Purchasing a tenanted property

loanranger_4

We have found an "ideal home", the property is let and the tenancy agreement ends in 2 months.

The vendor would like to exchange contracts while the property is let, and complete once the tenants move out, I would like to know if anyone has been in this situation and be advised of any issues we are likely to encounter in this scenario. I assume that the the tenants cannot overstay their contract ?

Also to make matters more interesting the tenants have said that they would also like to buy the property ! Don't know whether this is the estate agent trying to get a higher price, delaying tactics by the tenants or in fact true. Nevertheless this does put a spanner in the works! Again has anyone been in this situation before and what would you recommend is the best course of action to secure the property.

Thanks

chugalug

YOu can buy a property with a tenant in it, they tend to be cheaper to reflect the inconvenience. The tenant would be under no obligation to leave once the 'contract' is up. If the agreement is an assured shorthold it becomes ongoing (periodic) until either the tenant or the landlord ends it. The only problem I can forsee is that if the tenant doesnt move out can be a long process removing them. Either the current or the new landlord would have to take on the responsibility for this as if the landlord changes halfway through the process it has to begin again. Tenant has to be served 2 months notice (check if already done) before any proceedings can begin then can be a further 2-4 months to complete if they dont want to leave. The landlord would have to pay court costs and possible bailiffs warrant and recharge these to the tenant (via a CCJ). If you are considering purchasing while tenant still there check the landlords copy of the agreement to make sure it isnt an assured tenancy as this gives the tenants increased rights to the property. Also check if the correct Notice has been served. Your solicitor should be able to help. HTH.

loanranger_4

Thanks chugalug. There's much to think about ! I will get clarification on the tenants agreement ( I believe that 2 months notice has been served ).

Should I assume if the current landlord serves the notice and if the tenants do not move by completion I would I have to start from the beginning again, or will the original 2 month notice stand and I can begin eviction proceedings?
What additional rights do the tenants have under an assured tenancy agreement?

Also will a bank provide a mortgage to complete the transaction on a tenanted property? This is going to be our main home.

Thanks

firrybabe

When I went to purchase my place, it was tenanted. My solicitor was really helpful, she asked me if I had met the tenant and if it was likely to be a problem if we had to deal with it. Luckily the tenant who lived there was lovely (she even left me some furniture) and she asked me to ring her and let her know when completion was so she wouldn't over pay her rent to the vendor !

Have you actually spoken with these tenants on an informal basis, to determine whether or not they are interested in making a purchase ?

garysletters

I agree with everything Chugalug says. to add to it:-

You should ask to see that a section 21 notice has been served (giving 2 months notice for the tenant to quit), and also ask to see the tenancy agreement (AST). There are lots of ways of doing things wrong that mean the tenant can legally stay there longer.

you said that the vendor was going to exchange with a tenant in situ, but only complete when the tenant was out. There is no guarantee the tenant will move out, especially if they want to buy the place. where would this leave you???
You should not want to get involved in evicting a tenant if you can help it. it can get messy and expensive.
You should speak to a solicitor about exchanging contracts before the property is vacant, and then waiting for them to move out before exchanging. The vendor could then still change their minds and let the tenant stay on, thus they have your deposit money, and you dont get the house.....where would that leave you.

sounds like a legal minefield.

theres nothing wrong with buying a property with a tenant in, but you normally do that to get a nice discount, and to keep the tenant in the house and paying their rent.

Why didnt the vendor just sell the house to the tenants before asking estate agents??? They either aren't interested really (agents do lie occasionally) or they can't pay enough. why would the vendor pay agents fees if the tenants wanted to buy it from him at the price your paying???

Ask lots of questions!

zzzLazyDaisy

My daughter-in-law is in exactly this position - she is the tenant. Her tenacy has expired and notice has been served. All perfectly lawful. EXCEPT that she has four children and the council will not rehouse her unless she has been evicted by the courts. So, she has no alternative but to stay on in the house until the landlord completes court proceedings. AND she is on benefits and entitled to legal aid, so there is no chance of the landlord recovering her costs, because the courts will not award costs against a legally aided applicant in these circumstances. So do make sure that you know what is happening. Personally, I would not exchange on a property without a definite completion date, but I am a solicitor and I get very twitchy about these details.... good luck :T

chugalug

Doesnt matter whether client legally aidable (CLS funded) or not, costs will be awarded against tenant which they have to pay back to the landlord/court via a CCJ. Obviously if on a low income could ask the court for time to pay, but pay they will! Bizarrely the local authority will insist applicants are under imminent threat of being evicted by bailiffs before accepting they are homeless as this is what caselaw has established they can do. Even though these are usually the poorest who can ill afford the extra costs. A lot to think about for OP.

loanranger_4

Thanks for all excellent input. I'll get copies of all contracts and notices served. The idea put forward to meet the tenants is also an excellent one, I was going to do all negotiations via the agent (giving them an excellent opportunity to play us off against each other!).

It was a big surprise to see the tenants emerge as potential buyers AFTER we had put a proceedable offer on the table, it's strange why they waited until the property went onto the market before expressing an interest. I think it may be spoiling or delaying tactics. It would be better all round to exchange/complete on the property once the tenants have departed however with them expressing an interest to buy I think that this may not be happening soon! Can the tenants make the sale of the property to anyone but themselves very difficult!?

Thanks for the warning about costs for evicting tenants I did think once notice had been served it would be a simple formality ! But who wants the headache of months of legal work to evict people AFTER you have completed ?

With the early proposed exchange (i.e. tenants insitu) I would be very concerned if there is a risk that the vendor does not to complete, I thought that once you exchanged you MUST complete ? What happens if a vendor does not complete (is there a penalty ? The buyer risks their deposit but what does the vendor have to lose?)

Thanks