Inherited property with tenant - selling

booksurr

Your tenant states his tenancy has been running for more than 18 years, that makes it 1998 which is worryingly close to the exact date 27th February 1997 when the ability to create an Assured Tenancy ceased. So that statement tends to suggest your tenant is very aware of the rules and will run rings around you.

follow the tenancy checker to see if you think that are indeed an assured tenant:
http://england.shelter.org.uk/get_advice/downloads_and_tools/tenancy_checker

read the rest of the shelter website (written from the perspective of a tenant of course) to see the sort of issues you face as the landlord dealing with an assured tenant.
http://england.shelter.org.uk/get_advice/eviction/eviction_of_private_tenants/eviction_of_assured_tenants

you need to make a choice
Either - you want to sell the property for as much money as you can get? If yes then you will need to sell with vacant possession after evicting the tenant. It is clear that you will need professional legal advice to go down that route, and it may not be possible if he really is an Assured Tenant

Or - you sell the property on the basis it has an existing tenant so will only be of interest to other LL. That means an auction or sale to a professional LL who knows what they are doing. They will price it on the basis of rental yield (ie a multiple of the income stream) not on the basis of what the property is "worth". As you say they are currently paying below market rent then the yield will be low and unattractive to investors because if the tenant is genuinely an Assured Tenant they have additional rights if you try to increase the rent. It will sell for a lot below the vacant market value!

http://england.shelter.org.uk/get_advice/private_renting/costs_of_renting/private_tenancies

jcgalliard

booksurr wrote: »

Your tenant states his tenancy has been running for more than 18 years, that makes it 1998 which is worryingly close to the exact date 27th February 1997 when the ability to create an Assured Tenancy ceased. So that statement tends to suggest your tenant is very aware of the rules and will run rings around you.

follow the tenancy checker to see if you think that are indeed an assured tenant:
http://england.shelter.org.uk/get_advice/downloads_and_tools/tenancy_checker

read the rest of the shelter website (written from the perspective of a tenant of course) to see the sort of issues you face as the landlord dealing with an assured tenant.
http://england.shelter.org.uk/get_advice/eviction/eviction_of_private_tenants/eviction_of_assured_tenants

you need to make a choice
Either - you want to sell the property for as much money as you can get? If yes then you will need to sell with vacant possession after evicting the tenant. It is clear that you will need professional legal advice to go down that route

Or - you sell the property on the basis it has an existing tenant so will only be of interest to other LL. They will price is on the basis of rental yield (ie a multiple of the income stream) not on the basis of what the property is "worth". As you say they are currently paying below market rent then the yield will be low and unattractive to investors because if the tenant is genuinely an Assured Tenant they have additional rights if you try to increase the rent.
http://england.shelter.org.uk/get_advice/private_renting/costs_of_renting/private_tenancies

Thank you for the advice.

And yes I do pay my taxes and am aware of my responsibility as a landlord. Hence why I took it upon myself to arrange for the gas cert and epc to be done as soon as I made contact with the tenant.

As for the length of his tenancy - he has emailed me a copy of a telephone bill dated 1996. He is also emailed me to say he is an assured tenant.

I think my best option is auction.

Keep_pedalling

Rambosmum wrote: »

He has an agreement, it just isn't in writing. Having transferred rent to you now he has also formed a tenancy with you. So he has the rights of a tenant, and you the responsibilities of a landlord.

Serve him notice- someone will be along shortly to tell you the correct way to do this, but it involves writing to him in a very specific format.

Keep all correspondence from and to him as written now.

If he really is an assured tenant then you cannot just serve notice because you want to sell the house. He will not sign a new tenancy agreement with your because that would lose him his assured tenancy, and no clued up tenant is going to do that.

Do you know the exact date he moved in? If Before 28 Feb 1997 with no written agreement then I think I am correct in saying this is almost certainly an assured tenancy, which will make selling it very difficult, as about the only grounds for eviction is non payment of rent or anti social behaviour.

