Buying House with Tenants

martindow

Is this a flat? If so another reason it is so cheap could be that the lease is very short. This reduces its value as mortgage companies will not loan if the lease remaining is below a certain number of years.

Geek1337

martindow wrote: »

Is this a flat? If so another reason it is so cheap could be that the lease is very short. This reduces its value as mortgage companies will not loan if the lease remaining is below a certain number of years.

The house isn't really cheap. We're buying in Harrogate which is crazy expensive. They accepted ~7% less than the asking price so nothing which would suggest there's something 'wrong' with the property. It's just very rare to find a property without our budget within this area.

Cakeguts

You really don't have any experience of buying property do you? What you are saying doesn't make sense. If a property is rarely in your budget and this one is then that means that this house is cheap for the area that it is in. It is cheaper than usual.

People do not sell houses for less than they can get for them. So if someone can get £100k for a house they won't sell it for £90k. They will only sell it for £90k if that is all they can get for it.

In any area there will be houses that sell for less however the houses that sell for less are the ones that fewer people would be prepared to buy and the reason why they are less popular to buy is because there is something about them that puts most people off. If this house was a good buy for the price that you are prepared to pay a professional property investor would have bought it by now with the tenants. A property investor doesn't mind about buying properties that have tenants. If a professional property investor hasn't bought it that means that there is either something wrong with the property that you don't know about (subsidence?) or it is too expensive for where it is and what it is. If it is too expensive that means that you have made an offer for more than anyone else is prepared to pay for it and when you come to sell you will make a loss.

This house is cheap for the area. That means that there is something wrong with it. There is something that puts people off buying it for the advertised price and that isn't anything to do with the tenants because at the right price a property investor would buy it.

The agent and the seller must have thought how wonderful it was when you came along and made an offer for more than they can get from anyone else. They will now be hoping that as first time buyers you miss something out like a full survey and so don't find out what is wrong with this house.

VintageHistorian

We bought our first home that was a student let. It had been up for sale for months and was originally being sold as "Buy to let investors only" because they wanted to sell it with the students as sitting tenants. After a few months the price was reduced by £10k and it was marketed as "Buy to let investors and first time buyers", which was when we went and had a look.

Obviously I haven't seen the house you're viewing, but in our case it was pretty obvious why it wasn't selling. The vendors had owned it for 8 years and done very little with the place, and more importantly the bathroom was in such a state (aging bathroom suite with black mould growing on the ceiling and grouting etc) that it would clearly need to be completely ripped out and redone before it could be let back out again.

We were originally pipped to the post by another buyer, I've got no idea if they were FTB or investor, but they pulled out a week after the referendum result. We then made an offer £3k below the new asking price and then had to wait a few weeks while the vendors mulled it over (aka waited for someone else to come by with a better offer) before finally agreeing.

The main hiccup we had was that the students originally refused to move out when they said they would. I'm pretty sure the estate agents (who were also the lettings agents) were trying to get us to become reluctant landlords as they didn't seem to think it was much of a problem and they were shocked when I yelled at them and said we were pulling out of the sale. 3 days later and the students were moved on to other accommodation, I went to check the house, and we progressed from there (the agents incompetence was a running theme through the whole thing).

I think we got quite lucky in that our full building survey didn't show any major defects, barring the RCD needing to be upgraded. The house was fine structurally, it was just neglected after 8 years of frequently changing tenants and owners who lived over an hour away, who were clearly just trying to bleed it dry before flogging it and moving on to the next big buy. Any investor that wanted to buy it would have offered below asking price due to the bathroom refurb and the general decoration that would have been needed, new carpets through the whole place, fresh paint, probably replacing or regassing some of the double glazed windows as they're starting to fail. We also chatted with the neighbours and realised that the area was mainly young families, and some of the students who had lived there before had been very noisy and not particularly understanding of the words "please don't play loud music at 1am on a Tuesday, I have work tomorrow", so that had led to a few tensions around the place.

Sorry this is so long but I wanted to give you a thorough idea of the situation. I'm now sitting in the house, with a long list of plans for all the things we'll do to it to make it lovely again. All it needed was people who would care about it and invest the time, energy and money in to bringing it up to scratch. As long as you get a full survey (and I'd recommend an electrical check too) and go in with your eye wide open, then I don't think it will be quite as bad as you think.

