Buying and then renting back to original owners?

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • Russj
    started a topic Buying and then renting back to original owners?

    Buying and then renting back to original owners?

    We are buying an investment house using savings and a small buy-to-let mortgage.
    The current owners are divorcing and one partner has asked if they can rent the house for a few months while their new property is being renovated.
    This arrangement would be fine by us but I am concerned that we would not have got vacant possession (as required by our lender) as it would seem pointless for the owners to move themselves and chattels out only to move it all back in a few days later.
    Also, I read somewhere that under these circumstances, the original owners have the right to remain for a minimum of 5 years?
    Can we avoid these issues by having a genuine break of say, a month, between us buying the property, them moving out and the rental starting with a proper short term agreement?
    As I'm sure you can tell, we are new to this so your advice would be very useful.


  • jpkeates
    replied
    Originally posted by Russj View Post
    So, in simple terms, we can't rent back to one of the original owners under any circumstances without invoking the 5 year minimum tenancy?
    It's simple enough.
    Don't do it, it's adding risk for no benefit to you.
    I suspect it might actually be illegal (or at least not legal).
    If you were a business you would have to be regulated to carry out this type of transaction.

    And if you want to know how risky it is, there are currently only two business who are registered to carry our sale and leaseback transactions and neither is taking on any new business.
    And why would vacant possession not have been created if they moved everything out on completion and didn't return for a month?
    Because moving out, knowing that it's for a month and then there's an agreement that the seller will move back in, is a sham designed to breach your lenders terms and conditions.

    Look at this way, why do you think you've not heard of lots of people doing this?

    Leave a comment:


  • leaseholder64
    replied
    Because it would be a clear sham.

    Leave a comment:


  • Russj
    replied
    So, in simple terms, we can't rent back to one of the original owners under any circumstances without invoking the 5 year minimum tenancy?
    And why would vacant possession not have been created if they moved everything out on completion and didn't return for a month?

    Leave a comment:


  • jpkeates
    replied
    Originally posted by Russj View Post
    Can we avoid these issues by having a genuine break of say, a month, between us buying the property, them moving out and the rental starting with a proper short term agreement?
    That wouldn't be a `'genuine" break, it would be a premedited attempt to knowingly defraud your mortgage lender and evade the sale and leaseback regulations.
    You need (genuine) vacant possession.

    Either defer completion until the sellers new place is ready or they need to rent somewhere else for a while.

    Leave a comment:


  • theartfullodger
    replied
    That would be a sale and lease back deal , governed by rules including cooling off period and tenancy of at least 5 years.

    I'd only deal with full vacant possession

    Leave a comment:

Latest Activity

Collapse

  • Statutory periodic tenancy vs contractural periodic tenancy.
    buttons
    Having learned that a tenant without giving notice is still liable for council tax if a contractural periodic tenancy comes onto force at the end of a 6 month fixed term simply by adding this to the agreement, are there any disadvantages for a Landlord in adding this to a contract such as a change in...
    17-07-2019, 18:23 PM
  • Reply to Statutory periodic tenancy vs contractural periodic tenancy.
    Lawcruncher
    If my definition of a fixed term tenancy is correct, that is that it is a tenancy which only has one possible end date (excluding any early termination by surrender, forfeiture, exercise of a right to break or whatever other than effluxion of time) then a tenancy granted for any length of time and expressed...
    18-07-2019, 17:12 PM
  • Part of deposit not protected
    coppernob
    Hi all,

    Last December we entered into an AST (initial 6 month fixed term) and paid a deposit of £900, which included a £200 pet deposit for our dog. This full £900 was put into the a deposit protection scheme.

    Towards the end of January we wished to get another dog, and...
    16-07-2019, 10:26 AM
  • Reply to Part of deposit not protected
    DPT57
    Tell the landlord that if he repays you the deposit in full from his own funds, you will agree to him retaining the full deposit that's in the DPS account. It shouldn't be beyond his means to front fund this for 30 days....
    18-07-2019, 16:40 PM
  • Best option
    Locornwall
    I am considering buying a bungalow. It has a garage to the front and in a large rear garden, an outbuilding.

    When considering making money from a possible lodge or Airbnb, what would you say is my best option? Maybe to convert the garage and provide extra room for an in house lodger or...
    18-07-2019, 13:57 PM
  • Reply to Best option
    jpkeates
    It was mentioned, but the main debate in that thread is whether the use of some kind of granny flat would be a lodger or a tenancy arrangement.
    So mostly about people living there.

    Creating a situation where people stay somewhere temporarily is a different thing (it seems to me)....
    18-07-2019, 15:18 PM
  • Finding replacement tenant
    Chihuahua1461
    Hi guys,

    Looking for some help or advice. I am currently renting from a private landlord in a shared living arrangement in the UK.

    My current 12 month (and then rolling monthly) lease is due to end. In the contract it stipulates it is my responsibility to find a replacement...
    18-07-2019, 00:19 AM
  • Reply to Finding replacement tenant
    jpkeates
    I don't think the indefinite contract things going to fly.
    This is a straightforward lease with an initial term that continues in some (oddly undefined) way.

    The only unusual thing about it is that the terms of the continuation aren't defined, which they normally would be - so there...
    18-07-2019, 15:14 PM
  • Reply to Finding replacement tenant
    Chihuahua1461
    Fingers crossed an expert will spot this as you say leaseholder64 - tell me their name, I'm not privy to such etiquette 😁

    So it looks like I have to find a replacement prior to leaving then? Any previous tenants I have known have done this. It just makes it difficult to find myself a...
    18-07-2019, 15:06 PM
  • Reply to Best option
    leaseholder64
    AirBnB was raised, by the OP, in the original thread,
    18-07-2019, 14:35 PM
Working...
X