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Buying a property with a Tenant

Hi Guys,

I'll start by saying I am a first time buyer and I've come accross a nice piece of property that went on auction and didn't sell near me, it's down for a reasonable price but it has a tenant in.

I have looked over all of the documentation and the tenancy is an Assured Short-hold Tenancy which is 12 months and was started on 2nd of July 2010 and ends August 2011.

Me and my partner are in the process of getting our mortgage finalised and we're going to put an offer in (which we're assuming will be accepted as we've been told it will by the auction house) the only thing I am worried about is giving the tenant notice and getting him out of the property successfully and without any problems.

We are prepared to wait a couple of months if need be as fortunately we're in the position to do so... I am just curious if when this contract runs out and the tenant hasn't moved on what happens next... we could serve a notice as soon as we get the apartment transferred into our name but would this be too late? (3-4 weeks from now)...

I'd appreciate any guidance you guys can give!

Thanks
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Comments

  • Werdnal
    Werdnal Posts: 3,780 Forumite
    Part of the Furniture Combo Breaker
    edited 23 May 2011 at 6:19PM
    Firstly, if the tenancy has a fixed term until August 2011, you cannot start any eviction procedures until then - you have to honour the terms of the existing agreement. You can issue notice documents at any time, but these will not come into force until 2 months from the end of the fixed term, and run until the end of the fixed term IYSWIM.

    However, this is just notice that you want to gain possession, and tenant can decide to sit tight and then you would have to go to court to get a possession order, and possibly even Bailiffs to evict them.

    You may be able to negotiate a mutually agreeable surrender of the tenancy, whereby you offer the tenant a sum of money to leave early, but they are not obliged to accept.

    By the way, just read you OP again and 2 July 2010 to August 2011 is not 12 months? What are exact TA dates?

    Probably of more concern though, is that your mortgage will have been taken on a residential terms for you to live in the property, and as you will have a sitting tenant until atleast August, this will probably void the terms of your mortgage as you will have to tell the lender and they will probably want to renegotiate the loan.
  • taxsaver
    taxsaver Posts: 620 Forumite
    Werdnal wrote: »

    Probably of more concern though, is that your mortgage will have been taken on a residential terms for you to live in the property, and as you will have a sitting tenant until atleast August, this will probably void the terms of your mortgage as you will have to tell the lender and they will probably want to renegotiate the loan.

    More to the point, your solicitor will have to undertake to the lender that you are buying with vacant possession so you'll likely not be able to complete until the tenant has left. You might be able to agree exchange with completion delayed until vacant possession has been obtained, although your solicitor will probably advise against that.
    If you feel my comments are helpful then I'd love it if you 'Thanked' me! :)
  • poppysarah
    poppysarah Posts: 11,522 Forumite
    It didn't sell cos no one wants to buy it with a tenant in.
  • BENZ1NE
    BENZ1NE Posts: 6 Forumite
    Thanks for the quick reply guys,

    That's the dates on the documentation July to August which I found a bit odd, we're fully aware that the tenant has rights etc but if for example he decides to sit tight what are the next steps? My solicitor said the fees are quite high and the time period can be extensive, has anyone had experience in these circumstances? We're in no hurry to move out as we still live at home and the rent the tenant is paying covers the mortgage repayments plus 30%.

    I know it's a bit naive to ask but is there a rough timescale for a posession order? is it even a court order I'd need if it come to it!?

    Thanks guys.
  • PasturesNew
    PasturesNew Posts: 70,698 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    You need to make sure the current owner gets rid of them - and you can exchange the day after the tenant's left. Safe then.
  • Benji
    Benji Posts: 640 Forumite
    The fees can be high - if you use a solicitor, but it is perfectly possible to DIY if you do your research throughly.

    As soon as you gain possession, you need to issue a section 21(1)(b) notice which will expire no earlier than 2 months after service, or on the last day of the fixed term (whichever is the later). The actual phrase for the expiry date should include the word 'after', example 'after 28th July 2011', but most s21 templates will include that.

