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Tes Tickle

How is this legal? Rent to Buy Mongrel

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https://www.rightmove.co.uk/property-for-sale/property-76363979.html

Owner will finance with just £5,000 deposit, then £750 per month, £100 coming off purchase price. Purchase price £167,000. Suitable for self employed, new to the UK, un-established or adverse credit record.

...

To be sold with a new 125 year lease ground rent 100 per annum.
Service charge 1/3 of building maintenance etc per year.

So the seller seems to be acting as some kind of landlord/sub-prime money lender?  They don't state the lending period, I had to calculate £162,000/750 to discover that you are required to "rent" it for 18 years before you'll supposedly own it.  I'm guessing that there are 3 flats in the building, paying a third of the maintenance each.  In other words, the landlord will not pay anything for maintenance.

So many unanswered questions...

  • What happens if I move out after 17 years?
  • What if the landlord decides to increase the "rent"?
  • Does anyone actually monitor or regulate what's being offered on Rightmove?
  • Will estate agents market any old tat if there's a few quid in it for them?

The agent is an online agent, Property Exchange of Newton Aycliffe.

Edited by Tes Tickle

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3 minutes ago, Tes Tickle said:

https://www.rightmove.co.uk/property-for-sale/property-76363979.html

Owner will finance with just £5,000 deposit, then £750 per month, £100 coming off purchase price. Purchase price £167,000. Suitable for self employed, new to the UK, un-established or adverse credit record.

...

To be sold with a new 125 year lease ground rent 100 per annum.
Service charge 1/3 of building maintenance etc per year.

So the seller seems to be acting as some kind of landlord/sub-prime money lender?  They don't state the lending period, I had to calculate £162,000/750 to discover that you are required to "rent" it for 18 years before you'll supposedly own it.  I'm guessing that there are 3 flats in the building, paying a third of the maintenance each.  In other words, the landlord will not pay anything for maintenance.

So many unanswered questions...

  • What happens if I move out after 17 years?
  • What if the landlord decides to increase the "rent"?
  • Does anyone actually monitor or regulate what's being offered on Rightmove?
  • Will estate agents market any old tat if there's a few quid in it for them?

The agent is an online agent, Property Exchange of Newton Aycliffe.

Devil will be in the details.

That contract probably doesn't hold water... or at least it shouldn't.

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2 hours ago, Tes Tickle said:

https://www.rightmove.co.uk/property-for-sale/property-76363979.html

Owner will finance with just £5,000 deposit, then £750 per month, £100 coming off purchase price. Purchase price £167,000. Suitable for self employed, new to the UK, un-established or adverse credit record.

...

To be sold with a new 125 year lease ground rent 100 per annum.
Service charge 1/3 of building maintenance etc per year.

So the seller seems to be acting as some kind of landlord/sub-prime money lender?  They don't state the lending period, I had to calculate £162,000/750 to discover that you are required to "rent" it for 18 years before you'll supposedly own it.  I'm guessing that there are 3 flats in the building, paying a third of the maintenance each.  In other words, the landlord will not pay anything for maintenance.

So many unanswered questions...

  • What happens if I move out after 17 years?
  • What if the landlord decides to increase the "rent"?
  • Does anyone actually monitor or regulate what's being offered on Rightmove?
  • Will estate agents market any old tat if there's a few quid in it for them?

The agent is an online agent, Property Exchange of Newton Aycliffe.

Where do you get ownership after 18 years from? To me the price starts at 167,000 - £5000 deposit - £100 for every month you rent.

To be blunt its a pile of nonsense designed by someone who hasn't got a clue...

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Either it's an outright swindle or, at the very best, a very overpriced and hazardous way of buying a flat, which will still be leasehold at the end of buying it.

Whatever it is, I don't understand why Property Exchange haven't told them they can't do this, or why Rightmove haven't removed it, or why nobody is telling Rightmove they shouldn't be advertising this sort of rubbish.  This is advertised as a house for sale, not to let, which is why I'm (falsely?) assuming that the ownership of something must get transferred at some point.  Who knows really though.

As a recently interested buyer, I'm getting quite shocked by just how unregulated everything really is.  I've seen all kinds of dodgy stuff advertised.  I know that in general it's buyer beware but, frankly, there seems to be more regulation on the sale and advertising of pretty much anything else you can think of in comparison to what people get away with when selling houses.

Edited by Tes Tickle

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1 hour ago, Tes Tickle said:

Either it's an outright swindle or, at the very best, a very overpriced and hazardous way of buying a flat, which will still be leasehold at the end of buying it.

Whatever it is, I don't understand why Property Exchange haven't told them they can't do this, or why Rightmove haven't removed it, or why nobody is telling Rightmove they shouldn't be advertising this sort of rubbish.  This is advertised as a house for sale, not to let, which is why I'm (falsely?) assuming that the ownership of something must get transferred at some point.  Who knows really though.

As a recently interested buyer, I'm getting quite shocked by just how unregulated everything really is.  I've seen all kinds of dodgy stuff advertised.  I know that in general it's buyer beware but, frankly, there seems to be more regulation on the sale and advertising of pretty much anything else you can think of in comparison to what people get away with when selling houses.

Perhaps its just to get your very real down payment into their pocket before they're off bilking the next fool.

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Convoluted and Bogus deal

Best way I can frame this is that it's effectively an option agreement + a rental agreement that co-exist. 

