You may have come across fast sale companies that propose to purchase your home for an agreed price in the future (anything from 2-15 years). They will usually draw up a contract called an “option agreement” which will give them legal control of the property. You would be able to move out and they would cover any mortgage payments until the date of the agreed purchase price. This is sometimes referred to as “babysitting”and you may also be offered an up-front payment when you sign the agreement (often referred to as an “option fee”).
The practice is broadly used in the commercial property sector and by professional developers to secure land and sites for future construction. However, when used for houses and flat purchases, it is important to note that The Financial Conduct Authority (FCA), the Council of Mortgage Lenders (CML) and the Law Society all warn against lease options.
The main issue is that the name on the mortgage is not transferred and, if payments stop, the original homeowner is still liable for the debt. Also, the very fact that the contract is optional means that there is no obligation to purchase at the end of the term – potentially leaving homeowners in a very complicated situation. For example, should the property be let out and damage subsequently occurs, the property buying company can simply walk away without any legal obligation to resolve the situation.
Generally speaking therefore, we are very wary of lease options as it essentially gives the person(s) “controlling” the property an unfair advantage. However, in certain circumstances, such as where there are tricky situations related to land, the physical condition of the building and/or planning issues – specific agreements and delayed completions may be suggested. These will usually be short-term arrangements to resolve any problems.
Above all, Property Solvers and our investor partners prefer a straight cash sale so that our clients are sure that they will receive the agreed price within the set timeframe.
Should you wish to have a no-obligation discussion about a clean and fast sale of your home, please contact us via filling in our form or calling us 24 hours / 7 days a week on 0800 044 3733.