Buying a Property with an Existing Tenant

chrisfi

I’m looking at getting into buy to let and an ideal property has come up which just so happens to have a tenant. I’m told the tenant has lived there for a couple of years and wishes to remain there for the foreseeable future. The rent is bang on what I would expect and if I would like the tenant to vacate the property, two months notice is all that’s required because the six months of the fixed part of the tenancy lapsed a while back.
At first I thought this was a good thing, but having thought about it for a few days I’m starting to think it may cause a whole load of problems – inventory, transfer/renew/start contract, the need to engage a solicitor with knowledge of residential lettings, deposits, and so on…..

I’m interested to hear others opinions on this especially those who’ve actually brought a tenanted property in the past.

Thanks.

PasturesNew

You'd need to arrange an inventory, with the tenant and seller. Tenant shouldn't be expected to make good the difference between their original one and the new one in my opinion as you're buying it "as is".

You'd need 25% deposit, but I guess you've got the financial side of things sorted.

You'd really need an agent if you don't know what you're doing legally with being a LL

Werdnal

You must ask to see a copy of the tenancy agreement that the tenant already has in place, as this will be binding and you may have difficulty changing any clauses. You must also verify what the terms of the tenancy are. It is easy to be told something by the agent/seller, but get it all in writing before you commit to anything.

You will not have had the benefit of being able to check this tenant's credit or references, as you would a tenant you picked for yourself, so this could be a risk. Seller will tell you they are wonderful, spot on reliable payers and excellent at looking after the property - after all they want to sell it to you!

You should also realise that becoming a LL brings with it legal obligations and regulations which you must abide by. You already seem to have done your homework as you mentioned deposits etc, but make sure you appreciate what you are letting yourself in for. I take it you are also aware you need to declare rental income for tax? - many new LLs don't know this.

You must ensure the property has an up to date gas safety certificate if relevant - I would insist this is done as part of the sale if it is due to expire.

Also, the 2 months notice you are required to give, does not secure you vacant possession. It is not notice to quit, but notice you are applying for possession, If tenant (who is obviously longstanding), decides to stay put, after the 2 months you will have to apply for court order to evict them. This can take several more months!

G_M

No, a new inventory is not possible.

You will be taking on the existing tenancy, with the existing terms, the existing inventory and the existing deposit. Obviously you need to see all this documentation.

You need to ensure that the F&F list associated with the purchase matches the inventory associated with the tenancy!
As the tenancy is now periodic there is no need to change it provided it is all in order.
You need to get the deposit transferred into your name since as the new landlord YOU will owe the tenant this when he leaves. You inherit ALL the existing responsibilities.
You need to serve the proper notice on the tenant that you are the new LL otherwise how does he know who to pay rent to?

If the tenant has been there 2 years, wishes to remain, is on a decent rent, and is a reliable payer, this sounds like an ideal way into the market. The key, though, is 'reliable payer'. Ask for written confirmation from the vendor/LL on this point. Also make sure to meet the tenant (preferably without the LL present) and you also find out what the property is like (long list of complaints......?)as well as being able to 'assess' the tenant.

Speak to the neighbours! They'll know if the tenant is 'trouble' after 2 years!

On being a LL generally, read here.

yorkshire11

You need to find out exactly how long each tenant has been in the property – not the just the date of their last tenancy agreement. Find out what type of tenancy they have, too. Most modern tenancies are assured shorthold tenancies, but you need to find out for sure before you’re tempted into taking them, and the property, on.If the tenants have been in the property since before 15th January 1985 they will almost certainly be 'protected' tenants which means that they will be almost impossible to ever evict, and that you can’t usually charge a market rate rent for the property as all rents for protected tenancy properties have to be set by a rents officer.

chrisfi

Thanks all for the comments so far.

G_M wrote: »

You will be taking on the existing tenancy, with the existing terms, the existing inventory and the existing deposit. Obviously you need to see all this documentation.

If the current LL is using a letting agent who set up the original tenancy agreement, would I be able to transfer this to another agent or take it on myself?
How difficult would it be to set up a new agreement?

G_M

An agent is employed by a landlord. It is up to you who you employ, if anyone.

Edit: However you raise an interesting question to which I do not know the answer:

In taking on the existing tenancy and all its obligations, do you take on the existing contract with the letting agent?

If yes, read that contract to see what notice period is required to end it.
However my instinct is to say you are NOT bound by a contract between another landlord and his agent.

Interested to hear others' views.