tenant offered opportunity to buy house

Wind up wind up wind up?

mf

Would the shared ownership scheme be an option. Under this the Co.Co. or the Corporation buy half the house and your friends buy the other half. After repaying their half of the mortgage down the road they are then allowed buy the Co.Co interest out.

You don't hear much about that scheme any more. It's all affordable housing now.


Murt

Hi,

If the tenens buy the house at €350K then their repayments will be higher then the rent by a factor of 50% or higher, so why not rent for a few more years somewhere else or wait till the market stabilises?

Regards

Gerry

I should imagine the landlords bank is not going to give a top up to 100% of value of house anyway, usually top ups or remortgage is only to 80-85% of value especially if purpose is not home improvements. Purchasers will have to be able to qualify in their own right for the full mortgage needed one way or the other.

It only took a single google to come up with loads of examples...here is one:
[broken link removed]

Google seller financing or buyer holds mortgage...

Happens a lot in the states - maybe it hasn't hit the mainstream here yet - but it will.

Can this scenario ever happen:

The actual price the two parties settle on is €350,000. They collude to "value" the property at say €380,000. Over the odds but perhaps the buyers haven't done their research.

The buyer then qualifies for and obtains a mortgage of €350,000. The €30,000 deposit is noted as paid directly to the seller even though it's not actually. The seller gets €350,000 and the buyer gets a 100% mortgage.

Obviously it's fraudulent, but what prevents it?

argolis said:

Obviously it's fraudulent, but what prevents it?

Click to expand...

You mean it's tax fraud (because presumably any gain in excess of the fair market value may be assessable for CGT even on an otherwise exempt PPR?) or "defrauding" the mortgage lender or both? Lots of self assessed taxes are open to fraud but I guess that the disincentive is the fact that Revenue can and do catch up with fraudsters and the penalties can be severe.

argolis said:

Obviously it's fraudulent, but what prevents it?

Click to expand...

the seller forgetting about the deal after he gets the cheque and keeping the 30,000..... you can't go to the guards and say I was trying to commit fraud but he cheated me...

No, he said that the deposit was noted as paid but not actually paid.

Anyway, apart from fraud, tax issues, lying, etc.,etc there are a whole series of flaws in the proposal. Lenders and Revenue are used to people lying and cheating - strange but true!

So: flaws:
1. It involves the collusion of two solicitors in drawing and witnessing the contract with the incorrect price. And presumably the EA.
2. Lying to the lender and the purchasers solicitor lying about the actual price being paid - its implied in our Certificate of Title scheme that the purchase price in the loan offer is the same as in the contract is the same as in the Deed.
3. What figure is stamp duty paid on?

Finally, what is the point of going to this much effort if the Purchaser cannot afford to buy the house at normal market value?

mf

Think MF1 summed this up perfectly, what's the point? Don't see a benefit to either party.

In my experience of tenants wanting to buy a place I was renting to them - it's simply not worth it.

Even after they buy - they have this tenant mentality about them and ring you to fix things. Seriously.

If the landlord wants to sell, give tenants notice, put it on the market and sell. Clean break and no running around in circles trying to sort out mortgages on behalf of the buyer!

If tenant wants to buy it - then take responsibility. Get a mortgage, make an offer, buy.

Can't afford to buy? Then rent. Simple really.