Edit - I posted before seeing you now have proof of the date of his original occupancy.

jcgalliard

booksurr wrote: »

Your tenant states his tenancy has been running for more than 18 years, that makes it 1998 which is worryingly close to the exact date 27th February 1997 when the ability to create an Assured Tenancy ceased. So that statement tends to suggest your tenant is very aware of the rules and will run rings around you.

follow the tenancy checker to see if you think that are indeed an assured tenant:
http://england.shelter.org.uk/get_advice/downloads_and_tools/tenancy_checker

read the rest of the shelter website (written from the perspective of a tenant of course) to see the sort of issues you face as the landlord dealing with an assured tenant.
http://england.shelter.org.uk/get_advice/eviction/eviction_of_private_tenants/eviction_of_assured_tenants

you need to make a choice
Either - you want to sell the property for as much money as you can get? If yes then you will need to sell with vacant possession after evicting the tenant. It is clear that you will need professional legal advice to go down that route, and it may not be possible if he really is an Assured Tenant

Or - you sell the property on the basis it has an existing tenant so will only be of interest to other LL. That means an auction or sale to a professional LL who knows what they are doing. They will price it on the basis of rental yield (ie a multiple of the income stream) not on the basis of what the property is "worth". As you say they are currently paying below market rent then the yield will be low and unattractive to investors because if the tenant is genuinely an Assured Tenant they have additional rights if you try to increase the rent. It will sell for a lot below the vacant market value!

http://england.shelter.org.uk/get_advice/private_renting/costs_of_renting/private_tenancies

Thanks for the advice.

The property is located in an affluent area of London.

The tenant is single and in his late 60's.

Market value: £500k (according to local agent and own research)

How much am I looking at auction?

Keep_pedalling

How old is this tenant? If elderly might be worth holding on to it until they move into care or die, otherwise you will be selling at a large markdown.

Edit - oh! late 60's could be there for another 25 years.

G_M

You'd need to ask an agent for a valuation for the property with a sitting Assured Tenant.

Unless he's managed to manufacture/doctor his telephone bill (do people actually keep bills for 19 years...???) it looks like he is an assured Tenant.

Unless also the aunt served him a notice before the tenancy started.

jcgalliard

G_M wrote: »

You'd need to ask an agent for a valuation for the property with a sitting Assured Tenant.

Unless he's managed to manufacture/doctor his telephone bill (do people actually keep bills for 19 years...???) it looks like he is an assured Tenant.

Unless also the aunt served him a notice before the tenancy started.

Doctor his bill?

I doubt it.

He could have said he only paid my aunt £500 per month or less and I would be non the wiser. He told me he was paying her £350 per month when he first moved in and the rent has been increased over the time he has been a tenant. Now it is £900.

I think he is genuine. I guess he does not want to be made homeless - WHICH I HAVE NO INTENTION of doing.

Guest101

Perhaps he kept it as the legislation would likely be voted through by that point

Keep_pedalling

G_M wrote: »

Unless he's managed to manufacture/doctor his telephone bill (do people actually keep bills for 19 years...???) it looks like he is an assured Tenant.

If you were savvy you would keep some form of proof of the start of your tenancy, and this guy seems to be on the ball.

PasturesNew

jcgalliard wrote: »

I guess he does not want to be made homeless - WHICH I HAVE NO INTENTION of doing.

What others are saying - and maybe you've not picked up on - is:

If he's been there since 1996 then he most likely has an Assured Tenancy. If so (and it sounds very highly likely):

You cannot give him notice. He can stay there for the rest of his life. You cannot harrass him (which could include putting up the rent to a high figure hoping he'd give up and leave). Selling it won't get you even close to the value.

He won't sign a new agreement with you as he already has one, that enables him to stay for life.

This is how renters used to live - with long-term/secure rights.

If so, he is what people call "A Sitting Tenant - that can't be moved out".

Even asking him to sign a new agreement could be considered as "harrassment" if he were to start phoning round solicitors as you've now scared him.