Buying a house to let, with incumbent tenants

mancdaz

My Wife and I are purchasing a property to let out. We are purchasing off a Landlord, and there are already tenants in the property.

Given that the tenants would be happy to stay in the property and rent off us instead, do we need to worry about engaging the existing letting agent?

As far as I can see, the fact that the landlord is ending his contract with the letting agent is not our problem, and we can benefit from all the up front checks that were done when the tenants first moved in (only 4 months ago), without having to pay an ongoing monthly percentage to a letting agent (we currently already have a property we let out, and even though we only paid for a 'tenant find' service, we still need to pay an ongoing monthly fee for as long as the tenants stay there).

Things that I think we need to sort out that previously our letting agent sorted out:

deposit scheme
assured shorthold tenancy agreement
new inventory (or blag a copy of the existing one since it's quite recent)

Is there anything else? Or am I completely on the wrong track?

Cheers
Daz

Werdnal

Have you actually seen a copy of the tenancy agreement that is in force at the moment? You MUST read this thoroughly and preferrably get it checked by a solicitor, as you cannot force tenants into signing anything new with you, you cannot change any existing terms and conditions, and you will be bound by the current agreement and inherit everything agreed in it!

Have you asked for a copy of the tenant's credit check report from the point when they moved in?

You are correct that you will need to arrange for the deposit amount to be transferred to you and re-protected.

I am surprised that the LL is selling the property so soon after tenants moved in? Maybe I am too suspicious, but seems a little odd!

Annisele

I don't think a new inventory would help you (but if I'm wrong, others will correct me).

You'd be stepping into the shoes of the previous landlord - so the contracts would stay as they were, and the T would have to return the property to you in the same state as T received it when the first LL handed it over (less wear and tear).

You might also want to know something about this tenant. Do they pay their rent? Are they nightmare Ts for any reason?

And, you'll need to know about the existing tenancy agreement. I guess it's probably an AST - but if it isn't, you'll need to know exactly what it is.

I think the letting agent isn't your problem - they're the agent of the previous LL, and so they're his problem to sort.

mancdaz

Surely the agreement with the previous landlord is made null and void when he gave them notice? Why would I have to honour a contract that wasn't made with me? It was a 6 month agreement with a 2 month notice period, which he has given them. Either way, it would end in a couple of months. Either now, or at that point, we are free to 'steal' the tenants from the agent, right?

Current landlord has owned the property for around 5 years. I don't think there's anything dodgy there.

budgetdiyer

mancdaz wrote: »

Surely the agreement with the previous landlord is made null and void when he gave them notice? Why would I have to honour a contract that wasn't made with me? It was a 6 month agreement with a 2 month notice period, which he has given them. Either way, it would end in a couple of months. Either now, or at that point, we are free to 'steal' the tenants from the agent, right?

Current landlord has owned the property for around 5 years. I don't think there's anything dodgy there.

You will take over the existing tenancy agreement from the current owner, so you will be bound by the terms of that agreement. Obviously the inventory essentially forms part of that agreement so you need a copy of that (just ask your solicitor to ensure you receive all original documentations upon completion.)

In terms of where you stand with the letting agent, you don't have to use them. If the current owner has signed a contract with them for any particular length of time, that is his problem to pay up the contract that he has signed.

You will need to serve the tenant with a notice to officially inform them that you have purchased the property and your address details etc etc

G_M

You are buying a property, together with the commitments it comes with - ie the tenancy.

The existing tenancy continues. The only change is the name of the landlord. The current tenants continue to have the same rights as before.

The deposit they paid the previous LL - you are now responsible for it.
The inventory they took over/signed? That remains valid. You cannot introduce a new one half way through their tenancy!
The rent they pay? You receive - you cannot change it (except in the normal way when their tenancy ends).

The current LL has given them notice? Does not mean they will leave, or the tenancy will end.

I could list 100 things you need to check, but my biggest concern is that you appear to have very limited understandng/knowledge of landlord/tenant law, or tenants rights.

