Buying a property with a Tenant

Werdnal

BENZ1NE wrote: »

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!

There is a slight possibility that the lender may accept your situation, but you must ask their permission. Mortgages on a residential basis are usually on much more favourable terms than BTL, as tenants are less likely to look after the property than you are, so they are more of a risk. As this appears to be your first mortgage, don't risk getting it wrong.

Do you know that all the utilities are definately registered in tenant's name? There are often threads running here about tenants leaving debts.

You would also need to ensure that the deposit for the property was transfered to you (as per my prev post above), and you need to protect it in a scheme before you issue an S21. A non-protected deposit will invalidate the notice. I would get your solicitor to prepare and issue the notice, as it needs to be exactly right - i's dotted and t's crossed.

If you feel a delay would jeaopardise your purchase, I am sure you could probably do this and get the tenant out successfully in time, but the mortgage issue is the main thing at the moment, as without that you cannot proceed anyway. Speak to your lender and ask the question, as you'll never know until you do!

BENZ1NE

Thanks for that Werdnal, I will get on the phone to Natwest in the morning, we're not sure about the utilities either... how would we go about finding this out?

The solicitor has said £100 for the S21 which we're fully prepared to pay and I'm sure he can sort out the deposit too (the tenant has paid £600 and it's secured with the current landlord now).

I guess now I just have to hope! Any more input would be appreciated though! :]

G_M

You seem intent on becoming a landlord, dispite the advice you requested and have received.

Before becoming a landlord, read this post.

BENZ1NE

It's not that I am intent on becoming one, it's just it seems the only way to get my hands on this property... if there was any other way I'd do it, but ideally it's only for 4-6 months right? If the lender doesn't agree I will write the whole idea off.

I really appreciate the help and don't take my replies as me ignoring your advice as I've fully took it on board, I guess it's up to the good ol' lenders!

DVardysShadow

BENZ1NE wrote: »

...
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.

Let's try to clear up this mystery. Start date assumed correct. End of fixed term is then 01 July 2011. But tenant can go periodic. A Section 21 notice would have to be served by 01 May 2011 to give an end date of 01 July 2011. So now the earliest effective date for a Section 21 is 01 August 2011.

It appears to me that this is a somewhat stressed sale - going to auction for certainty, but leaving the tenant in place to give options to for Owner Occupation or BTL.

taxsaver wrote: »

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.

Generally agree. The only reason I can see a solicitor advising against a delay for Vacant Possession is that this could become an open ended contract, with the vendor not bothered to actually quite get to grips with moving the tenant on, leavingthe buyer bound into a contract with no completion in sight. But this can be dealt with.

If you really want this property, then I suggest that you should require:

• seller to issue Section 21 notice immediately upon exchange
• seller to give Vacant Possession on completion
• Completion to be within 4 months of exchange [up to 1 month to a due date, 2 months notice and a month to play with]

BENZ1NE

Ok Guys,

there's been a few changes, my mortgage company when I informed them said they couldn't give me the mortgage with a tenant, but I've just found out the tenant has been served a section 21 (b) on 2nd August 2010 and it expires on 3rd August 2011, Would it be possible to 'not mention' the tenant to the mortgage company in this case assuming he will be gone just a few weeks after completion?

The Sellers "Receivers" require 28 day turn-around and upfront payment of 10%, any time over, they charge the base rate +5% daily... What does this mean? The rate?

I am talking to a solicitor tomorrow about the whole ordeal, Anybody got any views on this situation?

Benji

The s21(1)(b) is NOT a notice to quit, the tenant has no obligation whatsoever to leave the property on it's expiry date. Lets face it, we don't even know if the s21(1)(b) is valid - they are easy to get wrong.

Presuming it IS valid then all it does is give the landlord (current owner OR you) the right to apply to the court for possession after the expiry date. That is a 6-10 week process if all goes according to plan.

Your solicitor will have to declare to the lender that the property is with vacant possession, or with tenant.

Annisele

BENZ1NE wrote: »

Would it be possible to 'not mention' the tenant to the mortgage company in this case assuming he will be gone just a few weeks after completion?

No - they're going to ask. You do not want to be making fraudulent declarations to your lender (and it's highly unlikely your solicitor would let you get away with that anyway).

Until the T is actually gone, I think it's dangerous to assume that they will go when they're asked to. It may well be that the current owner knows something you don't, and can't be bothered with the hassle of getting rid of them.

G_M

Under no circumstances exchange contracts until the tenant has left.

There is no alternative.

None.

edit - sorry. there is. Forget the mortgage and buy with cash. Your savings or borrow from family etc.

Then come back here pleading for help when the tenant refuses to leave, stops paying rent, takes you to court because the boiler has broken and you have no money left to fix it for him.

Werdnal

OP - Whats the worst that can happen? Lender may withdraw the loan and repossess! Not a good way to start on the property ladder is it?

As said above, and within the first lot of posts in this thread about how to get the tenant out - S21 Notice dates do not mean the tenant will pack up and go quietly on that date. Lengthy delay waiting for court case may follow (costs you don't really want), followed by another wait for the bailiffs to call and evict them. Tenant may be quite happy to leave on the last day of the S21, or even before, but you don't know that. You have asked for advice and been given it in shedloads, so if you want the take the chance, then on your head be it!