buying a house with a tenant in it

johnnyredgate

thanks for the replies, I think it is unlikely to be of great interest to btl investors as you can buy much cheaper properties to rent for more in other parts of the country, so don't think they will be setting the value as such.
Yes I understand that the owner could evict the tenant and then try to sell as an empty property and if there is little interest they may have to do that or just continue renting and take the property off the market. As it stands with a tenant which may put other potential purchasers off considering it I just wondered what the difference in price would be if empty, if it is just a straight forward say 3 to 4 months (although could be a lot longer depending on the price they want to realised) rent lost from being empty to sell + council tax only looking at a reduction of £1500 to £2000 or so I guess.
With regard to the tenancy it sounds as though the only safe way to purchase the house is with the tenant evicted prior to completion then. If the house was to be relet to the tenant after say a period of 2 weeks would this be considered to be a new agreement or would any pre-established rights still exist?

bouicca21

Apologies if this is hijacking the thread - but I have seen a few properties tht interest me that have tenants on an AST. When I'm ready to buy I won't be in a hurry so (subject to doing my homework on ending an AST) wouldn't be bothered about waiting a few months if necessary. I'm puzzled though and fearful of possible pitfalls - why wouldn't the vendor get rid of the tenant before putting the place up for sale?

BitterAndTwisted

Usually because they can't afford their mortgage-payments without any rental-income until a buyer is found.

johnnyredgate

theartfullodger wrote: »

And this useful article on spotting Rent Act tenancies...
http://www.landlordlawblog.co.uk/2012/07/12/three-ways-to-recognise-a-protected-tenancy-under-the-rent-act/
.. in particular,


Tessa is a solicitor specialising in landlord/tenant law btw....

Thanks for the link, well the house is definately not priced low, its the same as a similar house in the terrace was asking recently without tenants.
Unfortunatley I can't get the electronic rent register link to work, will try again later on.
Still now thinking that the safest option is to wait for vacant possession, and possibly relet to the same tenant after completion

Werdnal

bouicca21 wrote: »

Apologies if this is hijacking the thread - but I have seen a few properties tht interest me that have tenants on an AST. When I'm ready to buy I won't be in a hurry so (subject to doing my homework on ending an AST) wouldn't be bothered about waiting a few months if necessary. I'm puzzled though and fearful of possible pitfalls - why wouldn't the vendor get rid of the tenant before putting the place up for sale?

Because they want to have their cake (the continued rental income) and eat it (the sale without the cost and hassle of evicting the tenant).

As per my earlier posts in this thread, eviction can go smoothly and tenants could leave in a couple of months if the required notice is given. Or it could go badly and take up to 6 months, and the hassle of court costs and baillifs to get them removed.

Then there are the added complications of council tax, utilities and insurance on a vacant property, and covering the mortgage whilst no rent is coming in. Wise LLs keep a good contingency fund for just such unavoidable costs, but others prefer to try to keep their void to an absolute minimum, and only evict the tenants if they think a sale is likely, or sell with tenants in place and pass the cost and hassle on to an unsuspecting buyer!

Werdnal

johnnyredgate wrote: »

now thinking that the safest option is to wait for vacant possession, and possibly relet to the same tenant after completion

I hardly think the same tenant, having had his home sold out from under him, will hang around to re-rent from you. Where is he going to go in the 2-3 weeks interim period? Are you prepared to fund storage for his possessions and alternative accommodation for him? If I was renting, I wouldn't take the word of a new LL that you would give me first refusal to move back after eviction! I'd just move on and get a new 6/12 month tenancy elsewhere.

Don't complicate your first step into letting by making promises to take the tenant back on. Concentrate on buying the place and getting it all up to letting standard, sort your mortgage and insurance, GSC if required etc. Then find your tenants!

G_M

johnnyredgate wrote: »

Still now thinking that the safest option is to wait for vacant possession, and possibly relet to the same tenant after completion

Just to add to Werdnal's points, your suggestion indicates an unfortunate attitude.

Too many LLs, either through ignorance or deliberate policy, expect tenants to just go along with whatever they (the LL) wants. eg
* allowing access for inspections, viewings, repairs, or any spurious reason without notice at times to suit the LL
* moving out as and when the LL wants the property back
* putting up with delays in fixing boilers etc due to LL's cash-flow issues or whatever

This is someone's home. You can't expect them to move out, move back in, just to suit you.

And once you ARE a landlord, you need to show similar respect. * Ask permission to inspect.
* repair things quickly, AND inform tenants when repairmen are coming
etc

johnnyredgate

I certainly wouldn't expect the tenant to move back in? The vendor is clearly expecting them to vacate for the sale. It is more a case of that they would be given first refusal as I would expect to relet the house, if they wished to take the offer - the house is in a small town with limited properties to rent and at the same time limited potential tenants. The house is not being sold with the expectation of a tenant remaining in the property, so whilst not ideal for the tenant it would at least give them the opportunity of reletting the property if they wished to do so. If there is any question over the date of the tenancy commencing it does not seem worth the risk of purchasing the property otherwise, at a vacant possession price.

johnnyredgate

A bit taken aback at the above posts, the vendor is expecting the tenant to move out as they are not selling the property with a tenant. I do not see how you conclude that by offering the tenant first refusal to take their home back if I purchased the property, means that I am treating them without respect and will expect access without notice etc to the property and won't fulfil a landlords obligation.
Ideally they would be able to stay in the property if I purchased, however judging by responses on this thread that could be a risky approach, unless the date of commencement of the original tenancy can be ascertained without doubt, as it seems this is likely to be questionable then I am considering the other alternatives. I will obviously take my solicitors advice if I decide to proceed but anticipate he will advise vacant possession is the safest option, particularly as the house is priced at a vacant possession price. The current situation is that the tenant would be evicted when a buyer is found, so at least giving the tenant the opportunity to relet the house if they wished to do so seems better than not doing this. Of course they may find an alternative property - that is fine they are obvioulsy not obligated or expected to move back in - and there are the issues of what they do during the period of vacancy etc. However the house is situated in a small town/village with limited properties available to rent, at the same time with limited people seeking property to rent.

franklee

This thread is confusing me.

If johnny wants a tenant in place why not buy as an investment with the tenant in place especially as "the house is situated in a small town/village with limited properties available to rent, at the same time with limited people seeking property to rent.".

If the issue is it may be a rent act tenant or an assured tenant with more rights than an assured shorthold tenancy then the property isn't going to be vacant in any case as the tenant would not be giving up their rights. In which case buying with vacant possession will likely fall through.

So step one is to find out for sure what type of tenancy it is. Step two discuss options and prices with the vendor to buy either tenanted or vacant.

If you can't do step one then I can't see it going anywhere.