Buying House From Landlord

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Buying House From Landlord (Part 1)

Stephen Hargreaves explains the process of buying a house from a landlord. Episode one of two, recorded in May 2024.

 

If my landlord decides to sell, can I buy my rental house from my landlord?

Whether you rent from a housing association, the council or a private landlord, you can certainly buy a property from them.

If you’re renting privately from a private landlord, who says they are going to sell the house and you’re interested in buying it, you can ask whether they’ve had it valued and get a price.

From a purchaser’s perspective, it can be brilliant, because you’ve already been living there. You know the pitfalls and issues. You’re not going to move in and then be surprised when the hot water doesn’t work first thing in the morning.

You also have the Right to Buy with a council and the Right to Acquire with a housing association – both give you the opportunity to purchase the property. The council will possibly give you a discount off that purchase price as well, depending on how long you’ve been renting with them.

 

Can I ask my landlord to sell me the house?

Yes, depending on who you’re asking. If it’s a housing association or council, yes, you can ask. They will then get the property professionally valued by one of their surveyors and work out a discount based on how long you’ve been renting. Once they’ve given you that, you decide whether you’re going to buy it and if so, sign the paperwork.

If it’s a private landlord, you obviously won’t get a discount per se. But that landlord may be pleased for you to buy the house, as they don’t have to get estate agents and pay their fees. So again, you may get it a little bit cheaper because of that.

 

What is the process of buying a rented house from a landlord in the UK?

If it’s rented from the council or housing association, you fill out their documentation and that starts the process. For a private landlord, you would contact them to say that you love living there and ask if they would consider selling the property.

A vendor would ordinarily get two or three valuations of the property from local estate agents to give them open market valuations. They will then give you a figure – it’s very much a case of whether you want to buy at that price or get down to negotiations.

The good thing about selling to a tenant is that it can be done very quickly. There’s little or no chain involved. So as long as the landlord and the tenant are motivated, it can be through in a matter of weeks rather than months, which is fantastic for both parties.

 

Can a landlord sell the house you’re renting? What are my rights if my landlord wants to sell, and how much notice must a landlord give a tenant when selling property?

This is more into tenant law rather than mortgages, which I tend to deal with – but I do have a basic understanding.

Ordinarily, a landlord needs to give you two months’ notice to sell the house. I have come across property sales where a sitting tenant has stayed in the house and simply gets a new landlord. They’ve sold the property to a new owner.

A tenancy agreement effectively protects both parties – the landlord and the tenant. So the landlord can sell the property but they would still be governed by the tenancy agreement. They couldn’t just kick a tenant out with a couple of weeks’ notice. There are rules set out in the agreement.

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How can I buy a house from my landlord without a deposit?

Some lenders will give you mortgages using a discount. For example, if the market value of the property was £100,000, but the landlord was selling it at £95,000, we can actually use that difference of £5,000 as a deposit.

I had one a while ago where a husband and wife lived in one of their parents’ houses. They were renting off mum and dad and wanted to buy the house from them. The market value was £240,000 but they were happy to accept £180,000 – which was a fantastic discount for the daughter and son-in-law.

We used that £60,000 difference as a deposit on what they call a Concession Repurchase Mortgage. Lenders have these mortgages for exactly this situation.

What are the pitfalls of buying a property as a tenant? What are the advantages of buying your rental property?

There aren’t many pitfalls – I can only see the advantages, really. If you’ve been living in that property, you know what the next-door neighbours are like, what the garden’s like, you know how the heating works and that the electrics are good. You’ve been living in it.

Clients who are buying properties from their landlords don’t bother with comprehensive surveys because they already know the property inside out. I can’t see many pitfalls, but I can certainly see benefits and advantages.

How can a mortgage broker help if I buy a house from my landlord?

If you went to an estate agent, they would offer their finance services and you would start looking at mortgages. A lot of tenants end up finding their own way, starting with their own bank or building society.

But using a mortgage advisor can really pay dividends because we’ve got the benefit of looking at all the lenders. We are a whole-of-market mortgage broker, meaning I can look at all the lenders from A to Z.

We talk you all the way through the whole process. We can organise solicitors, surveys if required and continue to advise and support you every step of the way.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Some products are only available when purchasing directly from the Lender and not a Broker