Buying a flat already with tenants in

greyster

Hi

I've shortlisted a flat that I'm interested to buy. I'm aware some tenants are already in the flat and will be until December 2010. I've been told by the estate agent that should I purchase and then decide to move in, they can end the agreement early due to an existing clause in their tenant agreements.

My concern is, what happens if these tenants are not impressed by this and cause grief to both the letting agent and myself the new owner. The letting agent said they wont serve notice until an exchange has taken place to protect the tenants.

I assume this means that for practically the first month or so of my ownership, I will have tenants who potentially could wreck the place, refuse to pay the final rent or squat.

Is there any protection against this when you buy from someone else who initiated a tenancy or is it pretty much my own risk at this point?

I am of course taking the worst possible scenerio here but as I can't afford to be stuck in a rental property while I wait for slow tenants to leave, I need to understand my position.

Any comments welcome.

Thanks.

Doozergirl

No solicitor would adivse a client to exchange contracts for Vacant Possession without the tenants actually having moved out prior to that exchange. Serving notice on tenants does not guarantee an empty property on completion day if exchange has taken place.

You yourself will not be able to purchase a property on a residential mortgage if tenants are in place. And you can't have a BTL mortgage without a residential one.

I cannot imagine there being insurance against this - the risk associated is high and insurers are not stupid. It's the vendor that is taking the risk of being in breach of contract on completion day if they are agreeing to Vacant Possession, not you. If they are not offering vacant possession and you are taking on a BTL then your landlord's insurance could cover potential issues with your tenants.

It's not easy in a bouyant market to sell a place with tenants in situ. Unless the yield is magical, I doubt many people would be interested in it with tenants at all. It's wworth negotiating with the vendor rather than their letting agent.

CLAPTON

you have the following choices

-insist that the tenants move out before exchange of contracts
-let them stay and take the risk of having to go to court to evict them
-walk away

it's that simple.

secla

yes you could have problems getting them out, id ask to see what clause is in there contract to get them out early aswell as it may not actually be enforceable

tennanted propertys for sale usually fetch a fair bit less though so it could be worth the trouble

GDB2222

It doesn't matter what's in the contract. Worst case scenario, it takes over 6 months to get tenants out, if they don't want to leave.

poppysarah

And tenants that don't want to leave might sort you out some parting gifts.

<sebb>

You'll also need to make sure you have a 25% deposit at least as you can't get a buy to let mortgage for less than this.

greyster

hi all, I do intend to live in the property and not BTL. I think I'll be ok because as doozergirl says, the seller will be breaching the contract if he sells a vacant posession to me with students in it!!!

Thanks for everyones help.

poppy10_2

greyster wrote: »

hi all, I do intend to live in the property and not BTL.

But your mortgage company might not be happy to hand over the funds if you do not have vacant possession.

G_M

I'm aware some tenants are already in the flat and will be until December 2010.

Without seeing the contract it is impossible to be sure, but my guess is this is a 12 month contract, started last December 09, and with a 6 month break clause. So the EARLIEST the tenants could be asked/told to leave is June 2010. If they don't, the owner (whether the seller or you) would have to apply for a court order, serve it, and then, if they STILL didn't leave, go back to court to enforce the order.

So June if it goes smoothly.

September or later if it doesn't.

Oh, and as mentioned above, no lender will release funds on the mortgage while tenants are in occupation, and few solicitors would Exchange contracts since they act for, and have to protect, the Lender as well as you.

Assuming a) you are getting a mortgage and b) you are using a solicitor of course.

diable

Can a contract drawn up that for every month the tenants over stay then you will be refunded 10% of the cost of the flat.

I am surprised by this as if I was selling this type of flat I would have waited until the tenants had left but then again this is a buyers market, use it as leverage to reduce the price as it does seem that the seller is maximising his return or minimising his loss.