Seller wants to stay on after exchanging contracts

[asks62]

A bit of a strange one I must say in our journey of finding our first home. We've had a few difficult scenarios thrown at us in the last few months but this one, I must admit is a bit too crazy to digest. Looking for any advice you can offer.

Offer accepted. We're in a rush obviously to beat the Jun 30 stamp duty deadline. (It's a big sum for us if we were to delay).
Few days later the estate agent says the sellers are doing up their new property and it'll take a few more months than planned earlier. So they're still happy to close the transaction by end of June but they will stay over for 3 months beyond the contract completion date.
They're happy to pay rent for the 3 months that they stay at technically what would be our property if we go ahead.

Problems:

1. Solicitor and bank have both red signalled it saying you need to take possession on contract exchange day. So essentially I've to lie to them saying I will be moving in there as soon as the contracts are exchanged. I'm extremely uncomfortable with this.
2. Since we would be owners all liability on the house is ours. Building insurance etc could be invalid if something were to go wrong like a fire, burglary etc.
3. We love the property. It's a nice area but we're too inexperienced to visualise the challenges we might get into because this could be breach of contract with lender etc.

The sellers seem genuine but I know nothing about them.

There are not many properties on the market because everyone seems to be buying one at the moment.
My mind says we should just let it go.

Is this a common scenario? Do you think it's worth the pain?
Estate agent is trying to talk me into it and I'm confused.
Any advice is appreciated.

We stayed on as tenants in a house we sold while renovating our next house. This was a few years ago, in the UK.

The big difference though is that the new owner had purchased the house as a BTL, so already had the correct mortgage etc in place, and there was no deadline for us to move out (as she was going to be renting it anyway). So it worked out really well for everyone.

It be much more wary about a house you actually want to move in to.

Absolutely no fucking way! what a pair of CF they are.Listen to your Solicitor .They have your best interests at heart ,and know a lot more about House purchasing than anyone on here .I think they are taking advantage of you .This will be your first property and they are "Trying it on" with you I think .

Sale and rent back is actually an FCA regulated activity and they haven’t granted licences to do this for some time because everyone who wanted to do it was a scamming bastard. So for all intents and purposes, renting your house to the old owner would be illegal.

It would be a very very bad idea. They could easily refuse to move out. Then there is the question of insurance. And you will be in trouble with the bank if they find out. Where are you going to live. If they dont pay the rent you will be still liable for the mortgage

We did this with our first ever purchase so were living with parents at the time. We were buying without an estate agent and made a private arrangement with the sellers. We had nothing in writing, and didn’t communicate it well as we were young and very green. It ended badly at the end of the agreed month as their renovations were incomplete and my OH was hotheaded. It left bad feeling with neighbours and the couple we bought from, and me feeling guilty. We didn’t even consider the possible legal implications on our mortgage or insurance!

Absolutely not.

Estate agent is trying to talk me into it and I'm confused.

Of course they are, they want the sale, listen to a solicitor not a bloody estate agent 😂😂 it's too risky to do this and would end up costing you money. I'd let this one go.

No way! They need to move out of the property and if they can’t go to their new purchase then they need to move to a property that’s actually up for rental.

Why would you even be considering doing this after you have received legal advice?

You would be committing fraud and taking an enormous risk of losing everything!

you just need to say you would really like to help but unfortunately it breaks the terms of your mortgage offer and your solicitor refuses to request the money from the mortgage lender unless you undertake that the property will not be rented out. Thus its not you being unreasonable its the corporate bad boys.

No 100% do not even consider getting into this. They leave on the day of exchange end of. If they're doing somewhere up thats on them, they either stay with family, rent somewhere or sleep on a blow up bed - not your problem.

Just say no, they can find a short term let/storage

No. Don't do it. They can live in the other house or get a short term rental .

They are trying to force you because of the stamp duty.

No bloody way. Tell them to rent an air bnb for 3 months! Cheeky mares!!

