Renting to a prospective purchaser?
12:08 AM, 6th June 2023, 3 years ago
25
Hi all, I am in the process of selling my mother’s house, which is empty and have had a prospective buyer since March.
However, there have been some problems regarding the sale and this has caused the transaction to take much longer than usual and may still take another 3 to 4 months for completion.
The purchaser is keen to continue with the transaction, but has now asked if it would be possible if he could rent the house until completion. He is renting at the moment and has said he would have to give one month’s notice but he would like to move as soon as possible and has asked if I would consider this as an option.
I am a landlord so I understand the basics of letting properties but have never encountered this before so not sure if it would be wise.
Part of me thinks it’s a good idea but the cynic in me says it’s not!
I would appreciate any advice please.
Ashleigh
Tags:
advice, Advice for UK Landlords, landlord, Renting Before Buying, sell to a potential tenant, selling a house, Selling Property UK, UK Landlord Dilemmas
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Member Since October 2020 - Comments: 1137
11:38 AM, 6th June 2023, About 3 years ago
I would be wary of doing this. It could be an elaborate way for a tenant who is being evicted to scam another landlord.
You can’t legally take the £10k non-refundable deposit suggested earlier any more either due to the Tenant Fees Act, (although I’m not convinced you ever could).
I would only consider this once exchange of contracts has taken place.
Member Since June 2022 - Comments: 111
11:44 AM, 6th June 2023, About 3 years ago
Reply to the comment left by Neilt at 06/06/2023 – 11:31
I definitely apply my own T&Cs when negotiating with letting agents.
For instance never paid a Renewal Fee
Member Since January 2020 - Comments: 559
11:49 AM, 6th June 2023, About 3 years ago
Reply to the comment left by David at 06/06/2023 – 11:38
Definitely one for the vendor’s lawyers to deal wioth, but presumably the deposit would be under the sale contract, not the tenancy contract. In this case it would be legal.
However, non-refundable deposits on sales don’t often work as there needs to be a contract in the first place which sets out the basis of it being non-refundable. You can’t just take money and keep it unless it’s contractual. They tend to be sued for more complex deals, such as conditional contracts rather than straightforward resi sales.
Member Since November 2018 - Comments: 67
11:53 AM, 6th June 2023, About 3 years ago
You could try for an exchange with delayed completion. That way you can legally ask for a 10 percent deposit. It really depends on the reason for the hold up and the buyers position.
I made mine based on gut instinct when meeting the buyer
Member Since June 2022 - Comments: 111
11:53 AM, 6th June 2023, About 3 years ago
Reply to the comment left by David at 06/06/2023 – 11:38
The prospective tenant who’s buying would still need to pass referencing.
Member Since January 2020 - Comments: 559
12:02 PM, 6th June 2023, About 3 years ago
Reply to the comment left by Graham Bowcock at 06/06/2023 – 11:49
Used – not sued! Freudian slip.
Member Since January 2021 - Comments: 4
12:28 PM, 6th June 2023, About 3 years ago
Reply to the comment left by David at 06/06/2023 – 11:38
Yes, but David, I did not take a 10k deposit from a Tenant, I took it from a purchaser.
Member Since November 2022 - Comments: 65 - Articles: 1
12:34 PM, 6th June 2023, About 3 years ago
Look at setting up a rent-to-own agreement. A rent-to-own agreement is a deal in which tenant commits to renting a property for a specific period of time, with the option of buying it before the lease runs out. Rent-to-own agreements include a standard lease agreement and also an option to buy the property at a later time/at a fixed date. You get benefit of a fixed price sale at a later date with rental income until then, tenant gets benefit of the property as a rental and time to get deposit/mortgage sorted.
Member Since January 2021 - Comments: 4
12:35 PM, 6th June 2023, About 3 years ago
Reply to the comment left by Raz at 06/06/2023 – 12:34
Good solution!
Member Since July 2013 - Comments: 1996 - Articles: 21
12:43 PM, 6th June 2023, About 3 years ago
Ashleigh, do some checks on the buyer. Has he got a mortgage offer? What percentage of the value is he borrowing?
Subject to satisfactory due diligence then provided the buyer has exchanged contracts, paid a 10% deposit and you have a fixed completion date and agree a market rent, it should be OK. If the buyer fails to complete, he risks the 10% deposit, you can sue for specific performance and make him bankrupt.