Renting, want to buy in near future, been offered new fixed contract.. what to do?

[CrispyFB]

Little bit of background: We've been living in a rental for 12 months since relocating a year ago and selling our old house. We'd been trapped in negative equity with our old house until we overpaid enough to be able to afford to move, so obviously we've had to start from scratch with a deposit for a new place. We quite like our rental property - the landlords are the children of the old lady who lived here before and our rent is presumably subsidising her care home fees.

As much as we like the place, we're finding it very stressful living in rented as we feel we don't have much long term security, don't like the decor, worry over damaging wallpaper and beige carpets (with 3 young DC and DC4 due in March, this is a big worry!), having to upkeep a garden not to our taste, and not to mention the inspections or the threat of them. It just doesn't feel like home and that nags at us all on a fundamental level.

We've been model tenants, never asked for anything fixed, paid the rent on time, no issues with any inspections. The landlords have been fair on their end with things too like allowing us cats. A good tenant/landlord relationship, how it should be.

So 12 months has passed. Our fixed term contract has come to an end and we're on a periodic tenancy now. We've just been offered a new 12 month contract, with a rent increase of 3.5% (is this reasonable?) A year ago we'd have grabbed it, but things have changed. There's the new Help to Buy scheme, plus DH's share options with his company have done far, far better than expected in the last 12 months. This means that come January/February time we have a reasonable chance at having enough for a deposit and stamp duty to buy a place, a good few years ahead of what we were expecting.

However we don't really want to apply for an agreement in principle until there are more Help to Buy mortgages available in January (plus the funds won't be available until then either) Although our credit records are excellent, there's always the concern there might be an issue somewhere.

On the other hand we don't want to wait a further 12 months as house prices do seem to be rising especially thanks to Help to Buy. There's always the worry they may withdraw the scheme if it causes a house price bubble too, so we'd rather get in sooner than later! And we would LOVE to own again.

Ideally we'd love to buy this place but I'm guessing given they've just offered us another 12 month contract, that this is not likely to happen any time soon i.e. the old lady is in good health. Is it worth broaching the subject though?

So what can we do? Is it considered okay to ask for a few months to consider the 12 month contract? Would it be polite to give a reason why? I'm a bit wary of them knowing we're considering leaving as it may mean they're not as good with any future issues that may arise.

Any thoughts on our situation very welcome Sorry for the length, didn't want to drip feed!

I'm a LL and I think you should be upfront with the LL assuming s/he is a reasonable person. Explain that you are hoping to move in the spring/summer (realistically this is going to be the earliest it happens if you're not applying for a mortgage until January and you are having a baby in March) and you'd prefer to keep it on a periodic basis (or just renew for 6 months at a push). You'll have to suck up the rent increase if it's in line with what's happening locally but just say you'd prefer to keep the tenancy flexible.

Tell them that you will give them as much notice as possible when you intend to move out so they can start marketing the house again etc. I don't think they will want to sell the house if the rent is subsidising or covering care home fees but there's no harm in saying that you're looking in the area and really like that style of house, hint, hint...

To be honest, I would start looking now because I think prices will climb much higher in the new year but I suppose it depends where you are located.

Good luck.

Thank you! Part of my reluctance to say anything is because I am worried we might not manage to get a mortgage (even though in theory there should be no problem) and then we'd obviously want to stay a good while longer to address whatever the issue is.

We definitely wouldn't want to mess the landlords around (it's a man and a woman - brother and sister!) but obviously when buying a house it's not wise to give notice until exchange I am assuming, and from experience there's not much time between exchange and completion. We're happy for a bit of overlap of a few weeks though to fit in with the one month's notice.

Because of the price rises we do want to start looking asap and ideally would move tomorrow if we could, but we need to wait for DH's bonus (the last bit of deposit/stamp duty funds although we have enough for deposit-only end of December) at the end of January before we could put in a full mortgage application. We were intending on applying for a mortgage agreement in principle start of January and I've had my eye on the local property market for nearly two years now so I know what is about! I just don't want to be out looking at places knowing we couldn't make a full mortgage application to back up any offers we made.

Baby is due mid March at the latest, so it could be, uh, interesting. But there's worse things than moving house and having a baby at the same time although clearly it's not ideal. But if it's that, or lose our chance to buy a decent house.. Also I need to have an ELCS for medical reasons so unless I have PTL, so at least the date is fairly fixed. And I know what to expect as it is DC4.

Perhaps the best bet then is simply to say something like we have a baby on the way so we're considering our options at the moment therefore we'd prefer a bit more flexibility in the short term?

It does take a while to buy a house so even if you looked now it would be very unlikely that you would complete before January and therefore you wouldn't need to worry about your husband's bonus being available until then. I'd start looking asap if I were you and try to (a) beat the rush (b) get in place before your baby comes - or at least know that you're on the move by then. Start speaking to independent financial advisers and mortgage brokers to see what you can get, explain that you will have your deposit in 8 weeks' time and proceed to shop.

Thanks!! I am itching to get started (of course!) but am a little reluctant to go for even an agreement in principle until the new Help to Buy mortgages are announced in January by a whole bunch more banks. I guess of course there's no guarantees they'd be any more competitive than the existing ones, but it would give us a few more options.

I suspect we should find ourselves a decent broker regardless! After all there are always small building societies that may offer something suitable anyway. DH finds out his payrise and bonus (both effective from January's pay packet) within the next few weeks in the form of a letter so we should probably get the ball rolling once he has that. It took us three months to sell our house to a FTB, but it would have been two months if she hadn't switched mortgage providers once she'd made the offer, and the new ones dragged their feet over paperwork - everything else was straightforward though. So you have a good point

We've emailed the landlords and been honest, and said (paraphrased) that we'd be sure to keep them up to date with any decisions we make as soon as possible. We said we had a baby on the way and so we wanted a bit of flexibility in the short term whilst we consider our options and finances so we didn't want to sign another fixed term just yet. And that one possibility might be to buy a home similar to the one we're currently in which we really enjoy living in. If they're at all amenable to selling then that's obvious enough for them to offer I am sure.

Thanks for your help!