Buying house with a sitting tenant

  • Filter
  • Time
  • Show
Clear All
new posts

  • Buying house with a sitting tenant


    I recently bought my own home as a FTBer.

    My mother lives alone in a rental property, but she is on a pre-1980 whatever-it-was contract whereby she is secured and basically lives in the house as if it's her own for the last 40 years.

    I'm led to believe the house is worth a lot less with her there as a sitting tenant than it would be otherwise, so I am considering buying the house and letting it to my mother.

    Is this normal practice, and if so, how would I go about it?

    I understand the concept behind BTL mortgages, the extra deposit typically required, but wouldn't know how to go about getting an accurate valuation done taking the tenancy situation into account. Are there companies that specialize in such a thing or should I just go to a local estate agent?

    If the current owner chose to sell, would they have to do so at the property's market value with a sitting tenant, or could they just name their own price? I was led to believe that, much as there is a 3rd party who enforces inflation-linked rent increases (i.e. the owner can't simply charge what he wants), that there are also laws saying that he has to offer the house at it's market value in the eyes of an independant surveyor.

    thanks for any advice!

  • #2
    The owner can offer the house at whatever price he/she wants....why do you think otherwise?

    If I want to offer a two bed flat in Birmingham for £5 million, no-one can force me to sell it at 'market value' since it is mine to sell and not yours to buy.

    If I owned the property, I wouldn't accept your argument of a depressed market value due to having a regulated tenancy, since a family member is buying the house. I would know that the house would be worth full market value to you, since you are going to scrap the regulated tenancy at your choosing in the future.

    If you were a third party investor then your argument would stand since you would have no ability to change the house from being under a regulated tenancy, but as a family member...I'd tell you try again.
    I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.

    That also means I cannot share in any profits from any decisions made!


    • #3
      Appreciate your points about the owner being able to ask what they want for the house, but surely any mortgage lender would value the house at it's value with a sitting tenant, regardless of who the purchaser is

      So, if a cash buyer comes along then you may have a point, but if he sells it to someone needing a mortgage, whether that's me, you or anyone else for that matter, then he surely he has to sell it at it's value with a sitting tenant because otherwise it's un-mortgagable?


      • #4
        Where the purchaser gets his money from, and what a mortgage company are willing to lend against the property have no bearing on the selling price.

        Take Phlash's £5m flat in Birmingham. No lender would value it at that, but Phlash still has the right to say he won't sell it for less.

        I guess the key point is that the vendor doesn't have to sell it (at any price)


        Latest Activity


        • Residential Remortgage, Consent to Let and Purchase of New Build
          I have a complex situation I would welcome some advice on. I have stumped my two mortgage broker so far. Any ideas/tips would be most welcome. The scenario is;

          My wife and I currently own outright a property worth £410k. We are looking to release equity in order to purchase a new build,...
          15-07-2017, 21:27 PM
        • Reply to Residential Remortgage, Consent to Let and Purchase of New Build
          I am inclined to agree with Logical.Lean. Lending solutions come from experience and working on a face to face basis with both clients and brokers. Nothing is " Complex" as each case will have its own characteristics and there is normally a mental "Flow Chart" which enables the broker...
          21-07-2017, 14:50 PM
        • is it better to pay off mortgage or buy a few more ?
          I owe £49000 on my btl.I have £70000 in the bank .I could pay off mortgage or I could put down 2 deposits on 2 more buy to let's if I purchased around £80000 and I would still have money left over.Could I have some advise please or what would anyone else do ? .In my opinion buying 2 more would be...
          21-07-2017, 07:22 AM
        • Reply to is it better to pay off mortgage or buy a few more ?
          You unfortunately bought close to the market peak but 20% is still a long way from 50% down. And there are still 11 years to go from the over two decades suggestion. Plus it is your residential property, presumably bought for very different reasons than investment property.

          (I'm not buying...
          21-07-2017, 12:34 PM
        • Reply to is it better to pay off mortgage or buy a few more ?
          Not all that unlikely. My personal residence has fallen by comfortably over 20% in real terms over the past 9 years. Remember as well that the general market trend is no good to the individual if the individual is the outlier - and someones property has to be the outlier!!

          However I agree...
          21-07-2017, 12:15 PM
        • Reply to is it better to pay off mortgage or buy a few more ?
          Since you are looking at spending £80k I assume you will be getting decent returns. So if you lost your job your BTL(s) would provide an income.
          I am struggling to imagine what sort of repair could cost £25k on a £80 property and would not be covered by insurance.

          First I would...
          21-07-2017, 11:36 AM
        • Reply to is it better to pay off mortgage or buy a few more ?
          He would be paying around £250 pcm, easily covered by the rent. If they went to 10%, he'd still be covered.

          Possible but highly unlikely and he doesn't necessarily have to sell then, the mortgage is in nominal terms being paid for by the rent.

          21-07-2017, 11:29 AM
        • Reply to is it better to pay off mortgage or buy a few more ?
          Exactly right.

          Has OP worked out what would happen to him if mortgage rates went up to 6%
          property prices fell 50% in real terms over the next two decades
          we have several more bits of lettings legislation, rent caps and a Corbyn Government who thinks they...
          21-07-2017, 10:24 AM
        • Reply to is it better to pay off mortgage or buy a few more ?
          Couldnt agree more!! It completely depends on what YOU think is going to happen in the medium term, and what YOUR risk appetite is, as well as your personal circumstances.

          For what its worth - I personally would pay it off, as I wouldnt be buying more BTLs in the current market and with...
          21-07-2017, 09:12 AM
        • Reply to is it better to pay off mortgage or buy a few more ?
          It depends on what you are trying to achieve and over what time scale and the income and costs involved.

          There isn't a right answer to that question.
          21-07-2017, 09:05 AM