Selling rental to tenant who has to wait 6 months

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Colin4444

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Hey,

I have given my tenants NoT last October, their eviction date is 30 May 2026.
I issued the NoT via a solicitor.

Was speaking with tenants over the weekend and they want to buy it, I had it valued by an EA 2 weeks ago..
Long story short they need to overstay by probably about 4/5 months before they qualify for mortgage, as she has just started a new job and needs to finish 6 month probation period so can apply for mortgage.

I have absolutely no problem in them overstaying for that purpose.

My questions / worry are:
1. What happens if their mortgage application falls through? We wont know this til probably Aug / Sept, which will be 3 or 4 months after their eviction date, does my NoT still stand at this time, and what would be their date for exit then?
2. Should I get the solicitor involved again, so make this more official? Is this necessary?
3. The new laws coming into affect in March, do they affect this situation at all?
4. Should I be informing the RTB?
5. Not sure if the tenants are making any side plans i.e. if mortgage falls thru.. I really dont want them out on the street... But I really want rid of the house at the same time :)
 
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I would be concerned because of the timeline given. She has just started a job despite wanting to buy and while they got the notice 3 months ago at least.
They have still 4 months to go before the end of the notice. But need another 3/4 months for approval. Once everything is in order (which they should be able to get in 4 months) should it really take that long for approval? I know my last mortgage application was 12 years ago but it took a couple of weeks maximum to get approved while we decided to buy on a whim.
Closing could take a bit of time but I would not think that approval would take 8 months in total.
 
Some employers will waive the probation period if the employee explains that it is holding up a mortgage application. If they are agreeable to this, the employer can write a letter confirming this. I have done this for employees and it was accepted by the bank. Of course, there is no obligation on them to do this but it is free to ask.
 
Premos said:
I would be concerned because of the timeline given. She has just started a job despite wanting to buy and while they got the notice 3 months ago at least.
They have still 4 months to go before the end of the notice. But need another 3/4 months for approval. Once everything is in order (which they should be able to get in 4 months) should it really take that long for approval? I know my last mortgage application was 12 years ago but it took a couple of weeks maximum to get approved while we decided to buy on a whim.
Closing could take a bit of time but I would not think that approval would take 8 months in total.
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Sorry, should have been clearer, she is starting the job in a week or 2, so basically March til Aug is probation period..
She had been looking for a job last year but their was nothing available, and had Xmas inbetween all of that..

Things have changed re mortgage approval, I got my first mortgage (on the rental) back in 2004, no questions, the only question they asked was I sure I was borroring enough !! Then in 2015 going for second mortgage and the hoops we had to go through, ended going through broker to speed it up!!
 
Hillwalker123 said:
Some employers will waive the probation period if the employee explains that it is holding up a mortgage application. If they are agreeable to this, the employer can write a letter confirming this. I have done this for employees and it was accepted by the bank. Of course, there is no obligation on them to do this but it is free to ask.
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:) I got something similar from an employer for the first mortgage, I was on a contract for a few months and the employer gave a letter saying they would be hiring me for longer (they had no intention of this!)

But yeah will run this by the tenant, sure they will have to be there a few months before they can approach manager about this!
 
I know the hoops. I got my last mortgage in 2014. They asked details on absolutely everything. Was even called a couple of days before withdrawal because there had been a transfer of a couple of thousands on our account. That was for a mortgage of only 50k with LTV of 50 per cent. However they have a few months to prepare and have everything in order before proceeding.
 
Must point out they will be availing of the Tenant Home Purchase (THP) scheme, as both their incomes would not be sufficient to meet the principle they need...
Im just concerned that if it goes past the eviction date, where I stand.. is the NoT still valid, do I need to inform RTB, should I engage solicitor to make it official etc ?
 