Agree with Houdini on the pricing, Presumably the buyer rents until the "option exercise price" is low enough that a mortgage company will give them a loan. I really doubt any reputable mortgage company would entertain the tenant though. 

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9 hours ago, Tes Tickle said:

https://www.rightmove.co.uk/property-for-sale/property-76363979.html

Owner will finance with just £5,000 deposit, then £750 per month, £100 coming off purchase price. Purchase price £167,000. Suitable for self employed, new to the UK, un-established or adverse credit record.

...

To be sold with a new 125 year lease ground rent 100 per annum.
Service charge 1/3 of building maintenance etc per year.

So the seller seems to be acting as some kind of landlord/sub-prime money lender?  They don't state the lending period, I had to calculate £162,000/750 to discover that you are required to "rent" it for 18 years before you'll supposedly own it.  I'm guessing that there are 3 flats in the building, paying a third of the maintenance each.  In other words, the landlord will not pay anything for maintenance.

So many unanswered questions...

  • What happens if I move out after 17 years?
  • What if the landlord decides to increase the "rent"?
  • Does anyone actually monitor or regulate what's being offered on Rightmove?
  • Will estate agents market any old tat if there's a few quid in it for them?

The agent is an online agent, Property Exchange of Newton Aycliffe.

The way I understand that is you are paying 750 [rent] and an extra 100 which is all that will be "coming off purchase price". Thats 24k after 20 years  so the remaining purchase price will be 167 -5 - 24 = 138k. It's a never never deal. The maintenance being paid by tenant makes it more expensive still.

Of course flats in that area seem to be about 50k cheaper than that and 750/mo rent gets you a 3 bed house with a garden etc so rent is maybe 250/mo too high.

Perhaps the seller is paying you a bit of interest on that 5k rising to 29k after 20 years he is kindly holding on to for you, guessing not a lot. Maybe a bigger problem is what happens when seller is bankrupt. Hope he arranged a first charge on the flat lease he still owns for the 5k + some years of 100/mo.

If you want to get out after 17 years you just pay balance of purchase price then sell at the current market price.  Since you started 40% above MV, will require serious HPI before that works.

All property schemes in the UK are IMO some sort of scam and I include leasehold mostly. Share of freehold [as is standard across the rest of the planet] is the only OK leasehold.

I am also curious about regulatory requirements for owner financed mortgages. You used to see those advertised in the US. Is it legal in the UK?

I.e. standard sale and standard mortgage contract with the seller continuing as mortgage holder offering similar terms to a bank.

I am guessing it's not allowed by city regulators. Anyone know?

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I'd no intention of buying!  I'd been looking for detached houses and bungalows only, but just wanted to scour the site in price order from £0 upwards, to check for anything interesting I've missed.  But that involves encountering this sort of dross.

Buying leasehold is bad enough, buying one on a mortgage is stupid but this seems to be some kind of jumbled combination of renting and leasehold buying.  You pay rent AND maintenance AND ground rent, all presumably based on some kind of promise that you're somehow buying the place.

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They're an online agent only, I don't think they'll do anything other than pass your details on.

You'd hope they'd have some kind of basic checks of what they're advertising, but clearly not.  I believe that RM require all its advertising agents to have visited the house before they can list.  I don't know what else they require, you'd really hope that "outright scam" would be somehow covered in their terms but who knows really.

It seems that you get more legal safeguards when buying a tin of beans than you get when buying a house.  It's most people's most expensive purchase in their lifetime, with probably the least restrictions on advertising, standards etc.

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I emailed Rightmove about a similar listing  a year or so ago. They said...

We have looked into this and can advise that we would allow the listing on Rightmove. It has not been duplicated by the branch and they have made it clear within the property description what the offer entails therefore we wouldn't consider it to be misleading. 

I replied saying that listing a deposit price as the asking price must be misleading and they said they’d take it up with some manager or other. Then I totally forgot about the whole thing until now.

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I've finally read it properly, and it's worse than even I thought... you pay £750 per month rent, and of this just £100 goes towards paying to buy it, at a cost of £167,000.  So that means it takes 1,670 months or 135 years to buy it after paying the £5000 deposit - by which time the lender and borrower will both be dead and the building probably demolished looking at the state of it.

Also, the lease is 125 years so this may expire before you've finished paying for it.

Perhaps you're meant to voluntarily contribute more, so that the great day when you'll own* this hovel gets closer.

* You'll then only own the leasehold, i.e. the right to continue renting it.  The seller/landlord will continue to own the freehold whatever happens.

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23 minutes ago, Tes Tickle said:

I've finally read it properly, and it's worse than even I thought... you pay £750 per month rent, and of this just £100 goes towards paying to buy it, at a cost of £167,000.  So that means it takes 1,670 months or 135 years to buy it after paying the £5000 deposit - by which time the lender and borrower will both be dead and the building probably demolished looking at the state of it.

Also, the lease is 125 years so this may expire before you've finished paying for it.

Perhaps you're meant to voluntarily contribute more, so that the great day when you'll own* this hovel gets closer.

* You'll then only own the leasehold, i.e. the right to continue renting it.  The seller/landlord will continue to own the freehold whatever happens.

Thanks for reading it, hopefully no one will buy it.

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1 hour ago, Aidan Ap Word said:

And price histoiry is dovorced from "price" implied/stated in the description:

Year Sold Sold Price Price Difference
2006 £310,000 +16%
2004 £265,000 +152%
2000 £105,000 +25%
1997 £83,500

It was converted into 4 flats sometime after 2006....

Edited by Houdini

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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