If you’re currently renting a house and thinking about buying a property for yourself, it might be that you’re interested in purchasing the house you’re already living in.
Buying a Rental House
But can you buy your rental property? In this guide, we will tell you all you need to know. But if you have any questions after reading our post, be sure to get in touch with a member of our expert team for further advice.
Can private rental tenants ask to buy the house from their landlord?
Yes, you can buy your rental property from your landlord, if they agree to do so.
A landlord selling a rented property isn’t unusual in the UK and many tenants have made their way onto the property ladder as a consequence. Of course, your landlord has the right to say ‘no’ to you but if they do say ‘yes,’ you won’t have to look elsewhere for your property purchase, and you won’t have to worry about hiring a removal service to transport all of your belongings.
If the landlord does say ‘no,’ this doesn’t mean they will be in disagreement forever. After letting them know you’re interested in buying their rented house, it might be that they consider the option further down the line.
Related reading: Renting vs paying a mortgage: The pros and cons
What are the advantages of buying the property you are renting?
If your current landlord agrees to you buying their property, you will benefit in the following ways.
1. No estate agent fees
As you will be buying the house directly from the landlord, you might not need to go through an estate agent. As a consequence, your landlord won’t have to pay any estate agents fees. This can mean you may get the property purchase slightly cheaper.
2. Save time
If you’re sure you’re happy with the house you are in and you’re positive that you are in the right location, there will be no need to search the rest of the property market for a home. This will save you a lot of time as you won’t need to travel from location to location looking at houses and is a great way of getting on the property ladder.
3. Possibility of property price negotiation
If you have been a good tenant on an assured shorthold tenancy you may be able to negotiate the asking price. Your landlord might still insist you buy the house at the exact property value but there’s no harm in asking them to reduce the price before the sale goes through.
4. No competition
Provided the landlord doesn’t decide to sell the house on the open market, you won’t have to worry about a competing home buyer. And if it is just you that is interested in buying it, you might even get the house at a cheaper price. If you’re buying your first home, this could be an amazing option for you as the first-time buyer market is highly competitive.
5. You won’t have to move
As you’ll be staying in the same house, you won’t have to experience the stress of moving. This means no uprooting your family and pets, no packing of boxes, and no saying goodbye to the neighbours you are friendly with.
5. You will own the property
One of the problems of renting is you never know when the landlord will make you homeless. By buying the property this won’t be able to happen and you will have your very own home!
You will want a repayment mortgage which means you pay off both the interest and capital part of the mortgage. By choosing a fixed-rate mortgage instead of a variable-rate mortgage if interest rates rise your monthly payments will stay the same.
You will be able to choose a mortgage term with the mortgage lender that makes the mortgage payments affordable and possibly even lower than your rent!
6. Save money
You will make savings if you buy your rental property from your landlord. There will be no removal costs and potentially no fees from estate agents to worry about, and you won’t have to pay rent forevermore to the landlord. You may even find that the mortgage payments can be less than the rent you have been paying.
It’s been our experience as a professional mortgage broker that not only is it possible to buy your house from your landlord but also makes financial sense to do so. Landlords are often willing to sell the property at a discount because they will save on having to pay the estate agency fee.
We recently carried out an in-house study and the evidence from the study was tenants were on average able to buy their house from the landlord at 2% below the market value. – Stephen Roberts
The process of buying a rented house from a landlord UK
If the landlord sells the house to you, you will finally have the freedom to do what you want with it, such as sticking pictures to the walls without having to worry about nail holes and not getting your deposit back!
But before you get to that stage, there are a number of steps you should go through first. We have broken these down for you below.
1. Ask your landlord if they’re interested in selling
This is the obvious first step as you won’t get very far if they say ‘no.’
As a tenant, it’s probably wiser not to drop them a text out of the blue so have a proper conversation with your landlord in person or over the phone to get a rough idea of their thoughts on the matter.
It might be that they were thinking about selling anyway as the tax relief incentives have reduced dramatically over the last decade. If the landlord isn’t planning to sell, they may be willing to consider the possibility after you have shown interest.
2. Find out how much the house is worth
It’s not difficult to find out the property value. Simply go online and visit a property site such as Rightmove or Zoopla. This way, you will get an idea of how much similar properties in your area are selling for.
Another option is to have an independent valuation done on the property. You can ask an estate agent to do this for you so get in touch with somebody at a local letting agency as they should be familiar with house prices in your area.
It’s sometimes worth getting a second or third opinion on a property’s value to double-check the final figure, so get in touch with more than one letting agent for the property valuation.
It’s advisable to get the property surveyed too, as the value of the house might drop if there are any structural problems.
3. Find a highly reviewed fee-free mortgage broker
You won’t need to pay rent anymore if you purchase your current home but you will need to make the mortgage payments on the house. As such, it’s advisable to go through a broker as they will search the market on your behalf to find the best deals and lowest interest rates that are available.
A good broker will also calculate your affordability to find out how much you’ll likely be able to borrow and what your mortgage payments will be.
If you think you’ll be able to pay back the mortgage loan, after budgeting for such things as…
- council tax
- utility bills
- buildings insurance
- contents insurance
- stamp duty – How much is stamp duty?
… the broker will then get in touch with lenders on your behalf.
With the broker’s help, your journey toward home ownership will be made easier. Be sure to choose a highly rated, FEE-FREE broker such as ourselves, as we will help you to save money by getting you the lowest mortgage repayments and have better peace of mind during the house-buying process.
4. Formally contact your landlord
If your landlord has already established that they’re willing to sell, now is the time to present them with a realistic figure that equates to the property’s market value.
You should do this with a formal letter, backed up with a financial quote given to you by the people who valued the property.
Hopefully, the landlord will agree to the sale but if they try to negotiate the purchase price first, remember your budget and what you can and can’t afford.
If for whatever reason the landlord decides not to sell, or if you don’t like their asking price, you could continue to rent or look around at other properties.
Looking at other houses might be something you do anyway, even if you do consider buying your rental house, as you will have a better idea of the other houses that are currently available. You might find a property that is more to your liking or you might decide that your rented home is the house you want to buy.
How YesCanDo can help you buy the property your renting
If you’re a tenant and you are sick of paying rent, you may be interested in buying your current home.
Call us for a chat. We understand that there is a lot to think about. This is where we can help you. We have a lot of experience helping tenants buy the property they are renting. We will be able to work out how much deposit you will need and the mortgage term that is best for you.
Once you have had the property valued, we can look at your mortgage options with you and can get in touch with the right bank or building society that is likely to give you a good deal and the lowest interest rate on your mortgage. We have lots of connections with local solicitors and will also get you quotes for your legal fees.
Your appointed representative will also advise you on the steps you can take to reduce the mortgage interest rate on a loan as you will then be able to benefit from significant savings.
Book an appointment with a member of our mortgage team if you would like to know more and benefit from the support that we can give to you.