Selling to Sitting Tenant
Discussion
I have had a sitting tenant who has been with my now late Aunt when I was her POA then myself for 6.5 years. I`m needing to sell the property to release capital to give the proceeds to my youngest daughter to assist her in her own house purchase. He's been a good tenant pays on time albeit his rent is the same as it was when they agreed the tenancy back in 2017 so he's obviously happy with a below market rent and I`m happy with a stable tenant so its a win/win really.
Ive offered him the property at the home report value , not offers over as is the norm in Scotland but he says he cannot get all the funds made available to him for the full amount and with interest rates increasing his affordability is now becoming an issue. He does say he has sufficient deposit or thereabouts
The property is a two bedroomed mid terrace so moderate and even with two modest sallies the property value would be less than 3 times joint income so I would think affordability shouldn't be a problem and both of them in their early 30`s
Im trying all I can to keep him in the property , trying to sell to investors who specialise in sitting tenant aquisitions but they are only interested in low balling you with a poor offer which has/will be rejected.
Is there a mechanism that allows me to take a reasonable deposit and defer the purchase to them in say 12 months time , they then save the additional amount to achieve the mortgage and in turn they are then sold the property minus deposit at the previous home report value. All done in the form of a legal document outlining the terms ?
Desperately wanting to keep them in what is their home
Ive offered him the property at the home report value , not offers over as is the norm in Scotland but he says he cannot get all the funds made available to him for the full amount and with interest rates increasing his affordability is now becoming an issue. He does say he has sufficient deposit or thereabouts
The property is a two bedroomed mid terrace so moderate and even with two modest sallies the property value would be less than 3 times joint income so I would think affordability shouldn't be a problem and both of them in their early 30`s
Im trying all I can to keep him in the property , trying to sell to investors who specialise in sitting tenant aquisitions but they are only interested in low balling you with a poor offer which has/will be rejected.
Is there a mechanism that allows me to take a reasonable deposit and defer the purchase to them in say 12 months time , they then save the additional amount to achieve the mortgage and in turn they are then sold the property minus deposit at the previous home report value. All done in the form of a legal document outlining the terms ?
Desperately wanting to keep them in what is their home
mightymorton said:
I have had a sitting tenant who has been with my now late Aunt when I was her POA then myself for 6.5 years. I`m needing to sell the property to release capital to give the proceeds to my youngest daughter to assist her in her own house purchase. He's been a good tenant pays on time albeit his rent is the same as it was when they agreed the tenancy back in 2017 so he's obviously happy with a below market rent and I`m happy with a stable tenant so its a win/win really.
Ive offered him the property at the home report value , not offers over as is the norm in Scotland but he says he cannot get all the funds made available to him for the full amount and with interest rates increasing his affordability is now becoming an issue. He does say he has sufficient deposit or thereabouts
The property is a two bedroomed mid terrace so moderate and even with two modest sallies the property value would be less than 3 times joint income so I would think affordability shouldn't be a problem and both of them in their early 30`s
Im trying all I can to keep him in the property , trying to sell to investors who specialise in sitting tenant aquisitions but they are only interested in low balling you with a poor offer which has/will be rejected.
Is there a mechanism that allows me to take a reasonable deposit and defer the purchase to them in say 12 months time , they then save the additional amount to achieve the mortgage and in turn they are then sold the property minus deposit at the previous home report value. All done in the form of a legal document outlining the terms ?
Desperately wanting to keep them in what is their home
I am rusty on this, but:Ive offered him the property at the home report value , not offers over as is the norm in Scotland but he says he cannot get all the funds made available to him for the full amount and with interest rates increasing his affordability is now becoming an issue. He does say he has sufficient deposit or thereabouts
The property is a two bedroomed mid terrace so moderate and even with two modest sallies the property value would be less than 3 times joint income so I would think affordability shouldn't be a problem and both of them in their early 30`s
Im trying all I can to keep him in the property , trying to sell to investors who specialise in sitting tenant aquisitions but they are only interested in low balling you with a poor offer which has/will be rejected.
