We're about to buy this property in Northfields (near Ealing). Our vendors don't want to move out to rented accomodation. They've found a house but it will take them three months to renovate it.
They would like to sell their house to us, then rent it from us for three months while work is going on on the other side.
We will say yes because we're desperate to buy in that area (most of the properties there go above asking price of late. Close to the tube, close to a good primary school - the works. We've already missed out on a lot of properties in Northfields because we refused to go above asking price).
We will have to keep our solicitor in the dark (ie we'll pretend that we're buying a vacant property). We won't get a buy-to-let mortgage because the minimum amount of time to get one is two years.
My questions are:
1) are we crazy to do this?
2) if not, what should our future tenants pay for rent? full market price for a short stay rent? normal rent? or just enough to cover our mortgage (if our mortgage is lower than rent)?
Note that our vendors suggested that they didn't want to pay full market price for the three months rent (and I thought that was cheeky - they probably think that they can because there are plenty of families out there wanting their house... and they're probably right, sigh).
Get advice NOW from your Mortgage Broker. This is riddled with issues but its too late at night for me to write them all out here. Don't keep anyone in the dark about what you are planning, no good will come of it.
Don't keep your solicitor in the dark! They are the best people to advise you in this situation and if you keep it secret there could be issues down the line (what if the current owners end up wanting more than 3 months, insurance issues if you have to claim and they find out, huge potential issues with the current owners if you get into any kind of dispute with them)
1) yes It won't be sold as a vacant possession and if their plans fall through you have no legal redress, raises issues with mortgage and insurance company 2) market rent plus some ,after all it is doing them a favour not tying them in to minimum 6 month AST but you would be foolhardy to proceed on that basis.
What if they don't pay the bills, run up debts, cause damage etc . Have you a property to sell in which case this would presumably be a bridging loan and very £££
Turniptwirl - you nailed it, my biggest worry is that they may end up wanting to stay for longer, because the work ends up taking longer than planned.
LIZS - you suggest market rent plus some and deep down I know you're right, but the situation is what it is: every house on the market in this area receives 3 or 4 offer for asking price and above. Oh well. Thanks for your advice!
Vatta, Katymac, Tigresswoods - thanks so much for your words of wisdom. Good point on the insurance.