Buying a Leasehold Flat with Tenants in Situ

dinofabio

I'm interested in buying a leasehold flat with a tenant in situ who has signed a 6 month AST commencing in August 2012.

What sort of extra risks am I running buying a flat with a tenant already in place?

I know a tenant may refuse to pay the rent. Refuse to leave at the end of the agreement. Smash the place up etc but that could have happened even if I had bought the flat with vacant possession and then let it.

Is there anything else I should be mindful of?

Note: It is not a sitting tenant, my mistake. It is a AST. I don't know how to edit the title.

honey1

Is this really a 'sitting tenant'? This is a legal term - if so, they are almost impossible to remove.

As a prospective landlord you really ought to understand this!

If simply an AST, then there are pros and cons to having a tenant in place
* no void time - you start getting rent from day one
* no tenant-find costs
* no choice about the tenant - you get the one that's there!

You need to check the tenancy agreement closely. And the tenant's referencing/vetting documents. And the rent statement (for arrears/late payment). And sort out the deposit.

As for the risks you mention, yes they apply with any tenant, but at least you can check background before issuing a tenancy if you self-select, hence the importance of the above.

Werdnal

You must see the agreement the tenant has signed as you will be 100% bound to it when you take over ownership. Ask for a copy and if there is anything you don't understand, take advice on it.

Have you also checked out the condition of the property. Often LLs who sell with a tenant in place are doing so because they can no longer afford to keep and maintain the property. They may have neglected maintenance for some time, and once you buy it, the tenant will be after you to upgrade the place and make up for the previous LLs lack of repairs!

You must also find out where the tenant's deposit has been protected and get it transferred to you, and re-protect it. This is sometimes overlooked, and once tenant leave, you will be liable to return the deposit amount to them (less agreed deudctions) so it will come out of your pocket if the existing LL does not transfer it.

Is this your first BTL? Have you researched all your obligations and legal requirements of becoming a landlord?

honey1

Werdnal wrote: »

Is this your first BTL? Have you researched all your obligations and legal requirements of becoming a landlord?

eg like this freebie here (no idea how good it is)

missile

You can edit the title by clicking on Go Advanced

Werdnal

By the way OP, you mention one of the problems you could encounter would be the tenant refusing to leave at the end of the agreement. I hope you realise that the end of the agreement does not mean the tenant has to leave.

Once the current 6 month fixed term ends, if the tenant does not move out, their tenancy continues as a statutory periodic tenancy. If you are thinking/hoping they will move out at the end of their 6 months, then unless you issue notice, correctly and if necessary, follow through with a court order to evict them, you cannot end the tenancy and tenant can continue to live there ad-infinitum!