Tenants praying for a new landlord to buy their London flat!

by Readers Question

4 years ago

Tenants praying for a new landlord to buy their London flat!

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Tenants praying for a new landlord to buy their London flat!

We are a professional couple in quiet, untouched Rotherhithe and we are praying for a rental buyer of our landlord’s one bed garden maisonette. The interior is like new and it is in a popular residential area. Tenants praying for a new landlord to buy their London flat!

We’ve come to love this property  with all our hearts – so when our landlord announced he was putting it on the market, we were devastated. He told us we were great tenants and is selling only because he wants to buy another property. We always pay our bills, spend our own money on improvements and aren’t DSS, smokers or anything like that.

We love the flat and would love to keep renting. If the place sells we have to move out, even if the buyer is going to rent again. If it sells to a landlord buyer who likes us there’s a chance we could stay on with them – so we’re being proactive and looking for you!

The flat is on the market for £350,000 and we are currently paying rent of £1,300 pcm. We would be happy to increase this amount to £1,400 pcm.

We have substantial savings and would have loved to buy the property but thought it would never come on the market. The timing couldn’t be worse for us as I have recently quit my job to study for a Masters degree. Accordingly, we are victims of the recently introduced Mortgage Market Review rules and no longer qualify for a mortgage despite affordability not being an issue. We can easily service our outgoings for considerably longer than my Masters degree course and I have no doubt whatsoever that I will find work again when my Masters degree is completed.

We were hoping that Mark Alexander might be interested but apparently he stopped buying 5 years ago. Nevertheless, we have spoken to him and he has advised us of a few deal structures which we were not previously aware of. He gave us this idea …..

“Have you considered discussing with landlords a Rent to Buy deal, e.g. we pay a substantial amount towards the purchase deposit in exchange for a legal option agreement to purchase the property at a pre-agreed price within say 5 years. In the meantime all rental profits would belong to the landlord. To make the deal completely risk free to the landlord you may wish to propose an agreement whereby your deposit would be forfeited in the following eventualities:-

  1. you default on the tenancy
  2. you move out of your own accord
  3. you fail to exercise the option to purchase within 5 years

For your own protection, if you do a deal based on the above, I would recommend that you insist upon the landlord entering into a Deed of Assurance with you for 5 years on the basis that if we are evicted through no fault of your own the landlord would repay your deposit plus 50%.”

Our preference though would be for a landlord to simply purchase this property without all of the above complications and commitments, but we are open minded to any realistic and fair proposal.

If you would like to get in touch with us please complete the contact form below. Once submitted this will send us an email so that we can contact you and it will also link you to a web page which will tell you more about us and the property.

If we can pull off a deal with a Property118 member we will make a substantial donation towards the running costs of Property118, not as much as the typical 1.5% finders fee charged by agents but certainly a few hundred pounds 🙂

We look forward to hearing from you.

Regards

Sam & Lizzie

EDITORS NOTES

Sam forgot to mention that Lizzie continues to work full time and that he already has one job offer lined up as a software developer when he finishes his Masters degree.

Contact Sam and Lizzie



Comments

Mark Alexander

4 years ago

Good luck with this Sam and Lizzie. I admire your determination and positive approach to your dilemma and hope that one or more Property118 readers will be interested in doing a mutually beneficial deal with you.

I will send a test enquiry to you in a few minutes time to check the system is working properly 🙂
.

Bill Khan

4 years ago

There is hopefully a sensible solution to the issue, that allows the tenant and landlord to achieve a mutually beneficial outcome....However, to state that.... "We aren’t DSS, smokers or anything like that..."
Just the issue that there is a very professionally regulated sector that deals exclusively with "DSS" tenants. Some may be unemployed, or smoke cigarettes. Many are perhaps physically disabled, or infirm, elderly, former service personnel, adults with learning difficulties, the terminally ill..
Some properties within the market are privately owned, others are managed by well regulated trusts. Please don`t disparage the less well off, Thank you.

Mark Alexander

4 years ago

Hi Sam

I see that a couple of our readers have already been in touch.

I'm keeping my fingers crossed for you 🙂

If this works out we may have inadvertently discovered a potential new income stream for Property118 as I'm sure other tenants will find themselves in a similar predicament from time to time.

