I have tenants who have always been prompt in paying their rent.
Im now 70+ and want to dispose of the property. On speaking to my tenants, they want to but the property, but will not be able to get a mortgage. I am happy to speak the cost over ten years. Which works out cheaper for them to buy it from me than to rent.
Has anyone else done this, I don’t appear to be able to find a solicitor who is prepared to do the work.
Any assistance / advice
thank you
My landlord 50 years ago gave me a private mortgage to buy my first home that i rented from her Very kind , Never forgot that We agreed between ourselves but that was so long ago for a terrace house. Try Windeats in Devon
If you find someone who can facilitate a private mortgage, Id be interested too,.
Why not just let them carry on renting? What are you looking to achieve by selling?
If they can afford the monthly payments to you that would repay the mortgage over 10y then why cant they get a normal mortgage? Most people pay mortgages over a 25y or longer period
Would you be charging well below market interest rates? Or is the problem that they cant raise the deposit? Either way you are being generous and likely losing out financially- if you sold to someone else you would both have use of the funds and get income from them. If it’s just they dont have the deposit then lending them that and them getting a normal mortgage might be less risky?
Think about your own financial position and needs -what happens if you suddenly needed the £ in 5 years time. (For medicsl or care reasons)
And think about the risks - if they were ill and got into rent arrears you can evict. If they own and stop.paying the loan back how will you repossess?
Its a bigger financial commitment on their part - you might want to insist they take out sufficient life insurance and critical illness cover
Generally it’s financially not a good idea i think - a bank or building society spreads the risk over multiple properties which you cant do with one
Good luck
Well, that’s a clue that this arrangement is unusual and fraught with risk.
One risk that comes to mind is your age. What you intend to do with this property if you die? Until the property is paid for, it’s still yours but those you leave it to might well want to sell it to release the cash and that can get all sorts of messy very quickly.
Thank you all for your suggestions.
I’ve been a landlord for many years and have a few properties. Money is not really the main issue here.
What is, I can feed back to a couple, who like me are in need of a little help, to get started. I was like that many years ago and someone helped me. I would like to do the same
Many of us are in the same boat in terms of experience and we sympathise. Finding a way that is legally watertight is the difficulty here.
While everything remains as now, there are no issues. But there are a huge number of changes which are very hard to mitigate against and which could make this a nightmare: severe illness, death, divorce, inheritance, financial hardship. Who would repossess the property? How would they do it? Are you prepared to wipe off any outstanding payments? Are your legatees? Are theirs willing to forfeit their inheritance?
It’s complicated.
Yes thats the same sort of risk as if OP suddenly needs the funds himself in 5 years.
I assumed that it would be a mortgage like any other - for the full amount, and then to be paid off in installments
Eg
https://www.myerson.co.uk/personal/residential-property/private-mortgages-loans
@Mark115 would need to have the funds to lend to the tenants in the first place, tying up those funds as well as those in the property itself.
The alternative you seem to be suggesting is that the tenants purchase over time an increasing share in the property and only wholly own at the end of the ten years. This is much trickier because both parties have an interest in the property so have to agree on things like the building insurance and the maintenance in the meantime. If there is a choice between eg cheaper short term roof repaired or a new roof how is it decided? Etc etc
I would suggest if money isnt the issue either helping them with a deposit or selling to them at a knockdown price. Or keep renting to them at a below market rent and they can use the saving to choose to save up for a deposit if they wish or for something else. Not everyone cares about owning a place especially if they know you will let them stay, decorate to their own taste etc. They dont have any of the maintenance costs. Or leave in your will.
Trying to do a more complicated mortgage or loan agreement is a lot more complex, not least from a tax perspective.
Best
Like that I have done the same as the help that was given to me. Good man ,Its not all about money
Oh it is… it’s about making sure we share it with those who don’t have it.
To do a private mortgage you would need to have a lending license with FCA so it isnt practical. Similar to rental regulations finance regulations have also got more intense over time…
If you want to help there are 2 main options.
Gifted deposit is simplest option. TSB allow landlord to gift 10% with tenants not putting any thing up. Various banks allow 5% gifted deposit if matched by tenant funds. Generally it is worth gifting 5% to avoid EA fees, voids and hassle.
Rent to buy. You can add to your tenancy an option for tenant to buy in future based on a set price or formula. Whilst you remain responsible for maintenance it could be structured in a way to incentivise tenant to look after the property as an owner occupier would given they would have the right to buy it.
Don’t even consider this. You may fall foul of financial regulations and if they stop paying you would have no redress. There will usually be some lender who will give them a mortgage. Refer them to a good broker.
As as fairly recently retired long term landlord of nearly 60 years I can tell you what you achieve by selling. It’s peace of mind, time etc and no more problems to deal with. My last property was sold six months or more ago and I went down the route of using a ‘we buy any property’ type agent. So yes I lost quite a chunk of money but as some of you will know the market for selling flats isn’t good but you cannot put a price on peace of mind/no worries. I was always mainly a commercial landlord with strict criteria on the type and place I bought in and it served me well. Good luck, I’ll still follow you all..Patricia
I fully agree with the sentiment and congratulate you on your escape. It is worth saying though that whilst the market is more difficult, especially here in London, sales are still happening. I would certainly suggest landlords try the open market before considering below market value offers from corporate buyers. I completed the sale of my last rental property last week and got full market value. Whilst there was certainly a high degree of luck involved, it paid off as I was previously offered 25% bmv from an investor buyer recommended by the N R L A.
Some property investors are actively scouring the internet for encumbered and distressed properties and distressed landlords and making silly offers knowing that some will have little choice but to accept. I hope we can foil the plans of at least some of them.
I did try the conventional route for 18months, I should have said, but at least no capital Gains to pay! Well done on your sale, probably a completely different market in London but you are right to point out trying the open market first.