Sometimes tenants fall in love with their rental home so much that they want to buy it. They may want to approach their landlord with an offer or their landlord may have offered them ‘first refusal’ before they go onto the open market.
With various initiatives in place to help first time buyers onto the ladder, it’s something we are starting to see more of (especially when there were stamp duty holidays), and it can actually have its benefits – no need to spend money on a removal company for example, and you won’t have other buyers as competition!
Having helped some of our own tenants purchase theirs, our team at Hancock & Partners thought we’d let you know what your options are, to help you get the ball rolling…
Approaching your landlord with an offer
Ask your landlord if they plan to sell up in the near future, and if so, would they consider selling now to you. If they say yes then great, but if they say they don’t plan to sell for a few years yet, ask them if they would be willing to give you first refusal before launching to the open market. If you don’t have direct contact with your landlord, have a chat with the management company to see if they would contact them on your behalf.
Research the costs of owning your own home
You will already know what your energy bills, council tax and water charges are going to be – these shouldn’t change – but there are other costs to consider. You will have a mortgage to pay each month for example. Often this is less than what you are paying in rent, but it’s not always. Other expenses include a deposit, maintenance of the home, any renovation works, legal fees, mortgage lenders and stamp duty.
Find out how much your home is worth
Do your research to find out what the property might be worth, before making an offer. Have a look on property portals to see how much similar flats or houses in the local area are selling for. Some of them may be able to show you the price history of your property too. Your landlord will get a valuation done anyway should they want to sell, but it’s also worth you finding out too so you know what would be a sensible and tempting offer for your landlord. You could ask your managing agent if they have a sales department to help with giving an approximate value.
Do you need a mortgage?
Do your research online as there’s a plethora of sites that compare mortgages – don’t just look at mainstream banks. It’s worth finding a good mortgage broker because they will be able to find the best product for your situation, often finding mortgages that you can’t find online or have been refused for by others. They’ll also only give you options that you’re most likely be accepted for. This is useful because if you apply for mortgages and are then rejected, it will impact your credit score. You will probably have to pay them a small fee, but it can be worth it if it saves you time, money and stress. Ideally you want to have already got a mortgage in principle before you make an offer to your landlord, as this will demonstrate that you are serious and not wasting their time.