Buying as a Sitting Tenant
We often receive calls from tenants who are in a situation whereby their landlord is looking to sell the property they are living in. However, this can present an opportunity. It can be harder for landlords to sell to the open market. Therefore, those buying as a sitting tenant can often have the first refusal on the property.
Why is my Landlord Selling up?
Landlords were previously afforded tax reliefs, but the Government has clamped down on these. As a result of this, many landlords are now paying more tax than before. Therefore, it is no longer worth their while, so they are looking to sell.
In general, it’s more common to see amateur and smaller landlords to sell, rather than the large, professional ones. Serious investors tend to keep their properties either way as they view it as a long-term arrangement. They will ride out legislative changes because they still view the property as a sound investment.
Why is it better for Landlords to sell to Sitting Tenants?
Here are a few different factors that might mean a landlord opts to sell to you.
1. It avoids paying commission to Estate Agents.
2. It avoids “loss of rent”. If you move out as a result of the Landlord deciding to sell, then there could be a gap between you ending your tenancy and the house being sold.
3. No refurb costs. If you move out, then the Landlord will have to make the property ready for sale. This might mean forking out for redecoration or new flooring, all eating into their profits.
As well as advantage to the Landlord, there are advantages to buying as a sitting tenant:
1. You know the property and all its faults. No nasty surprises for you!
2. No chain. You are not having to wait for the owner to find a property before you can complete. As such, a deal can be done quickly.
3. Discounted purchase price. Given the advantages listed above, it’s normal for a Landlord to sell to a sitting tenant at a discount. This is also known as a sale undervalue.
Some lenders will allow any discount the Landlord is offering to you as part/all of your deposit. This means that you may not to have to put down any deposit if the price is significantly under the market value.