buying a house with tenants in

ftbworried

Hi Guys

Ok this is a long one, hopefully someone can help out.

We're ftb'ers and me and my fiance have put in an offer of 180k for a 185k house. It's been accepted. So far so good. We can't complete until April because there is a tenant in it (no worries, we're not in a rush).

However, despite our offer being accepted, us having a deposit, and a mortgage in principle, the vendor wont take the property off the market! He said that he won't accept any other offers (based on his word!) but he wants to keep it on the market for 'his peace of mind'. Hmmm...fishy?

So I thought 'what the heck, we'll just try to exchange contracts ASAP', BUT if we exchange contracts say, February, then do we have any responsibilty to the tenant until completion in April?

I heard that once you exchange you have to arrange buildings insurance as the building is your responsibility. So, if the pipes burst or the roof fell in on the house in the 2 months between exchange and completion it would be our responsibility?! Also, what if after exchange and before completion the tenant moves out and decides to smash the kitchen bathroom and walls in the house!?

So then I thought 'hmm best not to exchange until the tenant is out of the house', but then that's April and we only have the vendors 'word' that we wont be gazumped in the next 4-5 months since he wont take it off the market!!!

I don't know what to do, we really like the house but it seems like a complicated situation that we are getting ourselves in to...shall we just hold off any searches until nearer to April so that we dont lose out any money? or do you think we are within our right to insist that once searches get underway then he should take the property off the market????

thanks for reading, any advice appreciated!

Halaku

Okay,

"However, despite our offer being accepted, us having a deposit, and a mortgage in principle, the vendor wont take the property off the market!"

Just because he says he has accepted your offer doesn't mean it is final. Just as you have every right to continue searching for properties, he can continue listing it. Deals that seem a fait accompli but get cancelled at the 11th hour happen all the time.

"He said that he won't accept any other offers (based on his word!) but he wants to keep it on the market for 'his peace of mind'. Hmmm...fishy?"

Don't believe that for a second. If someone makes him an offer for £185k, you really think he is going to accept your offer over theirs? He's just sweet talking you to keep you interested, so he doesn't lose a backup.

"I heard that once you exchange you have to arrange buildings insurance as the building is your responsibility. So, if the pipes burst or the roof fell in on the house in the 2 months between exchange and completion it would be our responsibility?! Also, what if after exchange and before completion the tenant moves out and decides to smash the kitchen bathroom and walls in the house!?"

If the house isn't legally your property, you have no financial obligations to it, and that includes insurance.

Are you received assurances from the tenant that he is ok with leaving the property in April? Evicting a tenant against their will is a very difficult thing to do, especially if they have been residing for a long time, and have kept up payments.

On property bought for investment, tenants usually increase likelyhood of sale of a property, whereas with property bought for accommodation the preference is for the house to be vacant.

My advice is to wait until the tenant has left, and in the meantime continue the property search. Even if someone else comes along and outbids you, at least you'll be better prepared for the situation. You never know, you might end up with an even better property.

BobProperty

ftbworried wrote:

...

I heard that once you exchange you have to arrange buildings insurance as the building is your responsibility. ...

Hopefully I'll get this right. Once you exchange contracts you are irrevocably committed to buying the place. Therefore, it is not actually your responsibility to insure it, but, since you now have a big financial interest in it remaining standing and in one piece, you are strongly recommended to insure it. The vendor will still want paying the amount agreed in the contract, on the date agreed. He may not be bothered if the Land Registry number you have agreed to buy is a 4 bed detached house or a pile of hardcore, he will still want the money. Therefore buildings insurance starting from exchange of contracts is a very, very good idea.

Ian_W

Yup, VERY fishy! It's not the owners primary residence so he's not tying up a chain or looking forward to moving himself so unless he's prepared to take it off the market he's showing no committment to you as a buyer. Sounds very much to me like he's hedging his bets in case a better offer comes along which, of course, he'll accept or try to play one against t'other.

Personally, I would tell the EA that I would withdraw the offer if the property isn't taken off the market but will show my committment to buying by having the survey completed ASAP if it is. If he still won't take it off I'd walk away and look elsewhere. If it's still on the market when the tennant has left you can always go back and offer less. There again, in the meantime you may find another prop that's suitable without the aggro.

BoL whatever you decide.

ftbworried

Thanks Haluka

So, in conclusion, you wouldn't consider appointing a solictior and getting searches done just yet? Do you think we should leave our offer in until April without doing anything?

If he was willing to take the property off the market, would you consider then proceeding with searches/surveys?

The tenant's contract is up in April and the landlord is not renewing it, so doesn't that mean that they HAVE to leave?

iwanttosave_2

i was a tennat in a house that was being sold, landlord didn't even tell us it was going on the market. I spoke to a soliciter who told me that even after completion, if my landlord hadn't given us notice to quit i could still live there. it would then be up to the neew buyers to apply to the courts to get us out, which can take months sometimes.

I would make sure that the tennants have been served their notice to quit and that it does indeed run out in april.

ftbworried

oh Blimey- I guess the order of the day is don't buy a property that is let out!!

Halaku

If you want a simple answer, yes. Sometimes tenants can drag the value of a property considerably, so you really need to be careful. If its an assured shorthold tenancy, it can take up to 2 months to get evicted, and with other contracts you can only get them evicted if they behave unreasonably, like falling behind on rent payment.

So yes, don't sign anything until the tenants have left. For what its worth, you have his word that he'll sell it to you. But even if you are outbid, don't worry too much about it. Chances are you'll find another propery just as good.

One-itis is a common condition affecting house buyers, especially FTB. When you find a house you like, you quickly become attached to it, and tend forget there are plenty more fish in the sea. Remember house buying is a lot like women, you've got to be prepared to love them and leave them

devils_advocate

Unless you are getting a very big discount because of the tenants, walk away from this one now before you incur any costs.

The downside is that the tenants may not move out, leaving you paying your mortgage, without possession of the house, and possibly with no rent coming in. This could last months. Whilst your mortgage is approved in principle, I would also assume this is conditional on vacant possession at completion, so you may get some way dowen the road and then discover your lender is not prepared to led to you. Also be prepared for increased solicitors costs, as they will have to look at the tenants lease very carefully. An assured shorthold tenancy is VERY different from an assured tenancy.

Its a buyers market and being gazumped by the vendor is probably the least of your worries at the moment.

silvercar

The downside is that the tenants may not move out, leaving you paying your mortgage, without possession of the house

You will complete subject to vacant possession; it will be the vendor's responsibility to ensure the property is vacant. Without the tenants out your solicitor won't pass over the money.