Is there a mechanism that allows me to take a reasonable deposit and defer the purchase to them in say 12 months time , they then save the additional amount to achieve the mortgage and in turn they are then sold the property minus deposit at the previous home report value. All done in the form of a legal document outlining the terms ?
Desperately wanting to keep them in what is their home
You really want a lease option agreement, though I am not sure they are legal in Scotland.
You could alternatively sell it to him with delayed completion. You get your deposit, he pays when he has the funds.
But does he actually want to buy, and is he offering you reasons or excuses why he cannot commit?
OP, you sound like a really decent person and I applaud you for your actions.
However, I feel you may be leaving yourself open to future issues with your proposals.
Could you sell your tenant(s) a share in the property instead?
Is shared ownership a thing in Scotland? It seems to be quite popular in England and does help people to get on the property ladder (although I'm aware some can be fraught with issues).
But in your case, you could sell 'x'% with an agreement that the tenant buys the balance within a prescribed period?
Obviously you would need to draw up legal and binding contracts for this.
However, I feel you may be leaving yourself open to future issues with your proposals.
Could you sell your tenant(s) a share in the property instead?
Is shared ownership a thing in Scotland? It seems to be quite popular in England and does help people to get on the property ladder (although I'm aware some can be fraught with issues).
But in your case, you could sell 'x'% with an agreement that the tenant buys the balance within a prescribed period?
Obviously you would need to draw up legal and binding contracts for this.
Thanks he is keen to commit to purchase is what he is saying the current rent will even after the recent interest rate rises be more or less the cost to mortgage, happy with the property , its location and his child is in a local secondary school and also not wanting to disrupt that.
The house value is relatively low and even as I mentioned previously with two modest incomes and a joint income of say £45K its not greater that 3 times earning to lending ratio so I struggle to understand why he cannot get the full home report minus a modest deposit to purchase albeit I don't know his credit rating although I can vouch that he has paid on time for the complete rental period.
They say they are looking at other rental properties but very few come up and those that do are £150 - £200 ppm dearer (making the mortgage option for mine I would have though even more attractive) and these properties are snapped up.
The house value is relatively low and even as I mentioned previously with two modest incomes and a joint income of say £45K its not greater that 3 times earning to lending ratio so I struggle to understand why he cannot get the full home report minus a modest deposit to purchase albeit I don't know his credit rating although I can vouch that he has paid on time for the complete rental period.
They say they are looking at other rental properties but very few come up and those that do are £150 - £200 ppm dearer (making the mortgage option for mine I would have though even more attractive) and these properties are snapped up.
Assuming a large discount is what he is after... then IMHO....dont mess about, give him his shot and then put it on the open market.
Its business.
If he smashes the place up, well, thats something for solicitors to sort out. Does not sound like that sort of person so chances are small?
If the difference is a few grand I would let it slide. But I bet he is thinking hang on I can probably get a couple of years rent back here....
Its business.
If he smashes the place up, well, thats something for solicitors to sort out. Does not sound like that sort of person so chances are small?
If the difference is a few grand I would let it slide. But I bet he is thinking hang on I can probably get a couple of years rent back here....
In fairness to the tenant, why would they have any desire to buy now?
The rent cap only applied to existing tenancies and means new rents have shot up. They're on a good deal.
Meanwhile, values aren't going north anytime soon so absolutely no rush to buy. The cost of buying however is still potentially rising.
And on top of all of that, they'd be spending more money a month to lose all their current legal protections while simultaneously taking on a load of potential new liabilities.
The flip side is that they probably don't want to rush into the hassle of having to find a new home but that still may be preferable to the ballache, cost and risk of becoming a home owner?
The rent cap only applied to existing tenancies and means new rents have shot up. They're on a good deal.
Meanwhile, values aren't going north anytime soon so absolutely no rush to buy. The cost of buying however is still potentially rising.
And on top of all of that, they'd be spending more money a month to lose all their current legal protections while simultaneously taking on a load of potential new liabilities.
The flip side is that they probably don't want to rush into the hassle of having to find a new home but that still may be preferable to the ballache, cost and risk of becoming a home owner?
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