Option to Rent house before Purchase but not a rent to buy..

yayatobe

So, made on offer on a property that was the highest offer, it was accepted but then after we discovered the offer was too low for the seller to cover the mortgage outstanding. The sale fell through, the house taken off the market and is now vacant.

Long story short we have been offered the house to rent at a very much reduced rent on the condition that we agree to purchase the property for an agreed higher price in a number of months. We commit to a figure and a time and sign contracts etc....

The whole idea does appeal to me but I do have my reservations.

Firstly I will be speaking to my solicitor in the coming days so not looking for advice on that front! I do understand that at a minimum I will need a contract of sale and also a tenancy agreement...

Just wondering what people think of the proposal, would you do it? What could you see as the pit falls if any? Have you ever heard of anyone doing this in Ireland???

Michael D Not Higgins

I can see a number of things going wrong here, especially on the obligations of the landlord front. The seller won't want to do the maintenance on a house they are expecting to hand over to you anyway.

I don't think I'd accept this kind of deal. They want more money in the form of rent and then more money again in the sale price than you bid. Can you have an existing tenancy and a legally binding contract of sale? What if the seller changes their mind and boots you out next year because the market has risen more than you agreed, do you have a comeback?

This is definitely one for the solicitor and I'd expect them to be hesitant to advise doing this.

Samuel T. Cogley

I'd take it on the basis of a reduced rent. Set your expectations that it is just a house at a reduced rent and keep looking around. If you then are in a position to buy, great buy the house you're in or move if you find somewhere else. Make sure any agreement you enter into allows that flexibility.

Cupra280

I'd also take it on the basis of the reduced rent, and I would ask that the tenancy agreement is only for the specified period and cannot be extended.

I would not make any home improvements/diy/decorations until the contract of sale goes through.

If you are happy with the increased cost of the house, plus the additional rent, then go for it.

yayatobe

I would not be expecting the owner to do any maintenance on the house, I would expect that would be one of the stipulations of the deal. The rent is about 5% of the market rent... very very much reduced so as part of that deal the maintenance would be on me I assume.

I would also be getting a survey done before entering into the deal so I am aware of any issues...

Cupra280 wrote: »

I'd also take it on the basis of the reduced rent, and I would ask that the tenancy agreement is only for the specified period and cannot be extended.

I was thinking of this but getting the agreement for several years at a fixed rent for duration of the tenancy. This way the seller will not want to delay the process. If he wants a higher sale price then I just stay put with my rent fixed for several years...

allibastor

yayatobe wrote: »

I would not be expecting the owner to do any maintenance on the house, I would expect that would be one of the stipulations of the deal. The rent is about 5% of the market rent... very very much reduced so as part of that deal the maintenance would be on me I assume.

I would also be getting a survey done before entering into the deal so I am aware of any issues...




I was thinking of this but getting the agreement for several years at a fixed rent for duration of the tenancy. This way the seller will not want to delay the process. If he wants a higher sale price then I just stay put with my rent fixed for several years...

I assume you mean 50% of the market rent.

just my own expereince, I have been in this boat. Bought a house I am renting.

All good so far, deal closes this week, but the last 7 months the LL would not so much as lift a finger in any form of repairs, but we couldnt do any work also on the flip side, just in case.

Nearly there, so fingers crossed !!!!

MrMorooka

Maybe I'm missing something, but I don't understand what you get out of this arrangement? The seller gets some extra rent, what do you get?

yayatobe

allibastor wrote: »

I assume you mean 50% of the market rent.

just my own expereince, I have been in this boat. Bought a house I am renting.

All good so far, deal closes this week, but the last 7 months the LL would not so much as lift a finger in any form of repairs, but we couldnt do any work also on the flip side, just in case.

Nearly there, so fingers crossed !!!!

No...5% will be the rent. I guess it sort of offsets the higher asking price...

yayatobe

MrMorooka wrote: »

Maybe I'm missing something, but I don't understand what you get out of this arrangement? The seller gets some extra rent, what do you get?

I guess I get to move into the house I want rather then waiting for something else to come up, Owner wont get extra rent, not really when rent is so low.

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Pkiernan

Jump on it.
You can live there for at least 2 years at an incredibly low rent and then up and leave.

You can stay there for 6 years with just a tiny rent increase if in Dublin.

Humour Me

What happens if they decide they don't want to sell a year from now? You could end up searching for another house and with prices still going up, will you be able to get a higher mortgage if needed?

Del2005

Cupra280 wrote: »

, and I would ask that the tenancy agreement is only for the specified period and cannot be extended.

You can't sign away your rights so no matter what is in the contract once the OP is in the place 6 months they will have part 4 rights.

Samuel T. Cogley

Del2005 wrote: »

You can't sign away your rights so no matter what is in the contract once the OP is in the place 6 months they will have part 4 rights.

I think the poster you're replying to is moving from the assumption (which I and seemly a few others) ignored that the vendor is looking to lock the OP into a position of having to buy the property 'at some date' and 'at some price'. They seem to want to do this by 'contracts' for sale - which they won't be able to do unless they agree a date and price anyway.

You're absolutely correct of course, I just think the Cupra was trying to get the OP to see it from the other side, that they might not want to be locked in for a number of years if it seems to be going nowhere.

newacc2015

OP this makes little sense.

So they pulled the house off the market, as the sale price didn't meet their existing mortgage. So instead of renting it for a few years in hope of clearing their mortgage, they are going to let it to you for 5% of the market rent. Which isn't going to clear their mortgage and then they will rip you off on the sale price. The fact is the house isnt selling as it is too expensive. You might save money on the rent, but will they rip you off later.

AFAIK rent to buy contracts arent written the paper they written on, which is the reason why they aren't popular here (ask a solicitor though). Take the house at 5% market rate for a few years, then find a house at a reasonable market rate for sale

JimsAlterEgo

Are you getting mortgage? Bank will value house (and surely wont be at higher amount)
sorry this stinks, run.

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