Common Questions and Answers

Q. What is a Lease Option?
A. "Lease Options" are widely used in commercial property. They are rapidly becoming a new approach for residential property owners to sell and for individuals to purchase a property in a flexible way, without having to immediately qualify for a conventional mortgage and put down a large deposit.

A Lease Option is a written LEGAL agreement, whereby a property owner can grant an Option to a buyer which is an exclusive and irrevocable right to lease and purchase the property within a certain period of time, known as the Option Period, at a price fixed from the outset.
A Lease Option combines the benefits of both a normal rental lease (known as an Assured Shorthold Tenancy Agreement) and an Option to Purchase (known as the Option Agreement). Therefore, in reality, the Lease Option is actually two concepts, using two separate written agreements that combine together as a Lease Option.

We buy properties using a Lease Option from a Landlord/seller and during that time, we either rent the property out and exercise the Option to buy it ourselves at a later date, or sell the Option to someone else, who is typically a first time buyer so they get the chance to buy the property.

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Q.  Who is the Tenant/buyer?
A.  The Tenant/buyer is/are the person/persons who will live in the property under the Tenancy Agreement and who has/have the right to purchase the property under the Option Agreement.

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Q.  Who is the Landlord/seller?
A.  The property owner and person granting the Lease Option.

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Q.  How do I build up a deposit towards the purchase price?
A.  The initial Option fee you pay to us at the beginning of the Option Agreement and your monthly rent premium iis credited towards your purchase price. Meaning they are deducted from the final purchase price of the property at completion, so less money will be due when the property is bought.

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Q.  How much money will I be expected to put down as an initial Option Fee?
A.  You will usually be expected to put down between 3%-5% of the agreed purchase price as the initial Option Fee, at the time of signing the Lease Option Agreement and prior to moving into your new home.

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Q.  My credit rating is poor, will I still be able to apply?
A.  Yes, if you have poor credit or even no credit, you're still eligible to apply. This is the beauty of Lease Options. Whilst renting with the Option to buy, you also get the chance to put your financial affairs in order, so you can prove to a conventional lender – affordability, stability of residence and a good payment track record.

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Q.  What happens if my circumstances change or I change my mind and don’t want to buy the property?
A. You are under no obligation to buy the property. An Option binds the sellers but not the buyer. However, you will lose the initial Option Free paid at the beginning of the Option Period together with the additional monthly Option Premiums paid towards your purchase deposit, as they are non-refundable.

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Q.  If, when I am ready to buy my property, I find it has increased in value?
A. You still purchase at the agreed upon price from the beginning of the Option Period.

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Q. May I decorate or carry out improvement works to the property?
A. Yes. In fact, improvement works often add value to property, thereby increasing the amount of your investment.

Any improvement works requiring major structural alterations (such as extensions and removing walls) we would require you to obtain our written permission in advance of carrying out the work, as there may be legal and/or structural issues requiring clarification and consents in writing.

As you are in the process of buying the property, you will be responsible for all maintenance, repairs and damages that may occur.

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Q. What happens if I can’t pay the rent or have missed some rent payments?
A. We cannot stress enough the importance of ensuring that your monthly rent and monthly Option Premiums are paid on time, every time. Not only to comply with the terms of your Option Agreement with us, but to also show a future mortgage lender, a timely payment and savings record, in order to qualify for a competitive future mortgage with a good, clean credit file.

The Option to buy can only be exercised provided you are not in breach of your Lease Option Agreement and all payments have been paid and there are no missed rental payments or breaches thereto.

In the event you are in breach, you will be required to clear any arrears and rectify those breaches, otherwise, we will have no choice but to issue eviction proceedings together with a claim for damages and costs.

The period within which you can buy the property will also end automatically on the date the tenancy agreement is terminated.

We sincerely hope eviction will not be necessary, as we are in business to help people onto the property ladder, not off it.

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Q. What benefits are there for me as a Landlord/Seller if I sell my property on a Lease Option?
A.
- You can stop paying the mortgage on the property knowing someone else is paying for it every month
- Secures a price close to or at current market value
- Saves on estate agent fees
- No maintenance problems
- No periods of vacancy

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Q. Once I have agreed in writing to sell my property for a fixed price, can, I change my mind and pull out of the sale?
A. A.  Once you have entered into a Lease Option agreement, you are under a legal obligation to proceed with the sale.

Your buyer however, is under no obligation to proceed with the purchase, so in the unlikely event the Tenant/buyer changes their mind and walks away from the deal, you will still benefit. We will either proceed with the purchase ourselves or find another Tenant/Buyer, or the property will return to you where you will be free to sell it for a higher price, together with the knowledge that your mortgage has been paid and your property well looked after during the Option period.

You will also be able to keep the profits of any increase in value due to any improvement works or rise in the market generally.

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Q. What if the Tenant/Buyer stops paying the rent?
A. Your contract is with us. As we hold the Option, it will be our responsibility to ensure the Tenant/Buyer pays the rent and complies with all other terms of the Option Agreement