How you may be able to buy your rental off your landlord
Are you renting a property that feels like home? Perhaps you’ve considered the possibility of buying it from your landlord, turning that familiar space into your own. At Connect Me Mortgages, we’ve seen a growing trend in private sale transactions, particularly between tenants and landlords. If you’re interested in taking this step, we’re here to help you navigate the process with guidance and practical advice.
We are noticing an increase in private sale transactions
There’s been a noticeable rise in private sale transactions, and we believe several factors are contributing to this trend. With interest rates being what they are and the increased cost of living, some landlords are reconsidering their portfolios. Additionally, recent changes to the Bright-line Test have made it more appealing for investors to sell properties sooner, as the tax implications have lessened. For tenants, this can present an opportunity to purchase the property they already call home.
Partner with a trusted adviser
Since these sales aren’t typically led by real estate agents, we often find that our clients need extra support throughout the process. That’s why partnering with a trusted adviser like Connect Me Mortgages is crucial. We can guide you through each step, ensuring that you’re fully informed and confident in your decisions.
The first step: get pre-approved
Talk to us about getting pre-approved. Pre-approval determines your borrowing power and gives you the confidence to know that the bank or lender is happy with you as a borrower. It’s also a time for us to crunch the numbers and advise what your approximate home loan repayments and ongoing property costs such as house insurance and council rates will be. It is an important step before you sow the seed of ‘selling the property’ to ensure you have the ability to buy it.
Benefits for the landlord
One of the significant advantages for landlords selling directly to tenants is that they won’t have to pay marketing fees or real estate commissions. This can make them more open to a private sale, potentially allowing for more flexibility on the price. This win-win situation benefits both parties, making the transaction more cost-effective.
The next step: talk to your landlord
If you’re considering buying the house you’re renting, the next step is having a conversation with your landlord. You might find that they’re open to selling the property directly to you, especially if it’s surplus to their needs. With the current financial climate and changes in the Bright-Line Test, landlords may be more inclined to remove properties from their portfolios.
How to go about it: understanding valuation and negotiation
In most cases, a property will need a registered valuation to determine its market value. This step is crucial because, without a real estate agent facilitating the process, the price negotiation may look different. When a property goes to market, its price is influenced by demand, but in a one-on-one private buying scenario, the market input is absent. Therefore, seeking advice from advisers with market insights, like our team at Connect Me Mortgages, can be incredibly beneficial in ensuring you negotiate a fair price.
Engaging professional assistance
It’s important to engage a lawyer to assist with the sale and purchase agreement, any property disclosures, due diligence and if applicable, your KiwiSaver withdrawal. This step helps ensure that all legal aspects of the purchase are thoroughly covered, protecting your interests in the transaction.
Understanding the property inside out
As someone who already lives in the property, you have a unique advantage. You’re familiar with the quirks, maintenance needs, and overall condition of the home—something that a potential buyer at an open home wouldn’t have. However, it’s still worth conducting a building report and valuation, along with performing your due diligence. These steps will give you added confidence in your purchase, knowing you’ve covered all bases.
Confidence in your purchase
Another benefit of buying your rental is that you’re already familiar with the neighbourhood and your neighbours. This knowledge adds an extra layer of assurance, as you know you’re not just buying a house, but a home in a community where you feel comfortable.
Overall, buying your rental property from your landlord can be a straightforward and seamless process. However, it’s essential to go through each step with care and detail. At Connect Me Mortgages, we’re here to support you every step of the way. With our experience, you can approach this opportunity with confidence, knowing you’re making informed decisions that align with your goals. Ready to explore this option? Connect with us today, and let’s start planning your path to homeownership.
Lending criteria are always subject to change. The information contained in this blog is not tailored mortgage advice; please contact a Connect Me Mortgages Adviser to get tailored mortgage advice for your own financial position.