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Can You Buy The Rental House From Your Landlord?

Can You Buy The Rental House From Your Landlord large

Are you renting a house that your landlord is selling and are you wondering whether you can buy the house from your landlord? It may be that you love the house you currently rent, which is why it’s helpful to understand if you can buy the rental house from your landlord.

You can buy your rental house from your landlord if they are selling if you are able to afford the purchase. You may need to borrow part of the purchase price on a mortgage and you will also need a deposit. Your credit report must be in good order to get a mortgage to buy your landlord’s property.

Can a landlord sell a house with tenants?

A landlord can sell a house with tenants to another property investor so the tenants remain in the property. Or a landlord can sell a house after giving notice to the tenants to quit. If your landlord is selling to another landlord it’s still worth offering to buy their property.

However, if they intend to sell it by giving you a notice to quit, you need to know why they are selling. If they are selling the house to another homeowner, there’s no reason why you can’t buy the house from your landlord.

What if your landlord is selling the house you live in and what should you do?

If your landlord is selling the house you live in, there are two possible outcomes, as follows:

  1. You receive an eviction notice so your landlord can sell their house with vacant possession. In this case you will need to find another rental property, before your notice period comes to an end. Or you may be able to buy this property from your landlord or buy another property.
  2. Your landlord sells the rental property to another property investor. In this case you can remain as a tenant and all that changes is your landlord. No big deal, so long as the new landlord is as good as your current one. You don’t need to worry about this option, as it’s unlikely your new landlord will evict you. If it’s another landlord purchasing your landlord’s property, it’s likely they will keep renting it out to you. Like any landlord they won’t want any void periods and will want to keep good tenants. But this doesn’t prevent you from buying your landlord’s house.
What are the advantages of buying your rental house from your landlord

What are the advantages of buying your rental house from your landlord?

There are a number of benefits of buying your rental house from your current landlord. These include the following:

  1. It will be convenient, as you won’t need to move your stuff to another property.
  2. You will save on removal expenses.
  3. The house is known you you, as you’ve been living in it as a tenant. The home has been customised to how you like it.
  4. The area will be familiar to you.
  5. You know all the quirks about the house.
  6. You know how much it costs to live in the house with regards to utilities and council tax.
  7. Buying a house on a mortgage can often times save on monthly outgoings, as mortgage payments can be less than rent payments.*
  8. The landlord will save on estate agency fees and may be willing to share this saving with you. This is subject to a clause in their contract with the letting agent
  9. You will become a homeowner, which means no landlord can kick you out.
  10. Being a homeowner means you no longer need permission from the landlord to do what you want with the property, like decorating it in your chosen colours. Or having a pet.
  11. You can use your rent deposit towards your purchase deposit.
  12. There is in theory no competition with the purchase, it will be just you and the seller (i e. Your landlord).

* Be careful with this, as once you become a homeowner you are then responsible for any repairs to the property. This might include installing a new boiler if this goes wrong. You will also need to pay for buildings insurance from the date of exchange too.

What are the advantages to a landlord of selling the house to their tenant

What are the advantages to a landlord of selling the house to their tenant?

It’s in your interest as a tenant to highlight the benefits to your landlord of selling to a tenant. These include:

  • No estate agency fees, subject to a clause in your landlord’s contract with the letting agent.
  • There will be no void periods between when the tenancy comes to an end when the sale completes. This means the landlord will receive rent up to the date of completion, rather than have several months of lost rent. Plus they won’t have to pay for utility bills and council tax after you move out and whilst it’s being sold.
  • The sale will be quicker as the landlord doesn’t have to wait for buyers to view the property.
  • The landlord does not need to serve a notice to quit and wait for the tenant to move out before selling the property.
  • The landlord won’t need to furnish the property to make it easier to sell. Empty properties tend to sell for less than houses that are properly presented.
  • If the landlord is looking for a quick sale, their best bet is to sell to the tenant.
  • There’s no conveyancing sales chain for things to break down.
How you negotiate a good buying price with your landlord

How you negotiate a good buying price with your landlord

If you want to buy the house from your landlord, you will need to negotiate the purchase price. Before you make any offers to buy your rental house, do your research on similar houses in the area. Review the above benefits to your landlord and highlight these to them in your negotiation.

Use sites like Zoopla, Rightmove or nethouseprices to get comparable house prices similar to the one you are currently renting. It’s best to get “sold comparables” rather than trying to compare prices of houses that are for sale. This will give you a better idea of what the house is worth. Don’t use the Zoopla estimate as a guide for your offer price, as these are not always accurate.

You could also speak with at least two to three local estate agents to ask for them to give you a valuation too. But when you ask the estate agent for a price, make sure it’s the price the house would sell for, not what they’d list if for.

But at the end of the day these valuations are only a guide. You will need to speak with your landlord about how much they are willing to accept to sell their property. Buying and selling property is about a willing buyer and a willing seller. A sale only happens when a price is agreed that both sides of the sale are happy to pay and accept.

Thinking about whether you are prepared to walk away if you cannot negotiate a purchase price you are happy to pay.

