Tenant Buyer

In many cases paying the monthly rent is higher than paying a monthly mortgage. So, it's not that Tenants cannot afford to pay a monthly mortgage and in fact, by having a mortgage will save money. Mortgage lenders can see the rental payment history and profile risk of their prospective customer.

Sometimes, a small mistake can unfairly restrict lending. Paying rent is the largest financial commitment many people have, and yet this is rarely taken into consideration and does not affect the credit score and credit rating. We think this is ludicrous. Why does the current system not recognise this good financial commitment. The reason is its rent, not credit.
However, at The Property Step we can tie the monthly rental payments directly into a credit file thereby improving their credit rating over time. Paying rent on time every month equates to an improved credit score, and so it should.
We can also show mortgage lenders, a tenant buyer paying their monthly payments on time, month in, month out, for years and in many cases the monthly rental payments are substantially lower than the monthly mortgage payments.
We know this sounds common sense, but the current system does not recognise this.

The stress, cost, emotional attachment to the home you’ve made, time of finding new accommodation – it’s a nightmare.

For a young family, especially when they are settled into the local school, friends, family, being part of that community, and then served eviction notice to leave. The stress involved for the family can be unbearable.

We know people want security in their home, not living month to month, forced to move home at any time.

It depends on what's agreed. Sometimes it can be more expensive at the start of a contract, but over a number of years, the rent paid can be considerably less than market rent. This is because rent prices typically increase year on year.

Case Study

• A 1950’s 3 bed property
• Agreed purchase price £75,000
• Rent £475 pcm
• Rent top up £125
• Term 5 years

This couple have been in two years and in no arrears. They have put new windows in throughout. A young couple with one small child wanted to get on the housing ladder but due to the young man having a CCJ from 5 years earlier it was impossible for them to get a mortgage. They are looking to buy early as they have already saved up the 10% deposit already.

Yes please – I would like to be a Tenant Buyer

You lose the rent, including the additional rent top up.

It's unlikely, but a possibility and therefore a risk. In this case, you only have the legal right to buy at the pre-agreed price and the landlord seller is only legally obliged to sell at the pre-agreed price.

This is the same as being a homeowner and buying a property today, the risk is exactly the same. As a tenant buyer, you are taking over the equity, with includes negative equity. As a homeowner, house prices can go up or down. Long term houses prices increase due to inflation, wage growth and land being a finite resource, with a growing population.

As a tenant buyer, the equity, which includes negative equity, is being passed from the landlord seller to the buyer tenant. This is one of the advantages of becoming a tenant buyer. If house prices fall, and a landlord seller decides to withdraw and sell the property on the open market instead, they will only get the market value at that time, therefore, it makes sense to proceed with the tenant buyer at the open market value at that time. Alternatively, both parties can re-enter a new contract, with new terms and new period.

If a mortgage valuer on behalf of the mortgage lender down values the property below the pre-agreed price, within the remaining ten percent of the term period and the property is in the same or better condition, then we will renegotiate the purchase price and / or renegotiate terms. In the unlikely event, house prices fall and we cannot renegotiate terms, the rent ‘top up’ will be retained by the tenant buyer. This is because a tenant buyer cannot control house prices or market conditions and is outside of their control.

Example.
A landlord seller and a tenant buyer agree at the outset to sell and buy at £400,000, within a term period of five years and within five years the property is now worth £550,000. The landlord seller entered a contract to sell at £400,000, so the tenant buyer has instant equity. However, if we take a different scenario and the property within five years is now only worth £310,000, the tenant buyer has to make a decision whether to continue to proceed at £400,000 or renegotiate.

Yes. The contracts have been around since Oliver Cromwell and is like an exchange of contracts, its legally binding. The Landlord Seller must sell the property at the pre-agreed price set in the contract.

Case Study

• 2 bed property
• Agreed purchase price £70,000
• Rent £475 pcm
• Rent top up £97.22 pcm
• Term 6 years
  The couple have been in over 4 years with no rent arrears. The applicant had a poor credit due to his marriage break up and wanted to buy his own property. He couldn’t due to the CCJ, but has used the Rent to Own product to own his home. Both parties agreed to a 6 year term period as he wanted to make sure he paid off all his CCJ’s and had time to get good credit by the time the term period was finished.

A Tenant Buyer will pay a consideration. A financial amount to secure this contract. Depending on the situation and individual circumstances, it maybe easier to pay a larger initial fee rather than a monthly rental top up.

Our innovative 'buy now, pay later’ style service is an alternative solution for Tenants to secure their home.

• No more renewals,
• Unknown rent increases
• A secure home, your home. (not having to move out after six months)
• Effectively ‘Buy now, pay later’.
• Improve the property at your expense, gaining any uplift in value.
• Purchase price and rental price agreed and fixed prior to move in.
  We provide the knowledge, direction and opportunity.

It's important to remember, this system works by working together, to achieve the objectives of both parties and enjoying the benefits of using our system.

Why does anyone sell a property? It could be retirement, divorce, fed up, mortgage ended, disposing of a property portfolio.

Case Study

• A detached 1845 Grade II listed house
• Agreed purchase price £650,000
• Rent £1,675 pcm
• Rent top up £416.66 pcm
• Term 5 years

This family was looking for their forever home and saw a house that was on the market for sale and to rent. The owners lived next door and was important for them to like and trust the potential Tenant Buyers. The purchase price was agreed and was a win, win for both parties.

The Tenant Buyer comments “We have refurbished quite a few rooms in the house and although we do not own the property in the sense that the mortgage is not in our name, we do feel as though this is our home. Until I was a Tenant Buyer myself I would never have thought people would refurb a house they didn’t own. It’s a completely differerent mind set that I’m used too.”

Until you can put yourself in the mind of a tenant buyer then you will nto understand the desire to make a house your home and renovate it even though you do not own it.

When selling a property portfolio, it is easier to sell one a year and this is a great system to do this. It could be a landlord is fed up dealing with letting agents and tenants, but retirement is only six years away. This system takes the stress away. It could be a change is legislation or tax. It could be the landlord cannot sell for another four years due to financial penalties on a mortgage or want to spend the equity on a child's University fees. In fact, the conventional way to sell includes empty void periods and added risks of having empty properties. This system means no void periods, or we have investors that want to buy and sell and invest but do not want to be landlords at all. It could be a landlord wants to give a helping hand to someone and likes the ethics and ethos of the business model. It could be its more profitable for a landlord to sell to a tenant buyer.

Almost any property can be put into a rent to own product, however, the most successful type of property is a small starter house for a couple starting a family or already have a small family. We have clients looking for 1-bedroom flats up to large, detached multi-million estate homes.

We look to set this between 1 to 30 years.

The letting side would fall within the scope of The Property Ombudsman. The standard rent to own market for a sofa or car for example is based on credit and therefore regulated through the Financial Ombudsman. In this case, there is no credit and would not fall under the Financial Ombudsman. Although, like crowd funding, new markets arise, and the regulators tend to watch and see whether there is a requirement for regulation.

Most letting agents and property management companies have undesignated client accounts, whereas, we have individual designated client accounts for each client, coupled with client money protection insurance.

The deal is done and the landlord seller, having washed their hands of the property, move on with their life and decides to move to Papua New Guinea never to be seen again. We have this covered.

There is no limit. We have clients looking up to £5 million for a house using this system, however, the majority of our market is in the first time buyer and second time buyer market.

The founder of The Property Step has extensive professional experience, training and qualifications. Having dealt with over 2,500 tenancies, selling over half a billion pounds worth of property and over thirty years experience in the property industry, we have the experience, expertise and knowledge but also the ethics, principles, values and ethos.