Are rent-to-buy schemes a good idea?
Q I am looking for advice about rent-to-buy schemes. What are your opinions on them?
A After a flurry of interest around 18 months ago, this is the first time in ages that an e-mail about rent-to-buy schemes arrived in our mailbox. A quick look at myhome.ie reveals schemes in several counties including Kilkenny, Dublin and Kildare. The attraction for the buyer who hasn’t saved a deposit is that when the time comes to buy (usually) the first two years’ rent, say €25,000, is knocked off the price of the property. So a €225,000 apartment can, after two years rental, be bought for €200,000. This helps buyers who don’t have a deposit and who would have trouble raising the original higher mortgage of €225,000. All that is positive.
Renters can walk away after two years – so that is good too – but under these schemes, if they decide to buy, it is usually at the price initially agreed. The considerable danger is that in a falling market – and prices are still falling – the 2010 price you agreed could well be higher than the market price in 2012. That means you will have trouble getting a mortgage. Also by 2012 you might have a better choice in terms of location, property size, etc, so you might not wish to be committed to any one property now. If you decide to go down this route, you must take legal advice before you sign anything.
Tenants won’t let viewers into house
Q We tried to sell our house beginning in November 2008; by June 2009 we decided to rent it out. It is still on the market with the same agent but there is no sign up. Now there is some interest in it but our tenants (three people sharing) are being difficult about letting the estate agent bring prospective buyers around. I have written to them explaining the situation but the agent is still finding them uncooperative. I don’t want to lose a sale, can I force them in some way to comply?
A Why should they? It might be your house but it’s their home for which they are paying good money. Why should they let strangers wander through? What is in the lease? Did you specify that the house is on the market and buyers need to view? If so, you have a strong hand, but if not, and it doesn’t sound like it, you are on the back foot. In these circumstances, it is usual for sellers who have become landlords to do all they can to keep the tenants onside. You need their cooperation in letting prospective buyers in but also you need to encourage them to keep the place “viewable”. According to Threshold (threshold.ie), experts in this area, tenants are entitled to “quiet and peaceful enjoyment of their home. A landlord is only allowed enter with your permission, by prior arrangement with you. If the property is put up for sale, ask the landlord to agree viewing times with you”.
Money talks. Offer reduced rent in return for their cooperation – and get it in writing. What about paying for a weekly cleaner so you’ll know the house is looking good? Talk to the agent and get him to try to stick to set viewing times, so your tenants will have an idea of when to expect someone. It’s only fair.
Your questions
Send your queries to Property questions, The Irish Times, The Irish Times Building, 24-28 Tara Street, Dublin 2 or e-mail propertyquestions@irishtimes.com. This column is a readers’ service and is not intended to replace professional advice.