Also don't exchange contracts until vacant possession is confirmed and check the house yourself once you're told the tenants are gone. In our case it was quite obvious they'd left as the entire place was clear of everything bar furniture, and they'd cleaned the place pretty thoroughly since they wanted their deposit back.

Good luck!

Cakeguts

VintageHistorian wrote: »

We bought our first home that was a student let. It had been up for sale for months and was originally being sold as "Buy to let investors only" because they wanted to sell it with the students as sitting tenants. After a few months the price was reduced by £10k and it was marketed as "Buy to let investors and first time buyers", which was when we went and had a look.

Obviously I haven't seen the house you're viewing, but in our case it was pretty obvious why it wasn't selling. The vendors had owned it for 8 years and done very little with the place, and more importantly the bathroom was in such a state (aging bathroom suite with black mould growing on the ceiling and grouting etc) that it would clearly need to be completely ripped out and redone before it could be let back out again.

We were originally pipped to the post by another buyer, I've got no idea if they were FTB or investor, but they pulled out a week after the referendum result. We then made an offer £3k below the new asking price and then had to wait a few weeks while the vendors mulled it over (aka waited for someone else to come by with a better offer) before finally agreeing.

The main hiccup we had was that the students originally refused to move out when they said they would. I'm pretty sure the estate agents (who were also the lettings agents) were trying to get us to become reluctant landlords as they didn't seem to think it was much of a problem and they were shocked when I yelled at them and said we were pulling out of the sale. 3 days later and the students were moved on to other accommodation, I went to check the house, and we progressed from there (the agents incompetence was a running theme through the whole thing).

I think we got quite lucky in that our full building survey didn't show any major defects, barring the RCD needing to be upgraded. The house was fine structurally, it was just neglected after 8 years of frequently changing tenants and owners who lived over an hour away, who were clearly just trying to bleed it dry before flogging it and moving on to the next big buy. Any investor that wanted to buy it would have offered below asking price due to the bathroom refurb and the general decoration that would have been needed, new carpets through the whole place, fresh paint, probably replacing or regassing some of the double glazed windows as they're starting to fail. We also chatted with the neighbours and realised that the area was mainly young families, and some of the students who had lived there before had been very noisy and not particularly understanding of the words "please don't play loud music at 1am on a Tuesday, I have work tomorrow", so that had led to a few tensions around the place.

Sorry this is so long but I wanted to give you a thorough idea of the situation. I'm now sitting in the house, with a long list of plans for all the things we'll do to it to make it lovely again. All it needed was people who would care about it and invest the time, energy and money in to bringing it up to scratch. As long as you get a full survey (and I'd recommend an electrical check too) and go in with your eye wide open, then I don't think it will be quite as bad as you think.

Also don't exchange contracts until vacant possession is confirmed and check the house yourself once you're told the tenants are gone. In our case it was quite obvious they'd left as the entire place was clear of everything bar furniture, and they'd cleaned the place pretty thoroughly since they wanted their deposit back.

Good luck!

Now what the OP needs to know about your purchase is, was the house you bought very cheap for an expensive area? This is what the OP is looking at. They are looking at a house in and area that they wouldn't normally be able to afford. If you could have afforded to buy one in the area that you bought in without it being in a terrible state that is a different case to the one the OP has because no one knows why this house is so cheap for the area that it is in.

Phantom_tollbooth

Adding another viewpoint...

When we bought our current house it had been let. Viewing to completion happened in just over 3 months. No problems.

Of course we didn't exchange until they had moved out and we had looked round again, although we decided to carry on with our searches, surveys etc during the notice period. We wouldn't have minded if it had taken a couple of months longer, but worked on the basis that most people are decent people who don't want the hassle of court proceedings and so forth just to drag out the inevitable. In the end I think the tenants moved out a little earlier than they had to and their landlord (our vendor) refunded them pro rata. He seemed decent.

(I certainly am not criticising people who end up staying until the bailiffs come and cannot move elsewhere for financial reasons or because they need local authority assistance, btw. It doesn't sound like this is applicable in the OP's case, and it wasn't in ours).

Anyway, my point is just that this not necessarily the end of the world. Be patient. It could still all work out.