Buying a House From a Landlord Explained

Throughout our years as mortgage advice experts, we have seen a wide variety of first time buyers looking to get onto the property ladder by purchasing the home they are privately renting from their landlord. This is also sometimes called buying as a sitting tenant.

As a private tenant, you may eventually find yourself being given “first refusal” by your landlord. First refusal is a term that is used to describe the act of the landlord allowing the tenant to purchase directly from them, before it goes onto the open market.

If you are a tenant who has not been offered first refusal at all or are unsure whether or not it could be on the cards, we recommend getting in touch with your landlord to ask them.

Why are more landlords offering to sell directly to their tenants?

One of the main reasons that buying from a landlord has become a popular option, is because of government policy changes. Buy to let mortgages in previous years were subject to government tax relief. This is now no longer an option for landlords.

What this means, is that there are a great deal of landlords paying higher tax bills. For the long term investments, buy to let mortgages can prove to be a great idea. Even without these tax advantages, it can prove to be a worthy endeavour and result in plenty of profit over time.

That being said, the investments can prove to become quite costly, which from time to time can lead to them selling their buy to let properties and moving on to other ventures. As such, you may find yourself, as their tenant, being offered the chance to buy from them.

Whatever their reasons may be for doing so are, whether personal, financial or something else, there is a lot of upside to the landlord selling to you directly, as opposed to going through an estate agents and selling publicly.

Landlord Benefits

Avoidance of Estate Agent Fees

By going through the process of selling to the tenant instead, the landlord can end up saving a good amount of money. That money would have likely otherwise gone on estate agency fees.

An Easier Process

If the landlord puts the home up for sale on the open market, would-be buyers will have to schedule times for viewing the property, an activity that would prove difficult with a tenant still occupying the property.

 Refurbishment Cost Reduction

Since the landlord will be directly selling the property to their tenant whilst they are living within the property, there is no need to do any additional works on the property. This includes things like paying for cleaners, making major or minor repairs and repainting if necessary.

Doing these sort of things would no doubt be attractive to potential buyers who have never seen the place before, but for someone who already lives there and has grown to love it as is, they already know what they like and don’t like, having tailored it to their lives.


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Absence of Rental Void

In placing the home onto the open market and asking the tenant to vacate the property (or if the tenant willingly decides to leave), the landlord is in a position where there is no longer a steady income that they otherwise wouldn’t have gotten from rental payments.

You’re not guaranteed to find a buyer immediately and if it takes say, a few months to sell the property, that is a few months of you going without additional income from the property. Selling to the tenant of course, means they can pay up until the day the sale completes.

Tenant Benefits

Familiarity With The Home

You have lived in your home, you have grown to love it, you know it both inside and out. This takes out the element of surprise, as you already know all the positives and all the flaws.

Freedom to Make Changes

Buying a home that you are already living in allows you to make all those changes you would’ve wanted to make. Want to take out a feature and install a new one? Get a bit more creative with the paint? You can, because it’ll be yours with no landlord to consult with!

Possible Discount

Since there is a likelihood you could be saving your landlord some money from buying the property, it is very likely (as we have seen in our own experience) that they could offer you a much more discounted property price, than would be on the open market.

Absence of Property Chain

A property chain can be quite the nuisance to home buyers and home movers alike. This is where one person is waiting for another to move out, so that they complete their own sale. The person they’re waiting on, could unfortunately be waiting on someone else.

This can create a very stressful situation for all involved and has caused a lot of property sales to suffer the consequences. Sitting tenant purchases, however, do not have the burden of a property chain. Your only concern is mortgage lender criteria, you already live where you wish to buy!

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