Please keep us updated on progress.
.

Renovate To let

4 years ago

One point, just because your landlord sells does not mean you have to leave. Your tenancy continues and would pass to the new owner intact - he would "step into the shoes of" your current guy.

Clearly the current landlord could serve a Section 21 notice on you and then proceed (after 2 months) to gain possession but there is nothing "automatic" that boots you out if he sells. This notice and subsequent possession process takes many months...

There will be a significant difference in the achieved selling price between the place being vacant (higher) and you being there (lower) as the number of potential buyers will be far less with a tenant in place.

As the owner is an investor and clearly intends to continue to be one, you could propose a sort of rent-to-buy direct with him.

Like this:

We are shocked you are selling as we love it here and, as you know, we have been great tenants and have always paid, kept the place clean etc etc.

We would love to buy if from you but my masters course means we can't qualify for a mortgage for x years, even though we can easily afford one.

Can I ask how much you will actually get from the property after selling costs and after redeeming the mortgage? (this is the key point as it might be a LOT or it equally might not be very much at all, depending on how he has managed his lending). (He's told you this is his reason for sale - to use the equity elsewhere)

(assuming the amount of his "net equity" is doable for you) Would you consider us buying the place and exchanging contracts with you and pay out that "net equity" amount as the deposit and then you give us 5 years (or whatever) to complete rather than the usual 28 days? We would take over the monthly mortgage payments in the time between exchange and completion andand carry on with an AST so everything would be above board and would meet your buy-to-let mortgage terms. (he might want something over and above you paying his mortgage every month as his profit for letting you do this)

Solicitors understand this as delayed completion is widespread in the commercial world (and in the transfer of "tired" rented properties). Its a normal conveyance, with a longer completion. You would be granted a 12 month AST with the right to renew for the x years (subject to making the underlying mortgage payments).

You lock in a buy price now. He gets his equity out to buy the other place. He gets an easy sale with no refurb costs and no agent fees.

The risk to you is that you still fail MMR (or whatever follows it) in a few years time....however, the "exchange" can be made assignable so you could sell it on in that case (through an Estate Agent to another buyer) and may even make money if prices rise in the meantime versus the price you agree with the current owner.

If he's an experienced investor, he will (should) be interested. Equally he might "just want it sold" and therefore not.

Yes it's a bit complicated but it depends how much you REALLY want THIS house! After all, moving has lots of complications and costs too. There is a pack of paperwork needed but that's what solicitors are for.

Samuel Partridge

4 years ago

Reply to the comment left by "Bill Khan" at "01/09/2014 - 14:32":

Hi Bill,

Sorry for not replying immediately - You are very right and apologies, I did not want to seem as if I was disparaging DSS renters.

The only reason why I brought it up is because it is usually mentioned in conversations when looking for a new landlord and is often the reason why individuals go looking for new landlords - Goes to show the sorry state of renting for the less well off.

The very best to those in the private sector doing such good work and to yourself, Bill.

Best,

Sam

Samuel Partridge

4 years ago

Reply to the comment left by "Renovate To let" at "02/09/2014 - 17:01":

Hi Renovate To Let,

Thanks for your comment. That's very interesting - I may just propose that to the landlord right now!

I did mention the section 21 to the landlord, but he pointed out that in our contract (which is AST sadly) has a clause which says:

"Notwithstanding the fixed Term as stated in Clause 1 the Parties hereby agree that this Agreement may be terminated by the Landlord or his Agent giving to the Tenant at least two months’ prior notice in writing, such notice not to expire until after six months of the Term have elapsed. For the avoidance of doubt the Tenancy cannot be ended before 05/10/2014... At the end of such notice the Tenancy shall end and all obligations and responsibilities shall cease; subject nevertheless to any claim by either Party against the other in respect of any breach of any of the terms and conditions of the Agreement."

However, it still does not seem kosher to drag this out by ordering him to get a section 21. If we can't stay and are not wanted, then it's inevitable that we move - I'd personally rather leave willingingly than squat on legal technicalities...

I am completely convinced that why he's asking us to leave is due to the selling price of the flat - but as it's his place, it's his call!

Thanks for all your advice though, you've been very helpful.

Best,

Sam


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