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Lease to Buy


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I have started seeing a number of people offering Lease to Buy properties, eg, purchase to value of £xxx which is paid by paying a lease of £xx/month.

So, essentially, the idea seems to be that you buy the property without needing a mortgage or cash up front, the seller becomes the lender and you pay the purchase price off over a few years.

I have so many questions!

Is this really legit? One sourcer I spoke to says it is all agreed through solicitors etc, so there is no risk. A first charge gets registered against the property so the seller cannot undercut you and sell the property to someone else.

Why on earth would a seller agree to basically become the lender? What is in it for them?

 

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27 minutes ago, colleenw said:

I have started seeing a number of people offering Lease to Buy properties, eg, purchase to value of £xxx which is paid by paying a lease of £xx/month.

So, essentially, the idea seems to be that you buy the property without needing a mortgage or cash up front, the seller becomes the lender and you pay the purchase price off over a few years.

I have so many questions!

Is this really legit? One sourcer I spoke to says it is all agreed through solicitors etc, so there is no risk. A first charge gets registered against the property so the seller cannot undercut you and sell the property to someone else.

Why on earth would a seller agree to basically become the lender? What is in it for them?

 

I guess this falls into the 'Lease option agreement' or LOA. Something I haven't been involved with... and is something I would stay clear of myself... seems like a headache and a potential disaster to me but that story is for a different day.

I'm surprised that a seller is actually offering this. Usually, the buyer would approach a seller with this strategy, the buyer would offer to buy the property in X years at a Y price that is usually higher than the current market price. This is the incentive for the seller (securing a higher price). Buyer could then run the property, get the cash flow without having to buy the property upfront. At least this is how this strategy is usually marketed. :)

No idea how it actually works from a legal and technical perspective though!

 

 

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