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Would you sell a BTL property to its tenants at a discount to avoid agency fees?

concessionary mortgages

More landlords looking for a quick and painless exit from the PRS are considering concessionary mortgages, it has been claimed.

These little-known mortgage deals allow a sitting tenant to buy the property at a discounted price, based on a valuation.

The seller must be willing to sell for at least 10% below market value and then gifts the deposit to the buyer in the form of equity in the property - from 10% upwards. Buyers can use some of their own cash to get a bigger deposit.

Although landlords take a hit on the selling price on the open market, selling to a tenant means no estate agent fees, a speedy no-strings sale and guaranteed rental income until the property eventually transfers over.

Wanted to sell

One couple in Gloucestershire bought their home for �279,000 when the landlord told them he wanted to sell, despite it being valued at �310,000 '� a discount of 10% - and were able to add some money as a deposit to get their LTV down to 85%, securing a mortgage rate of 4.4%. Their repayments are now only slightly more than the rent.

With buy-to-let becoming less profitable, some experts have suggested concessionary mortgages could become more popular.


Lee Grandin (pictured) of Landlord Mortgages says they'�re not widespread as only a handful of lenders offer them '� and they'�re mainly taken up by first-time buyers.

'I'�m sure it will become more common as we have a shift in moving stock from landlords,'� he tells LandlordZONE.

However, Grandin adds that lenders will look at plausibility, and if a tenant is offered a property at �150,000 and given a market value of �200,000 then this would likely not be plausible.

'Likewise, if a tenant has been in situ for only two months then this looks less plausible than a tenant who has been occupying for a few years.'�


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