Positives
- you have a buyer that is not in a chain
- you can get all the legals ready and prepared
- you will not have the issue of tenants causing problems
- you do not have to clean and prep the house for sale
- you save EA fees

Negatives
- its a risk of delay
- there's a risk of overholding even if everything is done right (risk is there anyway)
- there's no contract under it is signed
- if it falls through, it could be October, not the best time to go on the market

I'd make a judgement call - what job is she starting, is it a skilled/semi skilled job. Is the company well established. Is the company's reputation good in terms of employment
 
Also a risk that this drags on and you end up caught up in an eviction ban this time next year. I think the chances of something like that happening are becoming more likely
 
Look at it this way, if you gave valid notice and they stayed on beyond the eviction date, your notice wouldn't become invalid.

So treat it as overholding. What steps does the landlord need to take when a tenant overholds?

Lodge a complaint with the RTB. It will take them a few months to process it anyway.

That is much better than entering into some sort of agreement which they might challenge if the mortgage falls through.
 
Brendan Burgess said:
treat it as overholding. What steps does the landlord need to take when a tenant overholds?

Lodge a complaint with the RTB. It will take them a few months to process it anyway.
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This. Also make sure you still get your rent and keep up your inspections.

You might like to chat with your tenant and let them know re the RTB complaint thats its solely to be compliant with legislation & you are very keen that they buy the property.
 
Have you agreed a price with them? Just be aware that they might realise that selling with a tenant in situ would reduce the value of the house and might expect to be able to buy it for this lower value rather than vacant value. I think the value of being a sitting tenant is not yet known by most but will become very apparent in the coming 12-18 months.
 
30 May tend of tenancy

1 September - put the house on the market anyway so that they know that you are serious about selling. And if they mess about with the price, then you sell it to the highest bidder on the open market.

30 November - the may be able to get mortgage approval
 
Imagine the complications and delay if they had the right to buy, and I think tenants will gain that right in the next couple of years
 
Colin4444 said:
they want to buy it, I had it valued by an EA 2 weeks ago..
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Brendan Burgess said:
1 September - put the house on the market anyway so that they know that you are serious about selling. And if they mess about with the price, then you sell it to the highest bidder on the open market.
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Wouldn't you think of putting it on the market now to make sure you are getting a true market price? Even if you have a good relationship with the tenant and will save time and money selling direct to them, when it comes to maximizing your income from the sale, you don't owe them anything.
 
patfert1 said:
Wouldn't you think of putting it on the market now to make sure you are getting a true market price?
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That's what I was thinking too. To add to this list...
peemac said:
Negatives
- its a risk of delay
- there's a risk of overholding even if everything is done right (risk is there anyway)
- there's no contract under it is signed
- if it falls through, it could be October, not the best time to go on the market
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Your don't know if you're getting the fair market value and possibly selling too low to the sitting tenant.
 
There are a lot of variables here....if it was an perm employee getting a standard mortgage from a mainstream bank, I would possibly value the ease of not having to prepare for sale, saving fees etc. But in this case I would be inclined to view there being too many things that could go wrong and put it for sale on the open market now.
 
Brendan Burgess said:
30 May tend of tenancy

1 September - put the house on the market anyway so that they know that you are serious about selling. And if they mess about with the price, then you sell it to the highest bidder on the open market.

30 November - the may be able to get mortgage approval
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You are right that he should preserve the right to evict for sale. It looks like the RTB can interpret a delay before taking action as implicitly waiving the NoT. It isn't clear how how long you can actually wait, once overholding starts.

They do say accepting rent past the notice period doesn't count as accepting a new tenancy.

The issue with the above is that they won't be leaving the property at any point in the process, so you can't really put it up for sale.

I think he could tell them that he is very sorry, but he has to follow the NoT process exactly.

If they want to buy it, he will sell it to them at <price> (slightly lower than expected market price due to reduced hassle/cost of getting it ready to sell). They have to get the mortgage setup, and close, before it he gets the determination order. Also, they have to keep paying the rent.

If they buy the property he will obviously drops the NoT process at that point. It is really unlikely that it would finish (with an actual eviction) within the timeframe anyway.
 
peemac said:
I'd make a judgement call - what job is she starting, is it a skilled/semi skilled job. Is the company well established. Is the company's reputation good in terms of employment
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Yes is a skilled job, in a decent company, well established insurance firm...
 
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