Opportunity for Tenants Buying from Landlords
The number of enquiries we are receiving about private tenants buying from landlords is on the rise. This is due to some Landlords offering “first refusal” to existing tenants. Even if you don’t have this privilege, it might still be an option. It’s worth asking your Landlord if they would be willing to offer you “first refusal”.
Why are more tenants being offered the opportunity to buy from landlords?
The Government have cracked down on tax relief previously available on Buy to Lets. The changes have been “phased in” over a 4-year period. It is only now that they are starting to see the impact of these changes as they receive their tax bills.
Property has been seen as a sound investment for Landlords over the years. Therefore, many have decided to ride out the tax changes because they are in it for the long term. However, if your Landlord is tempted to sell, then there are lots of advantages to selling it to you as the tenant.
- Avoiding Estate Agents Fees – the national average estate agents fee is 1.8% + vat so this alone saves a lot of money.
- Loss of rent – it’s actually quite difficult to sell a house with a sitting tenant. This is because tenants won’t typically put themselves out to do viewings on behalf of their Landlord. Therefore, the chances are they will move out and this creates a “rental void” where no income is being received. Selling to the tenant guarantees rent will keep coming in right up until completion.
- No refurb costs – if the tenant moves out then the chances are the house will need at least a lick of paint, if not more significant refurbishment to get it “ready for sale”.
There are also advantages to the tenants buying from Landlords in these situations:
- You “know” the house well and what improvements, if any, that need making.
- There is no “chain”, so the sale is less likely to fall through.
- The Landlord may offer you a slight discount from the open market value because of the costs they are avoiding.