BTl - taking over existing tenants

gallygirl

We are hoping to buy 2 adjacent properties, one with a tenant in place (been told they are 1 month into 6 month AST) and one about to vacate. Due to time lag in sale going through, with the latter property the current owner is planning on reletting, with us having a say in tenant.

Having had a quick look on here it seems possible to transfer ownership mid-tenancy?

Can anyone give me advice on what we need to look out for?

I will need to see agreements to make sure I am happy with them, also make sure deposit was correctly protected. What happens to that? Can I ask for it to be redeemed and transferred to me and re-protected?

I assume I need new rental agreements?

The estate agents are also letting agents - are they likely to sting me for fees for taking tenancies over?

I'll be asking the RLA and also solicitors but would like some general advice before making our final offer. And it's a Friday night!

Thanks.

jjlandlord

This guy seems to want his cake and eat it, and you do not seem very much what you are doing, so time to catch up fast.

For the property with the tenant about to vacate, say that you want vacant possession.
That way the current landlord deals with his tenant all by himself, then you can find and deal with your own tenant all by yourself. Simple, no trouble.

For the other property, you would become the landlord on completion.
As such you should want to see all the documentation (tenancy agreement, credit check, references, rent account, tenancy deposit protection, etc) before you commit, and you should demand that the deposit be transferred to you as part of the deal.

gallygirl

jjlandlord wrote: »

This guy seems to want his cake and eat it, and you do not seem very much what you are doing, so time to catch up fast.

For the property with the tenant about to vacate, say that you want vacant possession.
That way the current landlord deals with his tenant all by himself, then you can find and deal with your own tenant all by yourself. Simple, no trouble.

For the other property, you would become the landlord on completion.
As such you should want to see all the documentation (tenancy agreement, credit check, references, rent account, tenancy deposit protection, etc) before you commit, and you should demand that the deposit be transferred to you as part of the deal.

Thanks.

We're happy enough to take over existing tenants as we know through the grapevine he's particular in choosing them, and all are vetted thoroughly by agent (we'd want to see paperwork obviously). Also we can't complete for at least 3 months and we suspect he has financial difficulties so we're happy to accommodate.

What happens to the deposit?

G_M

As the new landlord you become responsible for the deposit and will have to return it to the tenant in the usual way in due course.

Hence the advice above that it be transferred to you as part of the purchase.

As for the letting agent, that is a separate issue, and entirely up to you.

You have no contract with them, so no obligation to use them. You could

* sign a contract with them and get them to continue to manage the tenancy for you
* sign a contract with a different agent and get them to manage the tenancy for you
* instruct the tenants to pay rent to you direct and manage the tenancy yourself.

ognum

I have bought properties with existing tenants. I insist on meeting the tenants, talking through any issues they currently have.

I use my letting agent, I get them to sign new tenancy agreement date from the completion date. I complete on their rent day so there is no dispute on who the rent is payable to and when.

You need to mutually agree how long an AST to give. My last set of tenants wanted to stay 3 months longer so I gave them a 6 month AST with a 3 month break clause.

I return the deposit and renew the deposit under a new agreement.

I ensure all bills are in the tenants names and not the landlords.

I ask my agents to do an inventory from the date of completion.

Hope this helps!

ognum

One last thing, I hope you are getting the property for a good price! the number of buyers who will take tenants in situ is limited so you should strike a good bargain.

Campervanman

Solicitors seem to have differing opinions on this. I was told by a solicitor I had some time ago that I could not do take over a property with tenants as it was not 'vacant possession'. However I bought a BTL with tenants in place more recently and my solicitor allowed it to proceed. The first property was for my own occupation in the end whilst the second was bought as an investment so that may have made a difference

anselld

ognum wrote: »

I use my letting agent, I get them to sign new tenancy agreement date from the completion

OP can ask tenants to sign a new agreement on completion but tenants are not obliged to do so. The tenancy continues on on completion and the new L becomes responsible for the the remainder of the pre-existing tenancy contract.

So OP - make sure you are happy with all aspects of the contract as you cannot rely on the T re-signing.

gallygirl

Thanks for all the advice. The agents offer a range of services from full to tenant finding only and are happy for us to use them in any capacity or not at all. Everything is in good condition in the property, we may just use them for the inventory check on completion and use our own rental agreement.

Ognum, hopefully we will be getting at a good price, though there are quite a few sales round the area with tenants in situ and prices not really much lower (talking of sold prices, not asking as I've been following them for a while). A lot of houses with vacant possession are bought for let anyway.

5.3% and 5.9% yields so quite happy - houses are 6 years old, pvc windows, solid fences etc so low maintenance. Parking spaces and not overlooked so good for resale - all the properties I've looked at I've asked myself if I would live in it if I was looking to rent and would I buy it to live in if that was my budget - a resounding yes to both. Only properties that has been the case for and I've considered a lot of houses (at one stage I worried I'd turn into one of those couples on LLL who've looked at 150+ houses and none have been right :rotfl:)

Annisele

Campervanman wrote: »

I was told by a solicitor I had some time ago that I could not do take over a property with tenants as it was not 'vacant possession'. However I bought a BTL with tenants in place more recently and my solicitor allowed it to proceed. The first property was for my own occupation in the end whilst the second was bought as an investment so that may have made a difference

If you were buying with a mortgage, that does make a difference.

If you had a residential mortgage on the first property, you wouldn't have been allowed to let the property out - so you'd have needed vacant possession to comply with your mortgage terms. For the second property, if you had a BTL mortgage your lender would have been (in principle) quite happy with existing tenants.

jjlandlord

gallygirl wrote: »

5.3% and 5.9% yields so quite happy - houses are 6 years old, pvc windows, solid fences etc so low maintenance.

Yield is not very high and you may struggle to be cash flow positive if you use an agent and interest rates go up. I may also impact your choice of BTL mortgages, but I assume you have a large deposit and are thus fine.
Hopefully there is good potential for capital gains.