About to exchange property with tenants in situ - what happens with the rent?

jumperabv3

I'm about to exchange/complete a property with tenants in situ, I've seen the tenancy agreement and the other details... generally happy to proceed.
My question is what happens with the rent?
The tenants paid the current owner the rent on the 1st of June, they started the rent on the 1st of June - so if we exchange/complete before 1 July 2020 then I am supposed to receive the rent paid onward? Shall I ask the solicitors to confirm this in writing or this is part of the law? Sorry for asking something that might be trivial but I'm absolutely unsure how exactly this works.

greatcrested

On date of Completion you become the owner, and their landlord. Rent up to that date belongs to the previous LL. Rent going forward is yours. If there is a pro rata adjustment to be made on their last payment, allow for it in the purchase price.

I trust you've allowed for

* their deposit

* check-in inventory

* all rent records

* their credit and other references

* your compliance withLandlord & Tenant Act 1985 as new LL

* previous LL's compliance with PI, Right to Rent check, etc

davidmcn

It should be dealt with in the contract. Isn't it? It would normally be apportioned at the completion date, so the rent for the period from completion to the next payment date is deducted from the price you pay. Solicitors should agree the figures in advance so there's no last-minute arguments about the arithmetic.

eddddy

What happens about the rent is whatever has been agreed in your contract with the seller.

I guess you also need to check whether the rent was actually paid on 1st June (and for previous months). If it hasn't, the contract might say that you have to pay all the arrears to the seller, and then chase those arrears from the tenant.

jumperabv3

eddddy said:

What happens about the rent is whatever has been agreed in your contract with the seller.

I guess you also need to check whether the rent was actually paid on 1st June (and for previous months). If it hasn't, the contract might say that you have to pay all the arrears to the seller, and then chase those arrears from the tenant.

There is a letting agent in place, confirmed rent + deposit were paid.
The agent told me they only need to serve Section 3 notice to the tenants informing them of the change of the landlord.
With the current pace we will be probably exchanging around 25-30 of June if no further delays occur - I will contact my solicitor asking to confirm this then. Thanks all of you.

greatcrested

jumperabv3 said:

eddddy said:

What happens about the rent is whatever has been agreed in your contract with the seller.

I guess you also need to check whether the rent was actually paid on 1st June (and for previous months). If it hasn't, the contract might say that you have to pay all the arrears to the seller, and then chase those arrears from the tenant.

There is a letting agent in place, confirmed rent + deposit were paid.
The agent told me they only need to serve Section 3 notice to the tenants informing them of the change of the landlord.
With the current pace we will be probably exchanging around 25-30 of June if no further delays occur - I will contact my solicitor asking to confirm this then. Thanks all of you.

That sounds good. Section 3 is the Landlord & Tenant Act 1985  .

Make sure the deposit is transferred into your name - you will be liable to return it.

I'd want to see and receive copies/originals of all the documents the agent holds (see my incomplete list above). The agent works for the old LL, not you (as yet).

If just one element of the PI was missed (eg EPC given to tenants) you will be unabke to serve a S21 if you ever want. If Gas report was missed/late, you may never be able to serve a valid S21.

You are entering into a business- treat it professionally and ensure everything is kosher.

Grumpy_chap

Really, your conveyancing solicitor should be advising you.  BTL with tenants in situ is not that rare, but relying on a public internet forum for something with details and for which you already have a solicitor engaged anyway seems really odd.

jumperabv3

greatcrested said:

That sounds good. Section 3 is the Landlord & Tenant Act 1985  .

Make sure the deposit is transferred into your name - you will be liable to return it.

I'd want to see and receive copies/originals of all the documents the agent holds (see my incomplete list above). The agent works for the old LL, not you (as yet).

If just one element of the PI was missed (eg EPC given to tenants) you will be unabke to serve a S21 if you ever want. If Gas report was missed/late, you may never be able to serve a valid S21.

You are entering into a business- treat it professionally and ensure everything is kosher.

Thank you GC.
The property has no gas certificate because it only works on electricity (boiler is electric) - that's something I've verified.
I did as part of the negotiations receive a new updated electricity certificate valid for the next 5 years, most of this expense was deducted from the cost of the property as well on the seller's expense as well.
The only thing I'm thinking of installing are panel heaters, cost around £600 - the electrician said it's not urgent to do it now coz it's spring/summer now but I'd probably arrange for it sooner than later. This would improve the EPC but it won't be sufficient. Basically,
The EPC was given, I have a copy of it too, it's currently E but the potential is A - my wife told me to not touch it now, the tenants are happy with the way it is - we would probably upgrade it to B or A later on, it would cost a few thousands but it's worth it long term.

I'd contact the agent tomorrow asking to ensure the deposit is transferred to my name. I would also ask for the things you listed in your previous post - thanks so much for that.

theartfullodger

After becoming owner until you have served notice(s) compliant with s48 & s3 then no rent is due (s48) & you are not fully landlord and may be liable to fines & criminal record (s3), sadly rarely enforced.

jumperabv3

Grumpy_chap said:

Really, your conveyancing solicitor should be advising you.  BTL with tenants in situ is not that rare, but relying on a public internet forum for something with details and for which you already have a solicitor engaged anyway seems really odd.

Their solicitor advised "On completion of your purchase we will deal with any necessary apportionments of the rents

receivable from the tenant." - however the information I received here was beyond useful especially what GC mentioned.
And personally, I am and always was in the opinion that asking many questions causes no harm but could be extremely useful, I'd rather be safe than sorry. Thanks.

theartfullodger

Do you know when tenant says they 1st moved in? If early enough it won't be an AST (regardless of shiny new paperwork) and you'll find eviction nigh on impossible