Insights
The structured purchase, explained.
If a price is being fixed before you move in and a down payment is being asked for, you are entitled to understand exactly how it works, including what happens if you walk away.
How a fixed price and time to finance fit into one agreement
Lease option explained
A lease option is two agreements that sit together. The first lets you live in the property and pay monthly. The second gives you the right, not the obligation, to buy it at a price agreed today, at any point inside an agreed period.
It exists because mortgage timing and life timing rarely match. Someone recently self-employed, newly arrived in the country, or holding money that is not liquid this quarter is often a strong buyer twelve months from now and an impossible one today. The option holds the property, and the price, until they are lendable.
The right to buy is yours. If you decide not to exercise it, you do not buy, and you do not owe the balance of the purchase price. What you paid to hold the option is what you have at risk, and that is set out in the agreement in pounds before you sign anything.
Price agreed at the start
The purchase price is written into the option and does not move with the market during the option period.
You move in first
Occupation begins once the agreement completes and the down payment is paid.
Time to arrange financing
Option periods typically run 24 to 36 months, set at the outset and stated in the agreement.
The purchase is your choice
You exercise the option, or you do not. Nobody can require you to complete.
Capital sits behind the acquisition
Independent capital partners fund the purchase, subject to their own approval of the deal.
A worked example
- Purchase price, fixed at signing
- £585,000
- Down payment, 10%
- £58,500
- Monthly payment
- £2,950
- Option period
- 24 months
- Price payable on exercise, month 24
- £585,000
- Balance to finance at exercise
- £526,500
The price at month 24 is the price agreed at month zero, whatever the market has done in between. That is the whole point of the structure, and it cuts both ways: if values fall, the fixed price is still the price, which is why the option is a right and not an obligation.
Why the number is agreed before you move in, not after
Fixed price explained
In an open sale the price is discovered by competition: an asking price, a best-and-final round, a survey, a renegotiation, and sometimes a chain that resets the whole thing. The buyer carries the uncertainty and pays for it in time.
A fixed price removes the discovery. The number is agreed at the start, written into the agreement, and does not move: not with the market, not with a valuation, and not because another party has offered more. There is no gazumping in a structure where the seller has already signed.
For an overseas buyer it does something further: it fixes the sterling figure, so the exchange-rate question becomes a planning problem rather than a moving target.
No bidding
The price is not a starting position. It is the price.
It survives the market
Movements in local values during the option period do not change what you pay.
It is documented
The figure sits in the agreement, alongside the down payment and the monthly payment.
It is set with evidence
Comparable sales, condition, and, where we have refurbished the property, the actual build cost.
What it is, where it sits, and what happens to it
Down payment explained
The down payment is what secures your position: it takes the property off the market, fixes the price, and starts the option period. It is stated in pounds and as a percentage before you commit, and there are no arrangement fees layered behind it.
It is credited toward the purchase price when you exercise the option. It is not a deposit held against damage, and it is not rent paid in advance. Those are separate lines and they are shown separately on every statement you receive.
It is at risk if you do not complete. That is the honest position and it is why the amount is set at a level a serious buyer can meet without emptying their reserves: typically 10% to 15% of the purchase price. Take independent legal advice on the agreement before you pay it. Anyone who tells you not to bother is not worth dealing with.
Typically 10–15%
Set per property, disclosed in pounds and as a percentage before commitment.
Credited at completion
It comes off the fixed purchase price when the option is exercised.
Shown separately
Down payment, monthly payment and any credited element appear as separate lines on every statement.
At risk if you walk away
Stated plainly in the agreement. Read it with your own solicitor.
Before you commit to anything
Take independent legal advice on the agreement. We will send the paperwork to your solicitor and answer their questions directly. Read the risk disclosure as well: it says plainly what can go wrong.