Buying with a sitting tenant

Voyager2002

OK, I know that doing this would be inviting a lot of trouble. However, would it mean that the purchase price would be a bargain? And is the saving likely to be sufficient to justify all the cost and nuisance of eventually obtaining vacant possession?

(This is in Scotland. I am currently renting, so would be able to endure a process that went on for months, so long as the end result was worth all the hassle._

cloo

Do you mean a tenant there or a sitting tenant, as those are different things I think, and I don't know about Scots law. My understanding is that in England a sitting tenant has been there for over a certain time and is effectively there for life. A tenant under contract might be moved, but there's potentially a lot of restriction on that in England - again, Scotland may be another matter.

PasturesNew

Swings and roundabouts - I'd not expect the price to be lower until/unless the seller was finding nobody wanted it with a tenant (of any sort) in it. A local landlord might be looking for a house to rent out in that road/estate, so the fact it comes with a tenant might suit them as it's less time to find a tenant.

As has been said above, in England a sitting tenant indicates somebody possibly able to live there for their lifetime on a cheap rent ... whereas a tenant has a specific tenancy length (usually 6-12 months).

Voyager2002

OK, in this case the tenant has a contract with an imminent end date, and a rent that is perhaps 60 per cent of the current market rent for that kind of property.

cloo

Then I kind of guess it may depend on what you want to do with it - eg whether you want to rent it out youself or move in ASAP. Perhaps worth gaining vacant possession if you want to live there yourself but maybe you'd be OK with the tenant there if you want to rent it out to someone else, as long as you can live with the low rent they're paying, as you're not likely to be able to whack it up to the market rent while they're there if they decide to stick around (which they may want to do as long as possible given the cheap rent).

May also want to consider how easy it is for tenant to move. Young professional types who've been there less than two years and are likely to move around anyway and in an area where plenty of similar available is less likely to be a problem than, say, if the tenant is an elderly horder who's been there for a decade or more, or a family with kids at school, especially if there's limited accommodation available locally. Guess you have to weigh up these things.

Hopefully someone will turn up here who knows something about Scottish law, though!

Annisele

Would you need a mortgage to buy the place?

If so, I think you'd struggle. You couldn't get a BTL mortgage, because you'd be intending to live in it yourself. You couldn't get a residential mortgage because you'd have a tenant immediately post completion.

jamespetts

An ordinary mortgage would require vacant possession on completion, so you would require a buy to let mortgage (which usually requires a much higher deposit).

G_M

Plus you'll be a landlord and need

* landlords insurance
* tax return declaring rent
* and 1001 oher things LLs have to do........

bris

With a rent at 60% of it's true value and going cheap are you sure it's not a secured tenancy?

These are not for small time LL's as the tenant can be there for ever on a peppercorn rent.

davidmcn

Not necessarily a bargain, as there's a market for properties which already have a rental income. But check it's a properly constituted Short Assured Tenancy (i.e that you'll have the right to kick out the tenant at the end of the term).

As above though, are you buying cash? Any initial mortgage would have to be BTL.

Among the admin hassles, you'd also need to register with the council as a landlord (admittedly you might cease being a landlord before the council catch up with you, but some BTL lenders will check).