Rent-to-own process for landlords.
- Understand the whole process from the enquiry until the final purchase.
- The whole process is relatively straightforward and designed to be as landlord-friendly and savings-driven as possible.
First thing first, we need your basic details. To start the process, please go www.bespokepropertywealth.co.uk and register your interest as the landlord. You will be required to provide some basic information about yourself as the landlord. Once that is sorted, and you activate registration by confirming the receipt of the email, we will arrange a phone appointment with you to discuss all your requirements and circumstances. You will be asked to provide property details to do due diligence because it is a long term rent and sale; we need to make sure that the property, legals and finance are sound.
We require the following:
- Title - that obviously can be downloaded by ourselves, but we need any confirmation of any additional charges/restrictions.
- Mortgage or charge - we need to see proof of your finance. Ideally, a mortgage statement or mortgage offer to confirm the balance, monthly payment, end of any mortgage product deal, and property allowed to be let. Mortgage statements will be required to be provided to the joint venturer regularly to ensure there are no arrears.
- Proof of identity and address.
- Latest valuation report if it is available.
Once we receive all possible documents and do our internal checks, we will be in a position to make you an offer on the property. The offer contains the sale price, monthly rent and term. If you are looking to receive a higher sale price, we are keen to do it longer-term. All you need to do is to accept the offer :)
The agreement each landlord signs is a joint venture agreement. The most important aspect of the deal is the set monthly rent, the set sale price and the term. Rent can be arranged to be paid monthly, quarterly or even annually. The rent level stays the same during the agreement. We can even pay rent in advance for up to 6 months! The fixed sale price. Payable on completion of the sale. The term is usually set half-yearly. So if we are looking for three years for a tenant-buyer, we will agree to a 3.5-year term with the landlord, which allows little extra time for finding a tenant-buyer and any delays with sale completion. Deposit. We aim to pay at least £5k or 3-7% of the value for each property to the landlord.
The wording on the agreement is that the joint venturer receives on completion any amount over the set sale price or monthly over the set rent. So, the set sale price is £240k, and the fixed rent is £1000. The actual sale price is £260k, and the monthly rent is £1100. Then the joint venturer profit difference between £260k and £240k so £20k and £100 monthly profit. The agreement is designed to allow the further sale of the property to the tenant-buyer at a specific time. The joint venture agreement is not required to be signed by the solicitor. It also contains the Power of Authority to the joint venturer, allowing individuals to deal with anything relevant to the property. The agreement allows the joint venturer to register a restriction on the title preventing the property owner from selling or capital raising without tenant-buyer approval.
The joint venturer is the Limited company or precisely Special Purchase Vehicle created only to be a joint venturer to several Rent-to-own deals. Even though they have been established, the companies form a group of companies that work directly with Bespoke Property Wealth under the directorship of the same people. The only goal for the company is to create a profit from the sale, and therefore, they aim to complete the sale of the properties as it is the only time when the gain is made. The monthly rent is payable in the first instance to the mortgage company. So let’s say rent is £1000 and a monthly mortgage is £600. We pay £600 to the lender and £400 to the landlord directly.
The joint venturer taking responsibility for payment of anything to do with the property, including:
- Utilities, council tax.
- Letting fees.
- Home insurance.
The landlord responsibility is to provide a financial statement from the lender regularly and start the legal process on time.