Renting before buying the place (suggesting to vendor+contract)

[DiamondEcho]

This falls somewhere between Property Practical + Legal, but I thought here might fit better. At the moment this is hypothetical, I just want to understand the potential scenario better and how it might be approached before we arrange a viewing. In this tight and illiquid market this approach could be appropriate on other places that cross our radar.

There is a house for sale that went off the market in the summer and has suddenly been re-listed. Why that is is one question to pose. We have not viewed it yet, but we have done a few walk-bys, and know the street quite well. Houses on the street, in fact that area of 4-5 roads, are very rarely listed maybe less than 5% turn-over a year.

We have our former home about to go up for sale but I can't estimate how long it might take for eventual release of funds. That local market seems to be 1/2-dead. If we viewed this other house and it was 'the one' I was wondering whether we might be able to viably propose that we rent it for say a one-year but flexible term (within reason) while selling our own home, whilst being under binding contract to buy this house in future. Private sector rent-to-buy if you like.

Would this be too unorthodox in the UK to be worth pitching? I can see the house vendors goals (need for £) might be paramount. Perhaps we could muster a sufficiently large purchase deposit to meet their short-term needs, then while we rent and are 'in-funds' complete the deal. I can also see that any such rent-to-buy contract might be complex and $$ to draw up. But for a once in maybe 5-10 year opportunity perhaps worth it...

I understand these kinds of R2B or[?] 'seller-finance' contracts are better known in the US than here. But has anyone seen similar done here? If you saw possibly your dream house for sale, that you might not be able to fully fund for 6-12 months how might you pitch a purchase?

[servodude]

Big ol' bridging loan out of the question?

[JohnB]

If I were the vendor I would not enter such a deal, especially in a falling market. It would make me a landlord when I had no experience of it, would leave me with nowhere to live without the funds to buy elsewhere, give me income when I wanted capital, and worry than I was in a specially negotiated deal that none of my friends had ever experienced.

[Dod101]

I would think you would need to know the circumstances for the sale. If they are like you and simply want to move somewhere else, then why would they entertain such a deal? You have simply transferred the problem to them.

If on the other hand it was an executry sale then your suggestion may be a goer. I think you need to do a bit of research on the background first. These arrangements can work but you need as much background as you can get. That actually applies to any sale I think. For instance, my daughter and husband are moving this coming weekend, and they are buying from a couple who have spent the last two of years modernising the house that my daughter is buying. The sellers have no kids and are happy to move to a rented place until they find their next project so could be candidates for the sort of thing you are suggesting, but most sellers will I would think simply want a clean sale. Research is vital.

Dod

[Gerry557]

I think you would need to tentatively see if the current owners would be interested in something similar. Depending on their circumstances they might consider or be totally against it.

As its been on and off the market they might be more keen to get it moved but your pitch might only be welcome if there are not other offers.

It takes nowt just to ask, would be quick to do and might lead to some other engagement on how to help each other.

[Mike88]

And when the rental period is up what would you do if the value of the house you are renting to eventually buy fell in value by around 15%? Or what would the owner do if the house increased in value. Such an arrangement seems risky for both buyers and sellers.

[Howard]

Wouldn't it be simpler and possibly cheaper to just go ahead on a purchase if you really like the house and and its price, then set the price of your current house low enough to ensure it sells as quickly as possible?

The seller's Estate Agents who will vet your approach and pricing carefully will almost certainly suggest you are the ideal type of buyer.

No extra complex and unusual contracts and legal fees which might add more stress to a move.

As a personal observation of a couple of house sales starting at the beginning of a downturn, vendors who refused to make a 5% reduction initially, later had to sell for a 10% reduction or more months later.

regards

Howard

[Clitheroekid]

If they're not all that bothered about a quick sale they might be open to the suggestion of an option.

You would agree a price (say £1m) and an option term (say one year). You would then pay them an `option fee' (say £50k, but highly negotiable) and in return they would grant you the option to buy the house at £1m for one year.

If you were ready, willing and able to proceed at any time within the year you would then serve them with an `option notice', by which you would exercise the option. This would immediately create a binding contract, with completion due in whatever time was specified in the agreement, say one month. The £50k would go towards the 10% deposit on the house.

If you were unable to sell your house or simply decided you didn't want the other one you would let the option lapse, and they'd keep your £50k.

[Mike4]

If they're not all that bothered about a quick sale they might be open to the suggestion of an option.

You would agree a price (say £1m) and an option term (say one year). You would then pay them an `option fee' (say £50k, but highly negotiable) and in return they would grant you the option to buy the house at £1m for one year.

If you were ready, willing and able to proceed at any time within the year you would then serve them with an `option notice', by which you would exercise the option. This would immediately create a binding contract, with completion due in whatever time was specified in the agreement, say one month. The £50k would go towards the 10% deposit on the house.

If you were unable to sell your house or simply decided you didn't want the other one you would let the option lapse, and they'd keep your £50k.

This seems neat, tidy and easily understandable.

Typical solicitor, cutting through the confusion and clarifying stuff in my experience!

[DiamondEcho]

If they're not all that bothered about a quick sale they might be open to the suggestion of an option. []snip]

Thanks for that. I haven't heard of that route. Assuming the vendor agreed. Would we take possession and be living there during that 12 months? Would the vendor then also be acting as a landlord with rent and repairing obligations etc? Or is it just an option with completion up to 12 months later, but no right to reside meanwhile?

Thx

[Clitheroekid]

If they're not all that bothered about a quick sale they might be open to the suggestion of an option. []snip]

Thanks for that. I haven't heard of that route. Assuming the vendor agreed. Would we take possession and be living there during that 12 months? Would the vendor then also be acting as a landlord with rent and repairing obligations etc? Or is it just an option with completion up to 12 months later, but no right to reside meanwhile?

Thx

No, there would be no right to reside. The sole right you would have would be to force them to sell to you at the agreed price at any time during the option period.