Property at Auction

N79

Just a point for you to check - you don't mention it. Are you certain this is an AST? Is there a written tenancy clearly signed by the T and not disputed? Make sure your solicitor has checked.

AlexMac

You seem committed to completing (and swallowing an extra £10k plus in losses, legal fees, etc) rather than walking away and losing the deposit and fees to date (?) So the good news is that if, as you imply there's the future potential of rent equivalent to 8% of value p.a. that's still a good long-term deal. And if you really want to apply rose-tinted hindsight and foresight; some interesting lessons learned (for me too, as I'm idly browsing the cheap end of the auction lists as we speak):-

Interesting pending experience of the court eviction and bailiff process (which in my experience is less problematic than I feared), and a great big tax loss in terms of lost income and fees over and above the usual conveyancing fees which you can offset against the next couple of years rental income on your on-line self assessment tax return!

May your glass always be half full- good luck.

tim123456789

GDB2222 wrote: »

Indeed! And the tenant might be able to. So, you get to court, the tenant provides proof of an unsecured deposit, and you're back to square one.

I know, but aren't we just a little bit too far down the path of:

what if this and what if that and what if the other have all happened

tim123456789

AlexMac wrote: »

Interesting pending experience of the court eviction and bailiff process (which in my experience is less problematic than I feared), and a great big tax loss in terms of lost income and fees over and above the usual conveyancing fees which you can offset against the next couple of years rental income on your on-line self assessment tax return!

Interesting question

Can a "private lettings" business actually acquire a "trading" tax loss in this way?

Or is this a capital cost that can only be set against the (eventual) CGT liability?

tim

GDB2222

tim123456789 wrote: »

I know, but aren't we just a little bit too far down the path of:

what if this and what if that and what if the other have all happened

Oh, I agree, but I was just asking how you prove the point. It's not so easy, but that's one of the problems with taking over an existing tenancy.

Yorkie1

AlexMac wrote: »

You seem committed to completing (and swallowing an extra £10k plus in losses, legal fees, etc) rather than walking away and losing the deposit and fees to date (?)

Are you sure that the OP would only be losing the deposit and fees to date if he walks away?

I was under the impression that purchase at auction means that he could be forced to complete - i.e. could not just walk away as you describe?

GDB2222

Yorkie1 wrote: »

Are you sure that the OP would only be losing the deposit and fees to date if he walks away?

I was under the impression that purchase at auction means that he could be forced to complete - i.e. could not just walk away as you describe?

I'm sure that's right, but often sellers will just settle for the deposit and an easy life.

koradma

Wow the replies have taken off.
Here is what we have found since.

The T has a immigration tribunal this thursday to ascertain eligibility to stay and claim benefits(implied).
Also the LL had taken a court case(we assume to get the rent back) which has been dropped recently since the property is officially sold. The judge explicitly mentioned the property has been sold hence case no longer exists. This incidentally was not disclosed to us at auction. Case for misrepresentation? Also the fact that no rent was ever paid. Auction pack showed AST, and sec 21 to vacate after 12 months. But no other notices were enclosed or mentioned?

As we intend to complete on what we sill believe to be good deal, 5 minutes from where we live etc. here are my questions now

1. Do we inherit the 6k rental arrears and hence can chase T for it through courts etc? Assuming we can write it off.
2. The T is in immigration tribunal it appears. What if T is declared non status meaning they have to leave the country ?
3. She is relying on housing benefit to pay the rent and also make up some downfall. If immigration (hearing this thursday) is against her, she wont be elgible for any benefits.
4. Assuming we write off rent arrears (would love to challenge for misrepresentation and claim back from seller), what issues will i have evicting the T. If we inherit the arrears we could serve a section 21 right away ? Evict in 6-8 weeks?
5. Costs I am told for eviction should be no more than 1k, any complications as there is immigration and housing benefits involved.
6. T has engaged solicitors for immigration tribunal and property matters (not being very open about it). Can we request/demand we speak to them ?
7. How do we inherit the AST in these circumstances ?

To clarify the AST is between previous LL and the T, not council. T claims deposit was paid by council(dont believe that). No proof has been provided to us though. We assume we can issue section 21 on the day of purchase and eviction processes after that.

We are seeing this as property cost us 160k instead of 150k now.

Anyone see why we should walk away and lose our 15k deposit to avoid any future issues.

Thank you all for replies. Am a first time auction buyer. Its been a baptism of fire. I will admit. Hopefully nothing should faze me in the future

koradma

N79 wrote: »

Just a point for you to check - you don't mention it. Are you certain this is an AST? Is there a written tenancy clearly signed by the T and not disputed? Make sure your solicitor has checked.

We confirmed the signature on the AST was the T's verbally in person. Is this sufficient ?

koradma

GDB2222 wrote: »

Indeed! And the tenant might be able to. So, you get to court, the tenant provides proof of an unsecured deposit, and you're back to square one.

Am not clear what you mean by this. We have asked the tenant to provide proof of any rents or deposits they have paid. None have been provided even though they claim the council paid the LL 1k in deposit. Not corroborated by any evidence.

If she did pay a deposit would we be liable, to be honest she owes us 6k in rent arrears anyways.

Is there a point I am missing here?