Prospective Buy to Let property already has tenant

Anthear

Just wanted people's views on whether it is generally a good idea to purchase a buy-to-let that already has a tenant??
It is let through a High Street Estate Agent and tenant has just signed a year's contract with a 6 month break clause.  Clearly whoever buys it is also taking on a tenant they had no input into choosing.  Any thoughts on whether this is risky or not?

Many thanks

sammyjammy

If you were looking to buy a property to rent out it seems like a positive situation to me.  Have they literally just moved in or have they just signed a new contract?

Anthear

sammyjammy said:

If you were looking to buy a property to rent out it seems like a positive situation to me.  Have they literally just moved in or have they just signed a new contract?

Apparently they signed a 12 month contact from 1 April and had just moved in.  Break clause at 6 months.

eddddy

Anthear said:

sammyjammy said:

If you were looking to buy a property to rent out it seems like a positive situation to me.  Have they literally just moved in or have they just signed a new contract?

Apparently they signed a 12 month contact from 1 April and had just moved in.  Break clause at 6 months.

Why is the owner selling so soon after the tenants moved in? Why didn't they sell while the property was vacant?

I guess you need to do your due diligence - here's a scam I came across with tenanted properties sold through auction:

• A landlord rents their property to 'a friend' at a super-inflated rent - of say £1000 per month
• The market rent for the property is really only £600 per month
• Somebody buys the property at an over-inflated price, because it appears to generate £1000 per month

And to make matters worse, the landlord's friend never pays you any rent, so you have all the costs and hassle of evicting them.

And to make matters even worse, the landlord's friend has rent arrears on completion day, and the contract says you have to reimburse the seller for any rent which is due but hasn't been paid.

AdrianC

Is the tenant one that you'd be happy to choose?

Anthear

AdrianC said:

Is the tenant one that you'd be happy to choose?

I have no idea as just viewed the property, I guess that's part of the risk?

Anthear

eddddy said:

Anthear said:

sammyjammy said:

If you were looking to buy a property to rent out it seems like a positive situation to me.  Have they literally just moved in or have they just signed a new contract?

Apparently they signed a 12 month contact from 1 April and had just moved in.  Break clause at 6 months.

Why is the owner selling so soon after the tenants moved in? Why didn't they sell while the property was vacant?

I guess you need to do your due diligence - here's a scam I came across with tenanted properties sold through auction:

• A landlord rents their property to 'a friend' at a super-inflated rent - of say £1000 per month
• The market rent for the property is really only £600 per month
• Somebody buys the property at an over-inflated price, because it appears to generate £1000 per month

And to make matters worse, the landlord's friend never pays you any rent, so you have all the costs and hassle of evicting them.

And to make matters even worse, the landlord's friend has rent arrears on completion day, and the contract says you have to reimburse the seller for any rent which is due but hasn't been paid.

I don't know why the owner is selling at this stage.  I have checked the market rent for the area & it's about right, taking the additional fees into consideration.  Re the last para - certainly wouldn't be signing a contract that!  Thanks for the heads up though.

GDB2222

I would only do this if the tenant is happy to sign a new contract that you can supervise the signing of. You can then check that all the myriad details are spot on, eg you'd make sure the smoke alarms are checked in front of the tenant, and that's recorded in writing. From the tenant's POV, there'd be no material change, eg if they have 9 months remaining on the old contract, the new one would have a 9 months term. Plus, you'd give the tenant something for their trouble.

steampowered

There's no real reason not to buy a property with setting tenants if you are buying a BTL anyway - you just need to make sure that you are happy with the tenant.

You could ask for a copy of the tenancy agreement, and ask about what due diligence has been done on the tenant.

You could also ask for evidence that the tenant is paying rent (e.g. copy of bank statements showing receipt of the rent).

Anthear

steampowered said:

There's no real reason not to buy a property with setting tenants if you are buying a BTL anyway - you just need to make sure that you are happy with the tenant.

You could ask for a copy of the tenancy agreement, and ask about what due diligence has been done on the tenant.

You could also ask for evidence that the tenant is paying rent (e.g. copy of bank statements showing receipt of the rent).

That's great advice, thank you ;-)

AdrianC

Anthear said:

AdrianC said:

Is the tenant one that you'd be happy to choose?

I have no idea as just viewed the property, I guess that's part of the risk?

Then find out... You're buying that tenancy, as much as the property.

And make sure all the ducks are in a row as far as the tenancy is concerned for if you ever need to issue an s21...