Your offer price to your landlord should reflect the location and condition of the house

The price paid needs to not only reflect the location of the property, but also its condition and state of repair. If the property is in very good order it will be worth more than if it is a bad state of repair.

If you really want to keep the house you are renting, should you offer over the asking price on the house? The problem with offering over asking price is if you are using a mortgage to buy.

The mortgage company will only ever lend on what the property is worth on the open market. If the valuation is lower than your agreed purchase price, you will have to pay a higher deposit. But if you go ahead with this purchase, immediately after completion of contracts, you own a property you paid more than its worth.

Can you buy your landlords property if you don't have a deposit - is rent to own a good idea

Can you buy your landlords property if you don’t have a deposit – is rent to own a good idea?

It is still possible to buy your landlords property if you don’t have a deposit using a lease option contract, which is also known as “rent to own“. With a property lease option it’s possible to agree a smaller upfront option fee with your landlord that is lower than a deposit would be. Over the period of the option agreement you will pay an amount over and above your rent.

This extra payment will go towards the deposit on the house at the point you exercise your option to buy the property. However, in order for this type of agreement to work your landlord must be prepared to sell you their property on an option contract. You will need to convince your landlord it’s a good idea for them to sell their house on a lease option.

A property lease option is also a great way to buy a property if you are not able to get a mortgage. The option contract period allows time for your credit rating to improve, so you are able to get a mortgage in time.

Landlord selling house tenants rights UK - Assured Shorthold Tenancy

Landlord selling house tenants rights UK

Your rights as a tenant in the UK include the following:

  • If you signed a six month Assured Shorthold Tenancy (AST) you cannot be evicted until the end of the six month term.
  • Your landlord must serve you a Section 21 NoticeNotice to quit” to end a tenancy agreement. He must serve you at least two month’s notice (although currently 6 month’s notice due to Covid-19). This notice period can coincide with the end of the tenancy. Which means the date the tenants must leave is at least 6 months after the original tenancy began.
  • In order for this notice to be given the landlord must have protected the tenant’s deposit in a deposit protection scheme.
  • The same rules apply if the tenancy has changed to a periodic tenancy. A periodic tenancy is the legal name for a rolling tenancy with no fixed end date. An assured shorthold tenancy becomes a periodic tenancy when the fixed term ends. Unless you agree to another fixed term with the landlord.
  • If the tenant is in arrears the landlord can serve a Section 8 Notice instead.

Offer to buy your rental property even if your landlord isn’t selling their property

It could be your landlord isn’t selling the property you rent, but this does need to stop you from offering to buy it. Ask your landlord directly or via the letting agency to ask if they will consider selling their property to you.

You never know you might catch the landlord at a point when they are considering to sell in any event. This is more likely if your landlord is an accidental landlord.

Have a plan B ready in case your landlord is not in a position to sell. But don’t give notice to your landlord yet to move out. Wait until you’ve found another property you want to buy.

Citizens Advice landlord selling house

Check what rights you have and what your landlord’s responsibilities are when they sell the house you are renting. If you have a problem with your landlord who’s selling the property you are rent, you can speak with Citizens Advice. This might be to understand your rights, before you consider buying the house.

Final thoughts on can you buy the house from your landlord

If your landlord uses a letting agency it’s very likely there’s a clause in their contract with the letting agency that says he will have to pay a fee if the tenant buys their property. This will mean that your landlord won’t save on estate agency fees after all. Having said that, there are many other benefits to your landlord than simply saving on estate agent fees (see above).

Before you buy the house you are renting from your landlord step back. Make sure this house is definitely the house you want to buy. Don’t just buy it for convenience, as it’s important the house is in the right location for future resale value. Ask the question: “would you buy the house in its present location and condition if you were not already living in it as a tenant?”

Also, you should pay for a survey on the house, even when you’ve been living there as a tenant. You may not know if there are any structural problems with the house like subsidence or damp problems.

During your research, look at other properties to buy too. It might be that if you are in the position to buy, you can afford to buy a better house for you. This could be your fall-back plan or ‘Plan-B‘ if you’re not able to negotiate to buy the house from your landlord.

Finally, you should also read this article about what is a cheeky offer. Please also read this article to discover how you could save over £70,000 on your next mortgage if you sell your house and rent before buying againEven I was amazed when I did the calculations! Whilst you are not selling your house, the concept still applies you you. The savings you can make will impact on your mortgage savings, so definitely worth a read.

I hope you’ve enjoyed this article about can you buy the house from your landlord

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Can You Buy The Rental House From Your Landlord?

Article written by Russell Bowyer who has been investing in property since purchasing his first commercial property in the 1990's for his own Chartered Accountancy business. But his first property investment project was to turn an old dilapidated restaurant into a large 5-bed home, which he purchased for £117,500 and sold for £450,000 (to see an "after" photo of the house before it was sold see here: About). Russell owns a number of investment properties, which includes houses, flats and HMO's. More recently he has turned his creative side to investing in property using lease options. His largest lease option deal to date was to acquire 12 properties worth over £2 million for just £12, which means he paid just £1 to acquire each property!

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