196 - Articles: 1396
9:10 AM, 17th October 2014, About 11 years ago
Reply to the comment left by “Mick Roberts” at “17/10/2014 – 07:21“:
Hi Mick
Have you considered buying the house off your “friend” and renting him a different house?
If you have lots of friends in this position, perhaps you could get them to swap houses?
No special deals of course!
.
Member Since June 2013 - Comments: 3237 - Articles: 81
2:11 PM, 17th October 2014, About 11 years ago
Reply to the comment left by “Mark Alexander” at “17/10/2014 – 09:10“:
Ooh yes many a times, but the big attraction for some of these that sell their home they live in & want to stay in, is that they have lived there 30 years sometimes & DO NOT want to move, no matter what it takes.
Yes, thought what u said, I suppose they could swap as such & as long as no law for them to swap back in a few months if they wished, this may help them.
Member Since October 2013 - Comments: 1308 - Articles: 10
11:40 PM, 31st October 2014, About 11 years ago
Just a thought……….. could an individual private landlord buy a property, then lease it to a company (separate legal entity), and then the company lets it to the original owner? Thus, the tenant’s landlord (the company) is not the person who bought the property and was not even a party to or otherwise involved in the purchase transaction.
Of course, the private landlord could be Director of the Limited company………. or the “company” could even be a charity…… Either way, old owner applies as a tenant, they are selected as tenants and given a tenancy. A separate transaction to the sale of the property.
Member Since January 2011 - Comments: 12196 - Articles: 1396
12:01 AM, 1st November 2014, About 11 years ago
I suspect this would be viewed by the regulators as a contrivance and prosecuted accordingly.
.
Member Since October 2014 - Comments: 7
8:54 AM, 1st November 2014, About 11 years ago
Reply to the comment left by “Mick Roberts” at “09/10/2014 – 12:13“:
I cannot believe such questions are being asked when the application form for a mortgage clearly raises the question and if one were to read the criteria of all lenders there is a strict No Go so far as this arrangement is concerned. If one has chosen to ignore and undertake such lettings the person concerned deserves everything they get if the lender finds out.
Member Since June 2013 - Comments: 3237 - Articles: 81
7:01 AM, 2nd November 2014, About 11 years ago
Reply to the comment left by “Silver Surfer” at “01/11/2014 – 08:54“:
I han’t took a mortgage for 6 years, so not seen a mortgage form for 6 years.
Used to know everything about mortgages, now know very little.
Unlike some on here who comment, & han’t got a clue about how the other person works. Or indeed how the subject in the discussion works sometimes.