# Rent to buy with current landlord...



## ahlarry (22 Oct 2014)

We have been renting our home for the last 18 months from a private landlord. They recently approached us with the possibility of buying the property. My fiance isn't working at the moment so the bank would not give us the required amount for the mortgage. We have a deposit saved and I earn a decent wage in a secure job but a portion of my salary every month from overtime and bonus etc. as I travel quite a bit with my job.

I told the landlord that we were not in a position to buy a few weeks ago. This left us with the uncertainty of not knowing if the house was going to be sold hanging over us. We have moved a crazy amount in the last few years and really don't want to do it again. We were thinking of ways to try to buy the house as we like the area and my child is in school locally. We also have another one on the way in the new year.

Long story short I sent a mail to the landlord asking about the possibility of us entering into a rent to buy agreement. They have said they are considering it.

The terms I suggested was as follows :

- We could agree a rent which is above the current rate. 
- Agree a sale price.
- We pay them a deposit of circa €5000. 
- We agree a date that the sale should be completed by (with a view to completing this ASAP). ( 24 months??)

When we buy the rent paid + deposit is taken off the final price of the house.
In the event that the sale didn’t go through for any reason they keep the full rent plus the deposit.

I have had time to think more about this and am looking for some advice from people with an unbiased view. It seems like a good idea to me but I can't help but think there is a reason why people don't do this very often. 

I have time to think about it and have a meeting with the landlord this week. Some input would be greatly appreciated.


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## Brendan Burgess (22 Oct 2014)

They have been discussed quite a bit on askaboutmoney

http://www.askaboutmoney.com/showthread.php?t=184039

http://www.askaboutmoney.com/showthread.php?t=176350

I am not sure why the landlord would agree to this in the current market. He wants to sell the house.  Do you live in an area where he could sell the house easily?


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## ahlarry (22 Oct 2014)

Brendan Burgess said:


> They have been discussed quite a bit on askaboutmoney
> 
> I am not sure why the landlord would agree to this in the current market. He wants to sell the house.  Do you live in an area where he could sell the house easily?




Yes, we are in an area where the house could be sold quite easily if put on the market. 

That first thread is just daft. the term on that agreement is ridiculous. It is effectively an interest free mortgage. That's not what I am proposing here.


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## Brendan Burgess (23 Oct 2014)

*Option 1 - *The landlord simply sells the house on the open market.  You can move or if the new owner agrees, you can continue to rent from him. 

*Option 2  *is the simplest alternative. A landlord who wants to accommodate you. 

He agrees to defer the sale of the house for 2 years or until you are in a position to get a mortgage. 
You rent it at the market rent in the meantime.
He then sells the house to you at the then market price. 

*Option 3  *You sign contracts for the sale of the house today to be completed in 2 years time.  You pay a significant deposit , i.e. around 15% of the sales price.  You have a right to pull out, but you forfeit your deposit.

In the meantime, he owns the house and you pay market rent.

*Your option 4 
*This makes no sense to the landlord. 

He can sell it today for €200,000
or
he can rent it for €15,000 a year for two years, and then sell it for €200,000.

You are asking for the right to buy it for €170,000 in two years time.  But you won't have any obligation to buy it. 

He should simply sell it today for €200,000. 

*Summary
*The only option the landlord should consider is Option 3, but the deposit would have to be a significant figure. 

It's very risky for you. If house prices rise significantly in the meantime, and you are unable to get a mortgage, then you lose your deposit.


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## Bronte (23 Oct 2014)

ahlarry said:


> It seems like a good idea to me but I can't help but think there is a reason why people don't do this very often.
> 
> .


 
Because it's too messy is why.  I can't wait to see the advice the landlord gets from his solicitor.  

Did you see the court case that has been going on for 16 years in todays Independant.  Over a house, agreed sale at 10K.  

Of course it seems like a good idea to you, because you want the house, but cannot afford it.  

But you might be lucky and the landlord will go for it.  If it were me, I'd want a large deposit, you forfeit in two years if you don't complete, and I'd probably want the sale price to be the market value at the time in 2 years hence.  

But here's where the trouble starts, potentially.  Property again collapses and you don't want to complete, or property goes through the roof, and you cannot complete, or you change your mind etc etc etc.


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## 44brendan (23 Oct 2014)

From a sellers perspective this would only make sense in a slow market where a quick sale would be difficult to achieve. Rather than spend time on a formal proposal why not ask the LL first if he would consider the option?


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