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?

Getting a mortgage lender to account for a second job is definitely possible - Sally needs a new mortgage advisor. However, they'll often require that she's been in both jobs for at least six months - so sadly I agree with 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, sorry.

The evictions ban was just extended another month and even then, the courts have been instructed to prioritise only the worst cases. It will take months and months to sort this at best.

The only option to avoid pulling out is to pay off the tenant to leave. Ask for seller or get a couple of grand together, Sally do the same—if the tenant is offered say 5-8k (depending on area?) to vacate and sever contract, they will likely agree to do so. They have all the cards in this situation, but may we

(Cut off): but may well be in a position of not being able to move, not having funds for a new place, etc. If the landlord can give solid help, and they and Sally back this up with money, they will likely agree to move on.

I think Sally should like at getting a professional mediator to help deal with the tenants—you can do this online. Basically what would it take to ensure you can move, and then what would mean you would want to.

even a simple eviction before corona takes between 5 to 7 months
Now? Well as pp have said the eviction has been delayed another month & the court is going to have an enormous backlog (& how many people have been working from home have childcare issues & the muddle!)
On another subject - the gov eviction ban extension is not yet covered by the mortgage holidays - I can see a lot of LL leaving renting & the local councils are in debt because of corona is going to lead to decrease in rentals & increase in rent. I doubt it will lead to availability
of lower cost housing ownership (for one thing many people will have lost their jobs & will only get lower paid insecure work - if they are lucky) nothing has been thought through. & the mortgage holidays both for home owners & LL have unintended financial consequences making future loans & mortgages problematic.

Pull out!! Tell her to walk away NOW
Getting a tenant out who refuses to leave is an legal nightmare and an expensive one at that
The worst case is the tenant then trashes the place before they leave and she's left with enormous repair bills
There's loads of properties going on the market at the moment-tell her to cut her losses and move on!

I feel bad for Sally. These are the type of things that people don’t think about when they say tenants should be allowed to stay put.

No way would I continue.

It is so awful for her. The timing of it all sucked, they should have completed a couple of months ago and at that time there was no issue with the salary or work hours.

The agent/vendor were not clear with Sally that the tenant was not going to be leaving until recently. The vendor does not live nearby so Sally can’t just knock on the door and agent won’t give Sally their phone no or email.

I don’t think the tenant will trash the house but no way can sally take over the mortgage with the tenant there and that’s not an option. Tenant should have left in Feb/March but COVID has worked to their advantage to stay put for months and months more. No idea if they are paying rent or not.

Pull out. With the stamp duty holiday, it seems a lot of properties are getting on the market. She will be able to find herself a better deal. One without a sitting tenant for a start.

It could be a silver lining. The sale seems dodgy reading your last update.

She's entirely within her rights to pull out and IMO should. The seller is a business person who knows the risks and if they are competent will have made contingencies. It's a commercial transaction for the seller and the usual 'moral' reasons for carrying on with a sale that no longer really works do not apply.

Pull out ASAP. Sally needs to find a house that she can buy if she can still take up the existing mortgage offer. It will take a long time for that property to be able to be sold "with vacant posession"

there is a very high chance that the place will be trashed by the tenants anyway

Can you please tell me how you jumped to that conclusion? Seems a very odd thing to say.

Sally should definitely pull out. This sounds like a disaster.

@LockdownLump yes that was very presumptuous of me just that I know of 4 landlords that had trouble getting the tenants out and when they eventually managed it they had all trashed the house and stolen furnishings. If the tenant is refusing to leave they are already showing themselves to not be that considerate or caring towards others.

What happened to the money from the house she sold?

The tenant has been advised by the council to stay put until evicted. This may mean that they are hoping to get rehoused by the council and council won't do anything until they are officially homeless.

If this is the case they won't be persuaded to leave by the offer of a few thousand pounds.

She still has the deposit money, but house prices are just slightly out of reach on her salary. Even just £3k pa salary wise out of reach. A second job like someone said would need months of wages to show a lender, self employed is no use, she’s struggling to find a new job that is the level of money required for a mortgage. There just isn’t much around right now. Her employer might reconsider increasing her hours again if their business is recovering well post COVID.

She can just about afford to private rent I think although it will be quite tight. Private rental is nearly double what the mortgage payment would be, she doesn’t want to spend her deposit on renting though and is hoping she would pass the affordability to rent, that’s another challenge! So if the mortgage was going to be £500pm for instance, renting similar is going on £1000 in this market right now. Moving further out is possible but another disruption for the children. She’s just got divorced and this was the sale of the family home.

The tenant is a single parent I believe, who did not leave when they were given notice originally and intends to claim homelessness to the council therefore has been told to stay in the home until the eviction happens.

There is nothing she can get back either is there? What happens to all the fees she will have to pay up to now (solicitors).

No, and shit happens. Bad surprise after surveyor visit, issues with the deeds, etc. House sales sometimes don't go through for a variety of reasons.

It is worth not walking away from the sunk cost rather than walk into a bad situation.

Another vote for pulling out of the sale.

She could see if the misrepresentation of the tenancy situation means that she could get the vendor to pay towards the fees she’s incurred so far.

My advice would be to not completely pull out but wait until the Tennant is out then view the property again and reassess the situation. There might be some scope to reduce the price iif the Tennant has left the property on poor condition or the market has dropped. Also the job situation may have improved by then and Sally may get a better mortgage offer.

Is there scope to barter the price down? As you're dealing with a BTL landlord, this is ultimately a commercial transaction without a signed contract yet, so you'd be within your legal and moral rights - and potentially in a good position - to try to knock a chunk off the price.

The agent/vendor were not clear with Sally that the tenant was not going to be leaving until recently

I'll bet

Whatever the situation around Covid, reduced income and the rest though, she'd have to be mad to buy a house with a sitting tenant (unless of course it was bought as an investment property)
There are just too many ifs and buts, two of the main ones being that her lender almost certainly wouldn't agree to it, and as a PP said, the tenant will probably still be there next summer

Sally should pull out. I made a mistake of looking at tenanted house. After 3 weeks of trying to view it, we gave up.

It is much easier to just disregard anything with tenant in it for a future. She can tell them to let her know after tenant leaves, and hopefully she may get her situation sorted by then.