Buying tenanted property

mr_goosey

Dear all

I've had an offer accepted on a property that currently has a tenant, on an AST due to expire Nov 1st.

I'm asking my solicitor to build into the contract of sale that the vendor serves notice on the tenant on signing, and that the tenant must vacate before completion.

Does anyone have any experience with this kind of situation? I'm wondering what my potential risks are - I'm aware that I will have to wait up to 2 months between exchange and completion which is not a a problem.

Found the below site which is helpful but would appreciate any advice from forum-ers.
http://www.fridaysmove.com/buying-tenanted-property/15262

Werdnal

Do not even exchange until you have proof that it is vacant. The 2 months notice is only the start of what can be a long drawn out and possibly fruitless eviction process. No guarantees with court cases, baillifs etc that it would be vacant in 4 months, never mind 2. Exchanging means you are bound to the deal - your mortgage if its on residential terms, would be void until the property is proven to be vacant, and you cannot pull out without incurring costs.

My advice would be do not proceed any further with this until you know tenant has gone!

Fire_Fox

Agree don't exchange without the place being vacant. A section 21 is two months coinciding with a rent period so can be almost three months; as Werndal says court action may be required afterwards. Councils are commonly advising tenants to be formally evicted before they are classed as homeless for rehousing. Also if there are any mistakes in the S21 the procedure may need to start from scratch.

The longer you have between exchange and completion the higher the risk your circumstances may change unexpectedly or the lender withdraws your mortgage offer.

mr_goosey

So I should demand that the seller serves notice on the tenant, and wait 2 months for them to leave, before I sign the contract? What if they refuse (risk of losing tenant if I subsequently pull out for whatever reason)? Should they just be persuaded that they face a similar situation with any potential buyer (except a BTL / cash buyer...?)

mrginge

I agree entirely with what the others have said.
You may also wish to consider that if the tenant is given an s21 on 1st Nov, it will expire on Jan 1st. What is the likelihood of them leaving during christmas / new year?

Perhaps you should discuss with the tenant to see what their thoughts are? Although to be honest i don't see why you want to go through all this hassle. Tell the vendor you will exchange when the property is empty.

Fire_Fox

mr_goosey wrote: »

So I should demand that the seller serves notice on the tenant, and wait 2 months for them to leave, before I sign the contract? What if they refuse (risk of losing tenant if I subsequently pull out for whatever reason)? Should they just be persuaded that they face a similar situation with any potential buyer (except a BTL / cash buyer...?)

Explain you cannot get a mortgage without vacant possession, they cannot guarantee vacant possession having only served an S21, you are not willing to exchange and risk either party being in breach of contract (you unable to complete, they unable to offer vacant possession) because that is a serious matter which could one of you cost tens of thousands of pounds.

If they still refuse it's up to you, we can't tell you what to do only make strong recommendations and explain how risky your strategy is. This is why it's rarely a good idea to agree to purchase a tenanted property.

Werdnal

I don't think you understand. The notice that will be served on the tenant does not end the tenancy or mean they have to leave. After the 2 months, if tenant remains (they may leave but do not have to), the LL applies for a court possession order. This can take 4-6 weeks to come to the court date, when if the S21 is correct, a possession order will be granted. If the S21 has any minor technical error (judges are fussy), it could even be thrown out at this point and the LL has to start over with 2 months more notice, another wait for the court etc.

Once a possession order is granted, the tenant may still refuse to budge, and the LL will then need to await a baillif appointment to enforce the eviction - maybe another 2-3 weeks ontop.

You could exchange in just over 2 months if everything goes to plan, S21 is correctly issued and the tenant is compliant - or you could be looking at next April. Is this property really that desireable?????

G_M

Novenmber 1st is not long away. Wait till then. Do not start spending money on surveys, solicitors, mortgage applications till then.

If the tenants leave at the end of their AST on Nov 1st, all well and good. Go back for a viewing, check the property is empty, and then start the purchase process.

In the meantime, tell the seller you are keen to buy but will be waiting till the property becomes vacant on Nov 1st before proceeding.

Of course, if the tenants do NOT leave, then you must accept that, as others have said, it could be many months before they are forced out.

mr_goosey

Thanks for the advice everyone. More than I've got out of my solicitor!

I understand that serving a S21 does not guarantee that the tenant will leave, and the potentially long drawn out process if they do not.

I wonder if it might be worth dropping by and speaking to the guy in person...? I think it is highly unlikely he will leave on the 1st Nov of his own accord...

Perhaps the best plan would be
-obtain mortgage offer (I'm 75% of the way there)
-place deposit with my solicitor
-show evidence of both to seller
-ask seller to serve notice, inform them I cannot exchange until vacated


Well aware that there are risks attached to buying property with tenant in this manner. Property is well under market value.

dancingfairy

Another option is to buy with tenant in situ and work on getting him out yourself. Obviously this would mean getting a BTL mortgage, making sure you have the correct landlord insurances, getting the boiler gas safety checked if necessary and sorting out the transfer of the deposit and making sure it is registered correctly but could be an option if you are willing to take on all the risk of evicting the tenant yourself (although obviously this could still take many months).

Apart from that it's probably easier to insist on vacant posession. Like someone said everybody else will be in the same boat and wouldn't even dream of exchanging until the tenant has vacated.
Best of Luck
df

dancingfairy

Don't forget that it is still the tenants home until he vacates and he is entitled to quiet enjoyment and protection from harassment.
Just be careful you don't get accused of harassing him, although the landlord has probably more to worry about in that respect if he has been showing people around etc etc.
df