Rent Theoretical

MarkAnthony

Here's one for you fine folks.

If you had the option to rent a property below market value but paying for the full year in advance:

a) Would you
b) What sort of % reduction would you be looking for.

Thanks in advance!

handlemaster

20% off id think about et. But would want confirmation person aggreeing was ownee

MarkAnthony

handlemaster wrote: »

20% off id think about et. But would want confirmation person aggreeing was ownee

Yeah I think that's be a fair one! Reminds me of that Billy Connolly bit where he's going on about the really rich and the really poor in Glasgow getting on because they were both mad and the middle class guy trying to get involved in the conversation.

Middle Class Guy: What do you reckon you'd get for selling your house
Working class guy: About 5 years.

That barely relevant joke was my way of saying thanks

GarIT

I don't think I'd need a discount to accept it, it seems like a good idea to me. That's the way most colleges operate.

MarkAnthony

To flesh this out a bit, probably thinking of letting out my gaffe at 750-800p/m so the guts of 9-10K rent for the year. Market rent is 1100 with parking 1000 without it.

Need a bit more financing for a house purchase is why I'm thinking of doing it. The neg equity and odd employment status has meant we've got some fairly low offers from the banks.

Thanks for the input folks!

emmamc1982

Where is said property located? Sounds like a good deal for someone that can pay up front. Be interested in how the banks view such a financing arrangement.

MarkAnthony

emmamc1982 wrote: »

Where is said property located? Sounds like a good deal for someone that can pay up front. Be interested in how the banks view such a financing arrangement.

I'm not in a rush to tell them to be honest but the approval we go means that our tracker goes so they know it's being rented and take the mortgage as liability but don't add back in the rent so I don;t feel like I'm being too under handed.

It's in D8 - City Centre or there abouts.

You don't work for a bank do you?

emmamc1982

MarkAnthony wrote: »

I'm not in a rush to tell them to be honest but the approval we go means that our tracker goes so they know it's being rented and take the mortgage as liability but don't add back in the rent so I don;t feel like I'm being too under handed.

It's in D8 - City Centre or there abouts.

You don't work for a bank do you?

ha no I don't ☺

GarIT

I think I should add I don't see why everywhere doesn't operate like this. It means there is no hassle of having to deal with collecting rent and/or paying rent and there can be no trouble with people leaving early or lengthy disputes when somebody doesn't pay.

You can have a one year (or other fixed term) lease renewed each year and paid up front, at the end of the year you can decide to stay another year or leave. It makes everything so much easier.

The_Morrigan

GarIT wrote: »

I think I should add I don't see why everywhere doesn't operate like this. It means there is no hassle of having to deal with collecting rent and/or paying rent and there can be no trouble with people leaving early or lengthy disputes when somebody doesn't pay.

You can have a one year (or other fixed term) lease renewed each year and paid up front, at the end of the year you can decide to stay another year or leave. It makes everything so much easier.

Not everyone has 12K in savings to hand over in bulk though.

The Spider

I'd say in general that anyone who has that cash is putting it towards the deposit on a house, awful lot of money to hand over upfront, and I know you can say you'll make it back by not spending the money you would have spent in rent, but there's an awful possibility that you may just spend it.

Sala

I met someone who paid 6 months in full for a discount.. And then a recover arrived saying they had to resume payments to them. It's a bit dangerous for the tenant

Mrs OBumble

OP, what are you going to do if the boiler blows up or there's a fire and you have to pay the excess, or whatever other expensive thing can go wrong with a house? Or the tenant pays, then pulls some interesting anti-social behaviour like say, running a brothel or drug-supermarket from the house.

TBH, you're asking for an interest-free loan from a tenant. I'm just not sure that's a good idea when I think about the implications.

johnnyskeleton

MarkAnthony wrote: »

To flesh this out a bit, probably thinking of letting out my gaffe at 750-800p/m so the guts of 9-10K rent for the year. Market rent is 1100 with parking 1000 without it.

Need a bit more financing for a house purchase is why I'm thinking of doing it. The neg equity and odd employment status has meant we've got some fairly low offers from the banks.

Thanks for the input folks!

Will the bank not see that the money is rent up front and then discount it as not genuine savings? They will also consider the tax implications of same.

Might be better to use a mortgage broker. They may charge a fee (if theyre independent - but be wary of brokers who get commissions from banks) but theg may also be able to help putting your best foot forward.

Victor

What happens if the property burns down? Wouldn't the tenant be in a rather difficult position?

campingcarist

Many UK landlords are dubious of tenants offering large sums up front. They do this in the hope of avoiding inspections from the landlord and use the houses as cannabis-growing places.

MarkAnthony

Mrs OBumble wrote: »

OP, what are you going to do if the boiler blows up or there's a fire and you have to pay the excess, or whatever other expensive thing can go wrong with a house? Or the tenant pays, then pulls some interesting anti-social behaviour like say, running a brothel or drug-supermarket from the house.

TBH, you're asking for an interest-free loan from a tenant. I'm just not sure that's a good idea when I think about the implications.

Point taken but; there should be an issue with anything going wrong as it's an apartment, fully electric and will be properly insured, which should negate the issue with fire. Anti-social behaviour is a worry but I reckon you'd be looking for quite a while to get the tenant out anyway, perhaps not a year though. I also reckon they'd be less likely to be anti-social if they've paid over that sort of money but who really knows. Good points though thanks!

johnnyskeleton wrote: »

Will the bank not see that the money is rent up front and then discount it as not genuine savings? They will also consider the tax implications of same.

Might be better to use a mortgage broker. They may charge a fee (if theyre independent - but be wary of brokers who get commissions from banks) but they may also be able to help putting your best foot forward.

Possibly - good point! The only thing I'll say about brokers is they're now extremely limited in who they can get loans from. To be fair its the broker that has us approval at the moment but we're also having to apply separately to BOI and EBS.

Victor wrote: »

What happens if the property burns down? Wouldn't the tenant be in a rather difficult position?

It would, but I think it would either way. Proper insurance will be in place, but I take your point. We'd have a fall back in fairness which would be that we could put the tenant up if needed or could borrow from family to release them from the lease if that's what they wanted.

Agreed though that it's probably an overly messy 'solution'.

Thanks for the input folks.

MarkAnthony

campingcarist wrote: »

Many UK landlords are dubious of tenants offering large sums up front. They do this in the hope of avoiding inspections from the landlord and use the houses as cannabis-growing places.

Thanks hadn't thought of that at all! Great point!!

campingcarist

MarkAnthony wrote: »

Thanks hadn't thought of that at all! Great point!!

We had an apartment in our complex which was used for cannabis growing. It was raided by AGS in September.

However, if there were periodic inspections, which I believe are allowed by law, it would help to prevent that problem.

It appears to me that few landlords do those inspections and so many issues arise causing the landlord more money than the cost doing an inspection.

handlemaster

I think landlords dont inspect much because this only invites complaints which other wise tenants wont bother with

MarkAnthony

Thanks guys, PRTB expect quarterly inspections - I'd find that a bit much (as a tenant) in all honesty and thought 6 months would be enough. I think I'll go for 3 a year.

I'd have no issues with complaints to be honest. If something needs doing I'd rather do it, the fit of the apartment is quite new and done to owner occupier standard so if something is up I'd rather fix it ASAP.

I'm not sure they'd get away with growing much green in this place, next door liked to smoke and was constantly getting reported. It's also not big enough to run a decent brothel out of so I'm hoping I'm safe there too!