Buy House From Landlord

Can I buy my rental house from my landlord?

Absolutely, you could and it’s similar to a normal house purchase. We deal with a lot of First Time Buyers, and they of course start off looking at properties on Rightmove. But actually it could be that they’re quite happy where they are.

A big bonus would be to buy the house that they’re currently living in. We often see our clients asking their landlords if they are willing to sell the house. If you like where you live and you’re really happy there, it’s always worth asking the question.

What is the process of buying a rented house from a landlord in the UK?

It’s pretty similar to buying any property in the UK. In most instances, someone who’s buying a property they’re renting will be a First Time Buyer, and it works in a similar way as any first-time property purchase.

You would open up conversation with your landlord either directly or or through a letting agent to understand how much they’re looking to sell for. Obviously, it’s a nice win-win if a landlord could sell directly to a tenant – they don’t have to find another buyer and the tenants don’t have to find another property.

You still have to go through the legal process of buying a property and having searches carried out. The main difference is there’s no estate agent involved, unless the landlord insists on that.

Getting a mortgage is similar to normal. There might be a few additional questions so the lender could understand your circumstances, as you’re buying a property you currently live in, but most lenders are quite comfortable with that.

Can a landlord just sell the house I’m renting? What are my rights as a tenant if my landlord wants to sell?

It’s highly likely that you will have a tenancy agreement with the landlord. There’ll be various terms, but that tenancy agreement sets out obligations for both the landlord and you.

The short answer is no, they can’t just sell the property. If there is an agreement in place, they have to meet the terms of that agreement. Just as you’re expected to to pay the rent every month, the landlord is expected to meet their obligations for as long as you’ve both agreed the tenancy.

Each contract is different. Your rights depend on the terms of that agreement. But landlords have to follow a process – they can’t just say they’ve decided to sell and ask you to leave immediately. You would need to give notice if you needed to leave for whatever reason, and they have to give you the same notice period back. .

How much notice must a landlord give a tenant when selling property?

We’re not here to advise tenants on their rights or or landlords. It’s definitely worth looking this up yourself or speaking with someone who is an expert in those things.

My general understanding is that your landlord could take back their property without giving any reason if you are at the end of a rolling tenancy or a fixed term tenancy. They need to give you written notice that they want the property back, and the date you must leave by must be at least six months after your original tenancy started.

If you’re behind on your rent, or have damaged the property, however, a landlord might have additional rights to serve an eviction notice. But generally your tenancy agreement will dictate what that process looks like and what your rights are as a tenant.

Can I buy a house from my landlord without a deposit?

The good news is there are many different ways you could potentially do this. You could get a 100% mortgage, believe it or not. With one lender, if you’ve been renting for one or two years and you’ve got a history as a good tenant, potentially you could look at obtaining a mortgage without a deposit. That’s true as of today in July 2024, but that could change in the future.

Or, it could be that the landlord might sell you the property at a lower value than the market price. If the property is worth £250,000 but he’s giving you a nice discount and selling for £230,000, that difference could be used as a deposit. That is known as a landlord gifted deposit, or a concessionary purchase.

Other areas you could potentially look at is having a gifted deposit from family members – that is generally acceptable when buying a house. To check your eligibility for a mortgage, speak to a broker.

What are the costs of buying my rental property?

It would be your usual costs – you will still need to appoint a conveyancer to carry out the legal work and the checks to protect you as a buyer. So you should still budget for a solicitor.
Although you’re already living there, you should treat the property as if you don’t know it.

Renting a property is not the same level of responsibility as owning it. If you’re getting a mortgage, a lender would require you to have those legal searches done anyway to protect them as well as you.

Another cost might be stamp duty, if you don’t qualify under the First Time Buyer incentive, or you’re over the stamp duty threshold. Other costs might include a mortgage arrangement fee or valuation fees.

I would definitely recommend getting a survey done to check it’s structurally sound and whether there is anything you should be aware of as an owner. There could be cracks that suggest there’s subsidence or movement, or there might be something that needs urgently repairing or maintaining.

The main thing you’ll save money on is moving. You won’t need to pay for removals because you’ve got everything there already.

What is a leaseholder?

This is technically around property ownership. It’s more common on a flat or an apartment. If you’ve bought an apartment, you don’t own the rights to the whole block. That will be owned by a freeholder, usually a management company or a landlord.

