Would you pull out of this sale?

[MenAndKen]

It’s not me who is buying a house but a relative I will call them Sally. I am trying to help them make a decision (I’ve also NC). Agents and solicitors are not really being much use.

Sally Put an offer in on a property which was accepted pre COVID in 2019, mortgage offer ready, surveys done, accepted an offer on their own house.

COVID hits and everything halted, slowly resumed and sales continued as planned. The property Sally is buying (she found out just before exchange of contracts on her house) still has the tenant in it who now cannot be evicted and will not leave. They were given notice many months ago but on advice of the council are waiting for the eviction.

Sally didn’t want to pull out of her own house sale to the couple and start again with that so this went ahead and she squashed in her parents small house with DC waiting for the courts to reopen on 23rd August so the process could begin for eviction.

Private rental per month is much higher than the monthly mortgage costs she would have paid on the house she can’t complete on, and she then won’t be able to save the money she would have needed to do up the new place. The mortgage offer runs out in a few months.

To make it a lot worse, Sally also got her hours reduced at work due to COVID and now can’t get a new different mortgage offer on anything else. Sally is looking for a new job constantly but has been told a 2nd job won’t be taken into account for a mortgage so she can’t do that option.

TDLR: property you were buying has a tenant in who can’t be evicted, your mortgage offer runs out in a few months and your employer cut your work hours. WWYD?

Can she even afford the mortgage with the reduced hours?

Honestly I would advise someone to pull out but if I were Sally I would maybe struggle to take that advice.
I think i would be worried about getting more hours/a new job.
And the sunk costs of surveys etc.

But getting the tenant out could take such a long time and so much effort.

Can she cope if the process takes 6 months?

Also she would need to check the property after tenants have left to check it hasn't been trashed before exchange/completion?

Pull out, no way would I take on a difficult tenant, who may have/ could stop paying rent.

She can afford the mortgage yes, but the mortgage lenders have become so much stricter it would probably be difficult to get another offer on the new hours and salary.

Arrange for bailiffs to evict, high court writ

I would 100% pull out now. Too many complications, massive worries about finances, etc. It could end up being a disaster.

Just before completion the mortgage company will ask you to confirm no changes in circumstances since the mortgage was agreed. Your friend will be committing fraud if she doesn't declare her reduced hours. She's best to withdraw.

@Newfornow

Is this closed? Can this be done? Agent and solicitors are just all doing nothing it seems. I am not sure what the vendor is being advised either to be honest it isn’t clear. Agent won’t let Sally speak directly to the vendor

Pull out. Tenant can't be legally evicted for at least another six weeks, then even if that doesn't get extended, there'll be backlogs at court for months, backlogs for bailiffs, they may well still be there next summer.

@Terryscombover

Mortgage advisor has not told her this either

@Newfornow

Arrange for bailiffs to evict, high court writ

Not possible. Government have just extended ban on evictions.

A other vote for pulling out.

Surely she will have to inform mortgage company of her reduced salary?

" Agent won’t let Sally speak directly to the vendor"

Agent can't stop Sally speaking to the vendor ; she knows their name and address. Bypass the agent.

You can’t get a resideitnail mortgage on a property that is tenanted and not vacant on completion. The mortgage company would consider that a buy to let

I thought evictions were on hold only if they were Covid related reasons which this isn’t. However, I would pull out. Look for something chain free and get moving fast.

If she can't get a new mortgage due to her hours being reduced it means it's not affordable. Mortgage companies make money from lending to people and won't decline without good reason. She should be re thinking taking such a large amount of credit without the means to pay it back. The reason they won't accept a second job is probably that long term that is not sustainable and many people in that situation will default.

I would pull out. Waiting for an eviction is a lengthy process and it’s possible you could be waiting until spring. It took a year for my friend to be evicted on the council’s terms. Can you realistically afford to spend money on renting while you wait? You may be entitled to some help with the rent while you wait, but I personally think you should cut your losses and find a new house to buy asap.

@MenAndKen - that's terrible. We were OK anyway but our mortgage advisor warned us.

Assuming that the morgage offer could be used on a different property, Sally does have the option of a ‘contract race’ - keep trying to buy this house but also look for something else (something chain free) and if she finds something else start the paperwork on that too, and see which sale goes through first then drop the other.

I do not think this current purchase will exchange contracts before her offer expires but I may be wrong.

A cheaper option might be to pay off the tenant to go elsewhere no idea how that would even work tho.

Poor Sally :(

Definitely don't complete before the tenants have vacated

• the mortgage company would not agree to lend with a sitting tenant and it would be fraud not to tell them

It would also risk large legal fees and paying to repair a trashed house

She can wait for the very small chance that the tenant will be evicted before the mortgage offer runs out
but even if this happens, she must check every room for damage, before agreeing to complete

If not, PULL OUT

"Sally also got her hours reduced at work due to COVID and now can’t get a new different mortgage offer on anything else"

Has the mortgage company confirmed that her current offer will still hold, after her changed financial circumstances ?

I would be looking for something else that's chain free before the offer runs out.

Thanks

I need to tell her about the mortgage offer being invalid now her hours have changed and they will ask.

I think the only option she has now is private rental until she can increase her income to get a new mortgage on something else.

What a mess , I would pull out . I'm surprised she can even go ahead with a sale with a sitting tenant anyway. Something else for her to consider is that the mortgage company will want confirmation the property is insured then you have to advise the insurers that it's rented out , it's a different sort of insurance and a different type of mortgage. It's a whole lot of problems and there is a very high chance that the place will be trashed by the tenants anyway.