expected value of auction property with sitting tenant?

nina_noodle

Can anyone give me a general idea of how much LESS to expect on the value of a property going to auction with a sitting tenant?

(3 bed semi, in need of modernisation, similar modernised property on same street currently valued at c.299k)

Any ideas? Ta.

Astaroth

Auctions are always a gamble as it depends what sort of people happen to be there. It will also depend on how much lease is left to run for the tenant.

If it only has a short time left then arguably it may even increase the price as it would appeal to both other buy to let investors and not be a significant deterant to private purchase people. Likewise if the room has a disproportionate amount of people wanting buy to let the tenant is seen as a potential boon and so drive the price up -v- a vacant possession.

clutton_2

what sort of tenancy agreement are they on and how long have they been there ?

nina_noodle

re: tenancy agreement - long story! Current tenant inherited the tenancy from his late mother (now deceased 5 years) who had been the tenant for 60+ years! So the tenancy has been in this family name for at least 65 years. The owner is now wanting to sell, but has not considered asking the tenant if he is interested in buying.

This is all a bit complicated, but suffice to say that the tenant being there is no problem if I were to buy - it's my dad. I'd just like to know that if I were to condsider buying this property to keep him with a roof over his head, what is the liklihood that I have stiff competiton in the auction room? I know it's like asking how long is a piece of string, but I'd like an idea of how this sort of situation might affect the property value and interest in it.

As far as I'm aware, there is no Shorthold Tenancy Agreement, as it was all so long ago when the tenancy began...

as clear as mud...?

BobProperty

Not quite as unclear as mud...
It sounds like the tenant will have an old tenancy agreement (I've forgotton the correct legal name as I haven't got my notes here) which means they are seriously well protected against removal (and also probably pay 10/6 in rent.) From a commercial point of view, the advice would be walk away unless you really know what you are doing and have the cash. The only competition you will get at the auction are people buying it as a reversion with a rent. i.e. you won't get possession until the tenant dies or leave voluntarily and the price is discounted in proportion to the life expectancy of the tenant. I know it sounds rather base but it is looked at like an annuity. The worry would be that some pratt who doesn't understand the law thinks they are getting a house cheap and pays the going rate for a house with an AST tenant, thinking he can get the tenant out in a few months.
In terms of value, what would a realistic value of the house be if it were empty and how old is your father?

nina_noodle

thanks very much for your replies.
I'm going to get a few more bits of info from my dad, and reconvene, so keep an eye on this thread...
Ta

Shahie

'Current tenant inherited the tenancy from his late mother (now deceased 5 years) who had been the tenant for 60+ years!'

You need to find out if a new Assured Shorthold Tenancy Agreement was signed , anything prior to 1997 was most certainly not an Assured Shorthold which currently gives Lanadlords more options to evict. If you can find the original tenancy agreement or latest agreement in force then you'll know how well protected the tenant is.

If no documentation exists and tenant has been there for many many years most investors won't touch this - Especially if on viewings Tenant says he's not going, could end up in court for years...

clutton_2

IF this is the sort of tenancy i think it is, most investors will not touch it with a bargepole as they cannot get the tenant out, and, in many cases the tenant has rights to pass the property on to their next of kin !!!! if it is this Regulated Tenancy (i think) - you are in an absolutely perfect position to buy it for a song, as no one else will want it. HOWEVER, i dont know what a Lender might think, as Lenders want to know that the tenants can be got rid of, if you default on the mortgage. You might need to find a way of paying cash for it initially and then remortgaging it very quickly to get your cash back.

you might ask your fathers landlord for a copy of the tenancy agreement.

good luck let us know how you get on

BobProperty

I think Clutton is spot on, I'd not thought about the money but i can't imagine you will get a mortgage on somewhere where the tenant is on a Regulated Tenancy.