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Story for The Times: First-time buyers buying from their landlords?

Journalist: George Nixon, The Times and The Sunday Times

ended 06. January 2024

Good morning, and Happy New Year! 

There's been two big supposed themes in the property market over the last year or so: Interest from first-time buyers holding up, and some buy-to-let landlords looking to exit the market.

There's no doubt that there's been first-time buyers buying ex-landlord properties, but have you worked with any landlords (or buyers) who have recently sold directly to their tenants? I know some banks will offer concessionary mortgages at a higher LTV if the landlord will agree to a discount, as an example.

I'd love to speak to any clients - buyers or sellers (ideally both!) - who have been involved in similar transactions?

Thanks! 

8 responses from the Newspage community

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Editor
Darryl Dhoffer
Founder at The Mortgage Geezer
Ex-landlord properties have become fertile ground for the first-time buyer stampede. These previously tenanted dwellings, like sun-dappled clearings after a jungle fire, offer potential for new beginnings. But have we witnessed the rare spectacle of direct tenant-to-landlord sales? A seasoned landlord, weary of property management's constant demands, seeks a swift exit. Across the watering hole, a loyal tenant, thirsting for ownership, eyes the familiar territory with newfound ambition. A delicate dance commences, each circling the other, gauging the price of freedom and security.
But, like a flash flood in the rainforest, unforeseen obstacles can arise. Mortgage approvals for unconventional arrangements can be tricky terrain, littered with paperwork and financial scrutiny.
Despite the challenges, this relationship holds promise. Landlords find swift exits and tax benefits, while tenants secure coveted footholds on the property ladder. It's a win-win scenario.
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Mike Staton
Director at Staton Mortgages
Buying from a landlord has major benefits, but I have seen few financial incentives from landlords for their tenants, this is as it should be, as a landlord with an emotional attachment to their property and tenant is a failed landlord and is quite honestly in the wrong industry. The benefits of not having to worry about moving costs and the stress of moving day being removed are incentives enough to buy out your landlord.

With Landlords struggling to meet affordability for their BTL remortgages and rates not as lucrative for the landlord as previous years, i expect to see many more of these cases on my desk, especially in the landord paradise where our business is based
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Hi George

We have a FTB who is buying from his Landlord who would be happy to speak to you.

Let me know and I can send you his details and can give you any comment you need also to support it.
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Denni Tyson
Mortgage and Protection Advisor at Henchurch Lane Financial Services
I had three transactions last year known as a concessionary purchase with each landlord selling directly. For the first-time buyers, it was a win-win in most of my cases as they subsidised the price and got a property they were already at. Plus due to regulations on maintaining a property as a landlord, electrics were updated and any other issues were resolved. Appreciate this isn't the case with every kind of purchase, but I think it's a great way to sell a property due to the minimal number of individuals involved.

I do think this is going to become more popular in 2024 if interest rates continue to reduce, as buy-to-lets rates are still high in comparison to residential.

Landlords with properties in their name rather than a Ltd company are being taxed heavily. Therefore, many landlords are going to cash in and this may be a good way even if it's not a first-time buyer.
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Graham Cox
Director at Bridging Hub
I have an artist client who purchased last year from her landlord. I'll ask her if she'd be willing to talk George and let you know.
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James Bull
Mortgage Broker at JB Mortgages
It can be very convenient for tenants to buy a property from their landlord for all parties. If the landlord is happy to give a genuine discount of 10% we do have lenders who will accept this as the buyer's deposit, so the first-time buyer can potentially do this for minimum cost, just legal fees and mortgage fees.
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Gary Bush
Financial Adviser at MortgageShop.com
2023 has confirmed that First Time Buyers in the UK are quite robust people and they seem to have adjusted to the fixed rate price shock to their intended mortgage budgets. The same can be quoted over the Christmas and New Year period with new enquiry activity at good levels - and the first week of 2024 is promising. It is quite a common story that tenants purchase from their landlords, however, from experience the rent payers usually expect too much from their landlords in these transactions e.g. heavy discounts, renovations conducted before purchase, and legal fees paid, which make the selling landlord sell to the open market instead at often on much higher prices. Personally, I have in the past offered a tenant a bonus payment to assist the sale of my rented property, making viewings a pleasant experience for would be buyers, being flexible, vacating earlier than contracted, and on time with no hassles. A good relationship between landlords and tenants is of utmost importance.
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Hannah Bashford
Director at Model Financial Solutions
I have had this query several times but more often than not, it is still unachievable for the tenant unless they can get a discount.

In the cases I have seen, what would work well is if the landlord could act like a lender and the tenants' rental income could go towards buying the property each month. This would be especially useful in situations where the landlord does not need the capital upfront but could still take advantage of the monthly income, and ownership of the property is slowly transferred.