How To Buy Your Rental Property From Your Landlord

So, you’ve been renting your place for a while, and you’re tired of saying, “It’s nice, but I don’t own it.”

But what if you did?

There would be no moving costs; and you’d finally be able to change those beige carpets and Jackson Pollock the magnolia walls without asking for permission!

Why are landlords selling?

There could be many reasons why your landlord would be willing to sell...

Mortgage interest rates are still high, reducing rental margins
They could be entering retirement and want to release equity to book a worldwide cruise
They could have newer, shinier investment options that they want to pursue
They could wish to cash out at the top of a property price peak
They could just no longer want the hassle of tenants.

You won’t know until you ask

First things first: plant the seed. Have the ‘chat’ with your landlord. Tell them you’re in a position to buy and how you feel about the home. Ask in which circumstances he’d be willing to sell it to you.

A friendly, “Hey, if you’re ever thinking about selling, let me know,” is a good start. Maybe your landlord has been considering offloading the property but hasn’t put it on the market yet. If they’re open to it, you’re already halfway there.

Now it’s time to negotiate

Once your landlord is interested, it's time to talk numbers. The great thing is, they might be willing to offer a ‘tenant discount’ since you’re saving them the hassle of estate agents and listing fees. Estate agents charge between 1 and 3%, with the average fee in 2024 at 1.42% plus VAT. This means on a £275,000 sale, the agent would pocket over £3,900.

If you’re lucky, you might even get the property at a below-market rate. Just remember, you’re not buying a sofa off Facebook Marketplace – this is your future home. Stay friendly, but be serious.

Buy with no deposit

Some mortgage lenders offer what’s called a concessionary purchase scheme. In plain English, that means they’ll lend you a higher loan-to-value (LTV) ratio because you’re buying from a family member or, in this case, a landlord offering a discount.

If your landlord agrees to sell for less than market value, some lenders will count the ‘discount’ as your deposit – meaning you could snag your dream home without coughing up as much, if any, upfront cash. Usually, the discount has to be at least 10% of the market value, so you’ll have to put your negotiation skills to the test!

Example: The property is worth £200,000, but your landlord is happy to sell for £180,000. There are lenders that would consider the £20,000 difference as your deposit, boosting your mortgage chances. Sounds sweet, right?

You’ll still need to qualify for a mortgage for the remainder of the purchase, so dust off those bank statements and make sure your credit score is A*. Better yet, read our Top 10 Tips to Boost Your Chances of Getting a Mortgage.

What’s in it for you?

Familiarity: You already know the quirks of the property (looking at you, squeaky floorboard), as well as the area. Your kids might be in a local school, and you know all the best takeaways.
Less competition: No bidding wars or getting gazumped – this is between you and your landlord. A private sale is completely legitimate, and you'll have solicitors do the proper legal stuff anyway!
Potential discounts: Landlords may sell at a discount, especially if it’s a quick sale.

What’s in it for your landlord?

No estate agent fees: enough said!
Speed of sale: You’ll have no chain which means a quicker sale, plus the landlord will save time not having to take pictures, market and list the property, as well as taking countless viewings.
Rent continues: You’ll still be paying monthly rent up until the sale completes and your mortgage kicks in meaning the landlord won’t have to worry about vacant periods between tenants leaving and the new owners moving in.

Everyone wins

Buying your rental property might not be an option for everyone, but with patience, good negotiation, and a bit of luck, you could turn your rented pad into a permanent home.

Good luck, future homeowner! And don’t forget to pop some bubbly when you finally get those keys.