If you are serious about becoming a LL, and a self-managing one at that, you need to learn a lot. Fast.

Read the links in this post for starters.

You say you can save money by relying on the agent's original vetting of the tenants, but have you checked this? WERE they vetted? With what result? Have they paid regularly or are they in arrears? Or consistnatly late?

By taking on existing tenants you lose the opportunity to choose your own tenant - you inherit.... who knows who?

Werdnal

mancdaz wrote: »

Surely the agreement with the previous landlord is made null and void when he gave them notice? Why would I have to honour a contract that wasn't made with me? It was a 6 month agreement with a 2 month notice period, which he has given them. Either way, it would end in a couple of months. Either now, or at that point, we are free to 'steal' the tenants from the agent, right?

Current landlord has owned the property for around 5 years. I don't think there's anything dodgy there.

Not the agreement between LL and LA, the tenancy agreement. LA is only a "middle man" and the existing tenancy will transfer to you as part of the sale. Get a copy, read and check it thoroughly to make sure you know what you are taking on. You will be bound by whatever terms the tenants have signed covering their right to reside at the property. Obviously, rent etc, will now be paid to you, not agents, but everything else will remain unchanged. You can ask the tenants to sign a new agreement with you, but they have no obligation to do so.

Doesn't matter how long he has owned the property, just seems odd that new tenants have moved in so recently, and probably whilst it was on the market.

Werdnal

G_M wrote: »

.

If you are serious about becoming a LL, and a self-managing one at that, you need to learn a lot. Fast.

Read the links in this post for starters.

GM, OP stated in first post that they already let a property, so this is not their first step into becoming a LL, but to be honest, I agree, that perhaps some further research into the whole letting game may not go amiss!

tbs624

mancdaz wrote: »

Surely the agreement with the previous landlord is made null and void when he gave them notice?

No, it is not.

mancdaz wrote: »

Why would I have to honour a contract that wasn't made with me? It was a 6 month agreement with a 2 month notice period, which he has given them.

LL cannot bring a FT tenancy to an end within the initial 6 months, except on specific grounds. You take the existing tenancy on, having bought the property.

mancdaz wrote: »

Either way, it would end in a couple of months.

The tenancy does not just end because a S21 Notice of Intent to Repossess has been served by the LL/vendor to align with the expiry of the Fixed Term. The law allows a statutory periodic tenancy to arise if the T remains in situ after that FT expiry.

Something that you do need to ensure is that the vendor (or his solcitor) provides the T with a formal letter of authority, which informs the T that all future rent payments are to be made to you as the new LL.

You also need to serve the Ts with formal Notices under the LL&T Act 1985, s3 and the LL&T Act 1987, s48

Check too that control the tenancy deposit is transferred/ the tenancy deposit scheme is notified of a change of LL

You may want to join a LL association and read up on LL& T law at Shelter/ Landlord Law, via a local Council's LL training and accreditation etc.

Werdnal

As I am still trying to make head or tail of this situation, I am concerned that if the "vendor" LL has issued S21 notice, and sale goes through to OP within the 2 month period (ie before expiry of the S21), where does that leave the OP and tenants in this situation.

If the sale is completed, does the S21 issued still stand, as the "vendor" LL would no longer be in a position to apply for possession, and indeed have no further interest in doing so.

In such a scenario, if OP does want tenants to leave, would OP have to start all over again, issue another S21 in their name etc, as having inherited an active tenancy, I assume this would invalidate all previous notices.

Anyone advise please?

mancdaz

Werdnal wrote: »

GM, OP stated in first post that they already let a property, so this is not their first step into becoming a LL, but to be honest, I agree, that perhaps some further research into the whole letting game may not go amiss!

Yes we currently let a property that used to be our residential property. We went through an agent and have had no issues with our tenants so I suppose we've coasted aong without knowing too much and have been lucky.

Clearly I had/have no idea about the law regarding inheriting tenants, so thanks to everyone for the pointers.