Gradual sale of BTL property to a current tenant?

[Incredulum]

I cannot see how this can work.

You have a property worth £130, if you're lucky, with debt of £119. i.e. equity of 11. For a 75% mortgage you need a further 22k of equity.

You have no cash for refinancing; your Ts have no cash for a deposit. Only the tooth fairy will give either of you the cash that the bank needs to provide sufficient equity in the property.


You suggest some sort of joint ownership, which means between you and your T you need to find 22k. If between the two of you the missing 22k can be found (sell things (car?)) then I guess the amount that you put into the property could be a second charge on the property ranking behind the building society. That way the risk of the property is transferred to your Ts, and your further exposure is limited to whatever equity you leave behind/put in. Perhaps they will pay you interest at the same rate as they pay the bank. Don't expect the money back quickly...

You say "all I care about is getting back what I paid" but you're not going to, are you - if values have dropped by 10% (or more). Sorry to bear bad news.

[LindseyS]

In theory, this is do-able, but not to get a sale in the short term unless you can come up with a lump sum of capital. You can give the tenants an option to buy in x years (for x, substitute the number of years that you estimate it will take your property to get back to the value that you need it be). In the meantime, you're still the owner and your tenants pay you rent. Can the tenants give you some deposit upfront which you would take off the final purchase price? Can you keep up the payments at the current mortgage rate?

If you google rent to own/rent to buy, you should find more information on this. If you do it, make sure you engage a solicitor who is experienced in this area.