Buying flat with tenants still in it?

Dr._Pein

Hi there

I think I found a property: ex-LA, 2 bed, very good location.
It is privately owned and currently rented to some students on a 2 months notice.

The owner wants to sell, but does not want to give notice to tenants before we sign the contracts.

Does that not effectively mean I'd buy the place with tennants in it?
Also: we'd get the survey done while the place is still quite a mess, full of people and their stuff.

Is that normal?
(his agent says it is...)


(sorry if this is a stupid question)

Thanks
Martin

Fred1_2

Dr._Pein wrote: »

Hi there

I think I found a property: ex-LA, 2 bed, very good location.
It is privately owned and currently rented to some students on a 2 months notice.

The owner wants to sell, but does not want to give notice to tenants before we sign the contracts.

Does that not effectively mean I'd buy the place with tennants in it?
Also: we'd get the survey done while the place is still quite a mess, full of people and their stuff.

Is that normal?
(his agent says it is...)


(sorry if this is a stupid question)

Thanks
Martin

If you don't know the answer already, the question is never stupid

Are you buying this flat to live in or to rent out? If you're buying it to live in then either insist the vendor evicts the tenants or negotiate a massive discount for buying it with sitting tenants. It will take at least 2 months to evict them after you've bough the flat, assuming they go peacefully.

If you're buying the flat to rent out, why not just contunue renting it to the existing tenants? Saves you rental void and marketing costs. Of course, that doesn't stop you insisting on a massive discount for taking on sitting tenants anyway

If you feel the valuation will be lower because people are living in the flat, surely that benefits you - it justifies a lower purchase price.

chewmylegoff

well, if you're buying the place to move into it, then it isn't normal. obviously the landlord is trying to protect himself against the eventuality that you pull out and he loses his tenants and his sale.

it's a buyers market. if you really want this place and you want to live in it, i would personally tell him to get them out and ensure the property was professionally cleaned before you will exchange contracts.

if he wont, then find somewhere else which doesn't have this problem.

if he wont and you still really want to go ahead, then speak to your solicitor. i don't know how you would structure this, but you need to protect yourself in some way. maybe a retention held by the solicitor to cover the eventuality that you get screwed by (i) the tenants don't move out by the expected date of completion - i.e. they resist the notice kicking them out and stay there and (ii) the property needing to be professionally cleaned when you move in.

Richard_Webster

Seller would have to give 2 months notice so you would have at least that time between exchange and completion. The contract should provide for vacant possession on completion so if not provided you would not have to proceed because the seller would be in breach.

If I was acting for a seller in those circumstances I would point out the risk of the tenants not moving out when expected and would be very reluctant to advise a seller client to exchange unless the tenants had actually gone, because they might not go and the landlord might have to take them to court or they could use the fact of a sale to some concessions out of the landlord.

Dr._Pein

Thanks for your help, guys!

I indeed plan to move in myself and I'll have a chat with the solicitor to make sure the flat is empty and clean before completion (Very messy and very cluttered at the moment, but that is reflected in my offer)

Cheers,
Martin

roses

Don't sign until they are out! Once you sign, it becomes your problem and the ex-landlord won't care.

Premier_2

Most properties are not vacant when exchange takes place (even if it's the vendor living there).

As long as the property is sold with vacant possession, then surely it's the vendors problem if they can't abide by the terms of the contract in the same way as if they don't move out themselves on completion day.

janey_uk

As they are students I think the issue is likely to be that term may not end until summer and you may be trying to move them on at a point in the year when they will a) not want to sign new tenancy agreements and b) be in the middle of exams etc. If you can discuss it with the tenants they may tell you that they won't need it from the summer anyway - it's not unusual for students to change lets year on year.

I may be wrong but I didn't think a landlord could just evict someone because they want to sell, particularly if it is a time specific let (e.g. for an academic year). Otherwise tenants would have no protection at all?

besonders1

Its a bit cruel of a vendor or new buyer to just evict the tenants. I have looked round properties that are tenanted and I don't want to be a landlord but I would let the stay until they found somewhere else to live as long as they were not staying for more than 6 months. I have seen notices in leaflets, stating that the houses are to be sold with tenants which I must admit puts me off and would offer less but if it was a BTLer then it would be an advantage .

franklee

Richard_Webster wrote: »

Seller would have to give 2 months notice so you would have at least that time between exchange and completion. The contract should provide for vacant possession on completion so if not provided you would not have to proceed because the seller would be in breach.

If I was acting for a seller in those circumstances I would point out the risk of the tenants not moving out when expected and would be very reluctant to advise a seller client to exchange unless the tenants had actually gone, because they might not go and the landlord might have to take them to court or they could use the fact of a sale to some concessions out of the landlord.

This is a very good point and it may mean in some cases that a landlord can't afford to sell. A landlord relying on the rental income to pay the mortgage will want to keep the tenants in place, but with the tenants in place he can't exchange contracts promising vacant possession. Yet if he evicts the tenants before exchange the sale may fall through, due to the time taken to evict or for some other reason, leaving the landlord needing to find new tenants quickly to cover the mortgage payments. Back to square one! Meanwhile the market is falling. I suppose if the price goes low enough he will attract an investor prepared to take the tenants on.

Dr._Pein

besonders1 wrote: »

Its a bit cruel of a vendor or new buyer to just evict the tenants.

I take your point, but given from the point the seller accepts my offer it takes us at least another month to sort out the paper-work, and then their are given another 2 months notice - I don't think that is unfair.

Plus (something I have not mentioned yet) the place is a real sh*thole at the moment, they have not cleaned it once in the last years they've been renting it. The filthyest people in the filthyest place I've ever seen.

I don't have an issue being cruel in this case

But thanks for your input!!