The leaseholder is someone who owns the lease for that specific property within the block. What you might see on leasehold properties is a lease of either 999 years or 125 years. It can seem quite scary when it’s put into mortgage terms that you don’t necessarily own the property or the apartment, you own the lease to that apartment.

But it’s similar to renting in that sense, where you might pay ground rent or a service charge.
So if you’ve bought a flat it would probably be on leasehold, and you are the leaseholder. The freeholder owns the building and the flat itself.

Can I apply to buy if I have rent arrears?

If you are currently behind on your rent and your landlord is selling the property, I’m not aware of any restrictions that would stop you buying it.

The challenge you’ll have is actually getting the landlord to sell the property to you. They might have you know reservations about your ability to buy the property. There’s a risk that you might struggle to get a mortgage and then withdraw from the purchase quite late on.

The second thing is that getting a mortgage may be a bit of a challenge if you’re currently in rent arrears. Usually, rent arrears are not the only financial problem someone has. Generally, people prioritise their rent over other payments. It might suggest you’re in financial difficulty, which lenders have to be very careful about.

Remember that your landlord has no obligation to sell to you just because you’re the tenant. It’s their house and they could decide to sell to whoever they want. They just need to follow the right processes in terms of serving you notice as a tenant.

Do I have to complete the purchase within a specified time?

No, there isn’t a hard and fast rule to complete within a set period. But one of the challenges in buying a property from your landlord, especially if there’s no letting agent involved, is that you don’t have any support with the negotiations.

Ultimately it’s just between you and the landlord. It would often come down to the timings on your tenancy agreement. There are lots of variables to it. There would just probably need to be a bit of common ground and an agreement between you both as to when that might be.

It could be that you might not be ready to buy for another six months, but actually the landlord wants to sell now. They might look to sell it on the open market once your tenancy agreement is finished.

But preparing, planning ahead and speaking with a mortgage broker as early as possible could help. If it needs to be a speedy transaction, you could make sure you’ve got all your ducks in a row to complete in a good time.

What happens if my landlord delays the sale?

It depends on the point you’ve reached in the process of buying a property. It’s most effective to open up that conversation with them to understand why they’ve delayed. Usually there will be a good reason. Most landlords will be happy to get that sale through as quickly as possible.

Once you know the details, you could make a decision as to what you want to do. Do you continue to complete the purchase or review your decision?

What if I want to remortgage?

Once you own the property, remortgaging is the normal process. So if you originally bought from your landlord and now you might be looking for a new interest rate, or to raise some funds for home improvements, that property is yours. You could remortgage in the usual way.

Can I sublet my home?

Yes, you might be looking to buy that property to then move out and let it. It might be quite good timing, and you might be in the market for an investment and you recognise the value of that rental property. You would need a Buy to Let mortgage to do that.

Also, it depends on where you’re going to go. If you’re moving into other rented accommodation, your options will be slightly limited, because a lot of Buy to Let mortgage lenders require you to own your home.

But there are lenders out there that would consider this. They would likely want some assurance that you’re not going to continue living there. As long as you could convince a lender that you’re definitely moving out and letting the property, it is an option.

What are the pitfalls of buying a tenanted property?

If you’re buying a tenanted property, the key thing is the tenancy agreement that’s in place. As we discussed, the landlord cannot just sell willy-nilly. It has to be part of a process and respect the agreement.

This is the difference from buying a property that’s empty, in which case there’s no process to follow around the tenants.

What are the advantages and disadvantages of buying your rental property?

The big advantage is that you are already in the property. You know what the property is like to live in. Logistically, you don’t have that stressful moving day – you’re already there.

The disadvantages would be those direct negotiations with the landlord. Is the landlord willing to sell? What are the timescales and do they match with what you’re looking for?

I’d probably recommend trying to get an agent involved if there isn’t one, as these parts of the process are the unusual ones, compared with buying a normal property through an estate agent.

How can a mortgage broker help here?

Mortgage advisors do this for a living. We understand the market and how lenders treat applicants in all different scenarios. We know the hurdles you might face and what documents you’re going to need to prepare.

We could answer a lot of the questions immediately in terms of whether it’s possible and whether you could get the mortgage needed. Then we’ll dive into the details of what the process looks like. We could just help you navigate this, because it’s very tricky to do it on your own.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

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