    If the tenant does not leave on the expiry date (as is their right) you will need to commence court proceedings. If you have full documentation, you can use court form N5b which has a fee of £175. As soon as the court get the paperwork, they will write to the tenant asking if there is any valid reason for the eviction to be refused (there aren't many - usually errors in process). Tenant will be given 14 days. So, 3-4 weeks after you have submitted your paperwork, the judge will look at the paperwork and make a decision. There will not be a hearing unless the judge thinks any abjection by the tenant may be valid. The judge will give a minimum of 2 weeks to the tenant to go but maybe as much as 6.

    If the tenant does not go, you can not throw them out, you will need to employ court bailiffs, which is more paperwork, more time and more £s (was £95 but think it may have gone up recently).

    I have written this page which may help. http://tenancyanswers.ucoz.com/index/ast_tenants_not_in_breach_of_contract/0-37

    If the link doesn't show (I can't remember if external links are allowed) PM me your email for the link.
    Life should be a little nuts; otherwise it's just a bunch of Thursdays strung together.
  • G_M
    G_M Posts: 51,977 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    1) you will not get a residential mortgage with a tenant in place. Either you wait for the tenant to leave before Exchanging contract, OR you get a BTL mortgage, OR you pay cash (no mortgage).
    2) The tenancy dates don't make sense. Start date 2nd July, 12 month contract, so end date 1st July 2011.
    3) you have no guarantee tenant will leave. You may need to go to court.
    4) You become a landlord, with all the responsibilities of a landlord. Even if the tenant stops paying rent, and refuses to leave, you still have to do repairs for them, get a Gas Safety Certificate etc etc

    I don't know how old/experienced you are, but as a FTB you should probonly either walk away, or wait till the tenant has gone.
  • FATBALLZ
    FATBALLZ Posts: 5,146 Forumite
    My advice is absolutely under no circumstances buy a property with a sitting tenant unless you want to be a landlord. Getting them out could be a nightmare, and they could trash the place before they go.

    We were going to view a property and found out it had a tenant in and cancelled the viewing for this very reason.

    If somebody wants to sell a property they should be getting the tenant out first.
  • Werdnal
    Werdnal Posts: 3,780 Forumite
    Part of the Furniture Combo Breaker
    edited 23 May 2011 at 10:14PM
    BENZ1NE wrote: »
    Thanks for the quick reply guys,

    That's the dates on the documentation July to August which I found a bit odd, we're fully aware that the tenant has rights etc but if for example he decides to sit tight what are the next steps? My solicitor said the fees are quite high and the time period can be extensive, has anyone had experience in these circumstances? We're in no hurry to move out as we still live at home and the rent the tenant is paying covers the mortgage repayments plus 30%.

    I know it's a bit naive to ask but is there a rough timescale for a posession order? is it even a court order I'd need if it come to it!?

    Thanks guys.

    But you seem to have missed the main problem here - Your mortgage will be void if the tenant is living there and not you! You also need to declare income from the rent to HMRC.

    You will become responsible for repairs/maintenance to the property whilst the tenant is there, as you take over all the terms agreed with the previous LL's contract.

    You will also need to get the deposit returned to you and protect it in a recognised scheme, before you can issue S21 notice at all. You also need to get every last word of the notice correct, as if there is any slight discrepancy, the court will reject it and you'll have to start over. The possession order can only be issued by a court.

    Depending on how well the tenant takes the news of the eviction, they could also leave the place dirty or damaged, stop paying you rent, leave utility arrears - do you really want all this extra hassle.

    Your buildings insurance will probably also be void if you are not resident at the property.

    If you are really in no hurry to move, tell your solicitor you will only proceed with the deal if the existing LL removes the T, and wait until it is all done and dusted. Otherwise you are opening a whole can of worms for yourself.

    Good luck!
  • BENZ1NE
    BENZ1NE Posts: 6 Forumite
    So there's no way around this? You definitely can't Let with a Residential mortgage, even in these circumstances where you're fully intending on living in the property? Even if you declared the rent to HMRC...Being in charge of the repairs is just another risk I suppose... we're really in love with this property and have been for years now.

    Sorry, his tenancy commenced on 3rd August 2010 and Expires on the 2nd August 2011, the property is with an auction house at the moment (if that's the right terminology) but most of the other properties in the block sold, and they had tenants also... Surely he couldn't leave arrears? How would this be possible if all is registered in his name?

    I feel like pulling my hair out! I've spoken to a solicitor about the S21 too! Argh!
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