Advice on buying buy2let with tenants

GemmaZE

elsien said:

They could move back in, theoretically, while still in contract.  

Presumably they don’t want to be paying rent on two places, so could they and the  current landlord agree a mutual early surrender before you exchange? 

You also need to consider whether, when you get new tenants, you are able to view it as a business rather than your future home. You are setting yourself up for a lot of stress if you can’t. 

Thanks. This is what we hope for - if they can agree an early exit date to end the contract then we can exchange before end of September, otherwise we will end up paying extra few k on stamp duty. 

Just want to clear up if legally we would run into risks if their contact is not officially terminated. 

MaryNB

GemmaZE said:

If the tenants leave before the contract end date ( end of Oct ), sounds like 3 out of 4 already found a place, The house is left empty.

If this is the case, officially their contract hasn’t ended yet, do you see any potential issues of exchange before official contract end date ? 

If they all give notice that they will be moving out before the end of October and this meets the terms of their tenancy agreement or the landlord accepts early surrender then the contract will end when their notice expires and they cannot legally move back in. If they are on a joint tenancy that is beyond the fixed term and has become rolling only one needs to give notice for the contract to end. If the rest stay on it's seen as trespassing and they could be charged double rent 

Although to clarify, the contract end date isn't the end of October. Only the tenants or the court can end the contract which could be many months beyond October if they don't want to leave. End of October is just the end of the notice saying the landlord wants the property back. The contract remains fully valid if the tenants stay beyond the end of October.

Grumpy_chap

GemmaZE said:

Hi wise ppl in MSE forum, we need some advice on pros and cons of buying buy to let with existing tenants.

We are not professional landlords, currently in the process of buying a property with tenants in, as the house is outside the school catchment area and needs extension to be big enough for us. Our plan is let out the property for 2-3 years until my eldest starts secondary, do up the house and move in.  We have got buy-to-let mortgage offer in place.

The house is currently let out as HMO (4 adults 3 household) without HMO license. And vendor seems to think we are keeping the tenants as we are buying as buy-to-let. Mainly miscommunication at EA side. At the time of offer, We did mention it is an option but we need to see the contracts etc to make that decision. no where was ever confirmed as offer condition. That was way before we found out they were let as HMO as the property is in a different borough with tighter criteria etc. 

So long story short, the tenants are given notice to leave by October and we aim to exchange / complete end of Sept latest, and seller wants to complete ASAP. 

Taking tenants is obvious an issue for us as we need HMO license, that application takes month+costs. The fact vendor is let out without HMO license will cause potentially issues when taking on existing tenancy agreement.

Would like to hear advise on what we need to watch out in this situation. 

Massive thanks ! 

I don't use the phrase lightly, but from what we have available in the thread, what the OP proposes would appear to be the very definition of absolute madness!!

The OP appears to be suggesting to purchase an unlicensed HMO with the aim of swiftly obtaining vacant possession by serving notice on the sitting tenants. The OP suggests to exchange / complete September ahead of the tenants vacating in October.  Furthermore, there are clear technicalities that will impede the eviction process unless the tenants are moving willingly - with 4 people / 3 households, that is all of them that have to be compliant; no good if 3 people move on leaving one behind.

What does the OP Conveyancing Solicitor advise on that approach?  I would be amazed if the Conveyancing Solicitor is not counselling against.

Why does the current LL wish to sell at this juncture?  If the LL assures the OP that the tenants are lovely, perfect tenants who respect and care for the property and always pay in full and on time, does that really stack up?

Despite the above, the OP seems to be suggesting that they would be an "accidental" landlord.  It's not clear where the OP sees the element of chance, unintentional or unexpected circumstance that results in them becoming a LL.

I also don't understand why the OP is so keen to exchange and complete in September. 
The OP mentioned the change in SDLT, but that seems to be putting an undue importance on this "small" cost against the costs and stresses of becoming a LL with an unlicensed HMO and having to resolve all of that before being able to choose how to proceed with the property.

The OP also has the luxury of time here as the OP's plan is not to do up and move in to the house for a couple of years.  It therefore seems odd that the OP has concluded the two routes forward are:

• Buy now with sitting tenants
• Withdraw from the purchase

Given the OP has no urgency to be in the property, is the best route to let the current LL resolve the current tenants and all the issues around the lack of license making eviction a greater challenge and then complete once the vacant possession is achieved?  That still gets the OP the property in a couple of years' time (hopefully) and gives all the stress of managing the current tenants to the current LL who is the one that created this mess. 

The OP's Conveyancing Solicitor may even be able to prepare a set of contracts that allow exchange to proceed with completion date conditional upon vacant possession - that would give the OP certainty on property purchase price (though not condition of the property) and the current LL certainty to not be left with a vacant property that then needs to go back to market.  Given the OP plans to refurb "do up" the property, risk over condition of the property at completion may not have a signifcant material impact on the OP's future plans.