Can I Buy My Rental House From My Landlord?

The simple answer is yes, you can buy your rental house from your landlord.

In some ways, it’s easier than being a first-time buyer on the housing market as there’s no competition and it will just be a dialogue between you and your landlord. However, they are not obligated to sell the house, so there’s no guarantee they will agree.

In this article, we’ll look at the practicalities of buying your rental house from your landlord, the steps you’ll need to take and any potential problems you might face.

Can you buy a property you rent privately?

Yes, you can buy your rental house from your landlord. This can be a convenient option if you like where you live and don’t want to enter the housing market.

However, the process isn’t as straightforward as that. Your landlord will need to agree to sell the house to you, which they may not want to do. Then, you have to consider the following as well:

• Do you have a decent deposit for a mortgage?
• Can you secure a mortgage in principle?

The larger your deposit, the likelier you are to get favourable terms from lenders. This is also likely to reassure your landlord that any sale won’t fall through if you can’t secure a mortgage.

What are the pros and cons of buying your rental property?

You might want to buy your rental property for several reasons, many of which are advantageous as opposed to entering the housing market. There are also plenty of reasons not to buy your rental property that you might not have considered beforehand We’ve listed some of the common ones below:

Pros

• You can complete the sale with or without an estate agent
• There’s no competition, just a dialogue between you and your landlord
• Your monthly repayments go towards ownership of the house rather than to your landlord
• You don’t need to move your belongings and pay all the fees associated with this
• You’re able to personalise and renovate the home which you wouldn’t be able to do if you rent
• If you’ve been a long-term tenant, you might be able to negotiate a more favourable deal with your landlord
• You’ll benefit from the property appreciating in value, which wouldn’t be the case if you continued to rent it

Cons

• Buying your rental property can be a big financial commitment as you’ll need a deposit and potentially have to pay mortgage fees too
• Once you buy a property, you run the risk of it depreciating in value due to an economic downturn which can affect your finances
• You’ll have to handle all the maintenance issues, which can result in costly bills if something breaks
• You’re less flexible, which could be an issue if you want to relocate in the future for work or personal reasons
• You’ll need to qualify and apply for a mortgage which can involve a lot of legal paperwork
• The market conditions could affect the price you pay when buying the property and factor into the lender’s mortgage affordability calculations.

What’s the process of buying your rental property from your landlord?

If you’re interested in buying your rental property from your landlord, the process differs slightly from buying a house on the open market. We’ve outlined the steps you can expect to take below:

Ask your landlord if they want to sell

Before you start thinking about mortgages, it’s a good idea to speak with your landlord and see if they’re open to selling. They might not have considered selling the property and be open to it or they’re happy to continue renting.

Regardless of the response, it’s best to speak with them first so you know where you stand and if you’ll need to look at other properties or not.

Find out how much the house is worth

If your landlord is open to selling the property, the next step is to get an idea of what it’s worth. One of the easiest ways to do this is to go on Rightmove or Zoopla and look at the prices of similar properties in your neighbourhood. You can also look at the price histories to get a more representative picture of its value.

Alternatively, you can get an independent valuation, which is often done by an estate agent. It’s a good idea to ask more than one estate agent so you can get a more realistic picture of what the value of the house is.

Get in touch with a broker

If this is your first time getting a mortgage, using a broker can help you get to grips with the process. You can do it yourself and go directly to lenders but they might decline your application, which can affect your credit report if you apply numerous times afterwards.

A broker will have access to deals from a range of lenders and can find the most suitable options on your behalf. Speak to one of the advisors we work with to get an idea of the deals that might be available to you.

Write a formal letter to your landlord

Once you’ve got a valuation and spoken to a broker, it’s time to present a formal offer to your landlord. This is best done in writing so you both have a paper trail and are clear on the terms of your agreement.

There may be some back and forth regarding the value of the property at this point, but you can chat with your landlord before you send a formal letter.

Have a backup plan

If at some point your landlord doesn’t want to sell, it’s a good idea to have a backup plan if you’re set on purchasing a property.

Have a look at other properties in your area and see if there are any you like and whether you can get a good deal if negotiations with your landlord fall through.

What alternatives exist to buying your rental property?

If, for some reason, you can’t purchase your rental property there are still lots of options available to you if you want to purchase a property. Below are some options you could take:

• Rent-to-Buy mortgage: A rent-to-buy mortgage is a good alternative if your landlord doesn’t want to sell. It’s a government-backed initiative and allows you to rent a new-build property for a typical period of between six months and five years paying 80% of the market rate.
• Shared Ownership: A shared ownership mortgage is a government scheme that allows you to buy between 25 and 75% of a property rather than buying the house outright. This often means you have a smaller mortgage, though you don’t have full ownership of the property.
• Continue to rent: You can continue to rent the current property you’re in or a different one if you decide buying a property isn’t what you want to do at this point. The benefit is that you’ll be more flexible, but your rent could increase or your landlord could eventually sell the property at some point.
• First Homes scheme: The First Homes scheme allows first-time buyers to buy a new build property at a discounted rate, typically between 30 and 50%. You’ll have to meet certain criteria to be eligible and councils can prioritise key workers such as nurses and teachers over others.
• Help to Build: If you’re feeling ambitious you could apply for the Help to Build scheme. This allows you to get a self-build mortgage of up to £600,000 to build the property. This scheme is only available in England and you will need to live in the property once it’s built to be eligible.

How a mortgage broker can help

Knowing which mortgage type to get can be confusing if you’re a renter. This is where the services of a mortgage broker can help you. They can consider your circumstances and financial standing to recommend the best mortgage deal for you.

Brokers have access to a wider range of lenders, with some of the market not available if you decide to go alone.

Speak to one of our OMA®Verified experts to discover the best deal available to you, and get advice on handling the application process. We can put you in touch with a broker who specialises in first-time buyer mortgages to ensure you get your application off to the right start.