Renting the house we're trying to buy?

[caledonianclown]

We're in the process of selling our current house (probably about a week away from exchange, our buyers want to complete around end of May/early June) and had found a house we wanted to buy but have run into some issues during the conveyancing.

It's currently used as a B&B and is therefore a commercial property meaning we can't get a residential mortgage. The owners have submitted a planning application to get it changed, but that takes 8 weeks, plus whatever time after that for mortgage company to do survey, approve mortgage and then conveyancing - probably another 6 weeks. So we're likely to be homeless for approx 10 weeks even if we can put our buyers off for a couple of weeks.

DH thinks we should approach the vendors about renting the house from them until the conveyancing is finished - they have already bought a new house and are itching to move. The B&B needs quite a lot of work to turn it back into a family home but we wouldn't start the work until it was actually ours. Other option would be to go into short term rental, but the shortest I can find is 6 months and we couldn't afford to pay rent and the mortgage at the same time if there was an overlap. Plus that means moving twice...

Anyone had any experience of this? Legally what are the risks? We would sign a tenancy agreement etc with the vendors to protect both them and us, but I'm worried about something unexpected coming up in the conveyancing which would mean we decide not to buy the house after all. But I reeeeeeeally don't want to have to move twice in 6 months with 3 kids, so this does seem like a viable option!

The main risk is that they wont get planning permission for chang eof use to convert to residentual.. In out area the planners are very often reluctant to agree change of use for tourist accomodation, (I know this because of my job) . You should talk to your local planning office before signing anything at all ,or you may have a place you cannot live in/convert..

I wouldnt rent from someone you are likely to buy from either ..(unless it was a landlord offering you the house you currently live in) I reckon it could get messy esp if you needed to pull out ..

Thanks Laska, we've already had a letter from the planning dept stating they would support the application so I think we're ok with that one. But I feel like you and am nervous about the risk of us wanting to pull out at a later date!

We were in this position but as the vendors. We had previously let the house, which was vacant and costing us a fortune in mortgage payments and insurance every month. Our sale was delayed and the buyer asked if they could move in as tenants until the sale completed.

Our solicitor advised us in the strongest possible terms NOT to do this. We would have needed an assured shorthold tenancy agreement which would have given the buyer various rights as tenants, not least 8 weeks notice to vacate. Had they failed to complete on the sale and refused to vacate we would have had to go to court to get them out.

However. If you can achieve a swift exchange you can have something called a 'short term licence to occupy' which would enable you to move in during the period between exchange and completion. You still wouldn't be able to start works until the sale completed, of course.

We did this. Due to some issues in the venders side they could not complete and it took a couple of months longer than anticipated. As the time approached we were litteraly going to be homeless. So they offered to rent to us and they would move out, they were ready to go as it was. We paid market rate and the solicitors drew up a contract that protected both sides i.e. They could not delay and we also had to proceed if done so satisfactorily. As it worked out it completed a couple of weeks after we moved in, but it worked well for us and for them.

We were also confident it would go ahead, so the risk was limited and we had exchanged, it was simply a land registry issue that took ages to get resolved. However when we moved in we had no idea if it would take two weeks or six months. If I remember correctly there was also a break clause in the contract if it didn't complete within six months we could pull out. If you're confident it will work, then I'd say go for it.

Had they failed to complete on the sale and refused to vacate we would have had to go to court to get them out

I'm guessing you mean you hadn't exchanged yet? Because there is big penalties for not completing if you've exchanged.

Bluntness yes, exactly - which was why the licence to occupy would only have been an option if we had exchanged. It sounds like your solicitors drew up a version of this. In our case, the delays with the sale also delayed exchange so it wasn't possible in the end and we just had to wait.

It sounds like OP has not exchanged contracts on this purchase, only on her sale.

That's right, our mortgage company won't even go and do a survey until the change of use is done so we can't exchange, although all the rest could be done so once mortgage is sorted exchange is very quick afterwards. We do have an agreement in principle for the mortgage but that's not enough. We did ask if mortgage company would do survey once the planning application had been submitted but they won't, they are even insisting that the B&B sign be taken down and locks taken off bedroom doors before survey. Ridiculous!

Yikes. That sounds v frustrating - sorry OP. The risks are pretty minimal for you but, bluntly, your vendors would be crazy to let the house to you before exchange and no solicitor worth their salt would let them. Depending on where you live, are there any air b'n'b or holiday lets around?

It is Angelica, thanks! (Ps love your name, we are going to see Hamilton in London in May 2018 and I cannot wait!) Will look at holiday lets, ironically there's another house we wanted to buy that the owner lets out as air bnb!