Having sold homes for over 30 years, this is quite common, usually new builders do this, but i am shocked your solicitor has not advised you to take out indemnity insurance which will cover you for any defects/problems ect whilst they rent your property, 3 months is a long time though, when we did it it was usually only a week or two.

no fking way!!

you would be mad to even consider it. If they refused to move say after 3 months, renovations not complete etc - court will be the next step and evicting tenants during covid is pretty impossible to do quickly, and very costly.

no no no no no no no no no no no no no no no no !!!

The only way you could do this, legally, would be if you were buying the place to rent out, had a BTL mortgage agreed, appropriate insurance & all the other paperwork sorted (not, in the nicest possible way, a sensible route for you guys to go down given you're naive first time buyers who clearly don't really understand the ramifications of buying a house never mind becoming landlords!).

Then you might think ok, they can be our first tenants.

I'd be wary even then. They are going to be stretched financially no doubt with their renovations. If anything goes wrong with the work on their new house, which it almost certainly will, who is to say the first expense they cut isn't paying you your rent? Or they stall their renovation work because they're skint because they need to pay rent and the new mortgage so can't afford the builders, & then you're stuck with miserable resentful tenants for years.

Oh & you can't evict them because covid & court delays. Which they'll know. So no comeback on them if they default on your rent & squat for as long as it takes.

BUT ANYWAY you can't legally do it because your mortgage & insurance are NOT set up for you to BTL.

So all of the above, plus it's fraud, plus if the house burns down the insurance won't cover it.

It's impossible for you to do this, simple as.

Their options - none of which are your problem - are a) rent elsewhere b) make it very much worth your while to delay completion c) take the house off the market until they are ready to offer vacant possession to a buyer.

No way. Not indemnity insurance. Do this and you become their landlord. You cannot enforce rent payment and you cannot evict at the moment because it is banned. Backlog is expected to be about two years if evictions are ever allowed again.

They leave on completion day. If they won't accept that, walk away.

Are a lot of pp conflating exchange and completion? It's not usual to vacate on exchange of contracts. It's usual for there to be a gap of a week or so between exchange and completion and the vendors will still be in the house in this period. On completion the vendors must vacate.

Are you attempting to exchange and complete on the same day?

For all those who are talking about experiences from a commercial perspective this is totally different. The OP is a first time buyer and using a mortgage as a residential homeowner. She obviously isn't experienced enough to take on a risk on this level even if there was a change to the mortgage to permit it. She wants a house to live in and the sellers are being tiresome.

No, do not do anything that requires you to lie to your mortgage bank.
They can rent somewhere else.

When it became abundantly clear that the seller of our home we were buying was trying to extend completion date, when we had a red line in the sand of “this date or the whole chain collapses” I rang the estate agent and basically said:

“if the seller doesn’t exchange and leave on x date then the whole thing is off, our buyers mortgage offer expired on that date and the seller has already lead on us a merry dance. If, IF this whole fiasco causes the sale to fall through I won’t be offering to buy their house at the amount we offer now because they will have cost us ££££s in lost time, new mortgage applications etc. That is if I am likely to trust them as a seller and you as an estate agent again. If you want your commission on this sale you will make it happen by x date. Tell them to rent a caravan and storage with all the money they will be getting from the house sale, and be glad they’re now in a position of buying without needing to sell, strengthening their hand.”

It worked. At the end of the day that estate agent wants a sale and if they think you’re going to cave in they will push that route, if they think you’re going to walk away they will
Push the seller. Be strong!

Oh come on. There’s no way you could think this is anything less than a ridiculous idea to be instantly dismissed.

@LittleMissMoggy

I think you would need an entirely different mortgage if you are renting it out rather than owner/occupier. Not telling them is potentially fraud. The sellers can just rent anywhere. I absolutely wouldn't do it.

What moggy says. Totally different mortgage needed at normally higher interest rate. If bank found out they'd withdraw your mortgage and you'd need to reimburse immediately. I believe it would affect your future credit history going forwards for a form of default or something like that.

Tell your sellers to rent somewhere, it's there problem not yours. If they or you wish to pull out then so be it.

Does OP mean completion rather than exchange?