Need to sell - propery has tenant

BlueC

Pixie5740 said:

Who told you that it’s almost impossible to sell with a tenant in-situ? Someone posted on the board in response to another thread saying they had done just that. 

Indeed, we've just bought with a tenant in-situ. However, I would say we got it for less than we would have paid if it was available as vacant possession, as then we'd have been competing with a much broader audience of buyers.

BlueC

SDLT_Geek said:

BlueC said:

p00hsticks said:

BlueC said:

Explain what you mean about opening yourself to a higher rate of stamp duty? My understanding is that you are already not a first time buyer so you won't get reduced FTB rates, and the property you're buying is presumably for yourself so you won't pay the second-property rates either. You'll just pay standard stamp duty regardless of whether you sell this flat or not.

I don't beleive that's true - the OP currently owns one property. If they buy another they'll own two, so the purchase will be subject to the higher rate SDLT (assuming we're talking England here). The fact that they are buying it to live in is not relevant.

I think OP should get legal advice on that from a conveyancer. Dot gov states: "You will not pay the extra 3% SDLT if the property you're buying is replacing your main residence and that has already been sold."

Certainly if you already own a property as your main residence and also some BTL or other properties, then you would NOT pay extra 3% SDLT if you sold your main residence and then bought a new main residence. I am not sure how it works given that he doesn't currently own a main residence.

The replacement exception from the 3% surcharge requires a sale or other disposal of a previous home.  OP will be liable for the 3% extra if they buy a new home while still owning the existing property.

Ahh I see, I guess this makes sense because otherwise this would be a fairly obvious loophole to avoid the 3% surcharge. Sorry for introducing confusion about this!

Crashy_Time

jameslester78 said:

About 10 years ago I bought a flat, got made redundant, moved to the other side of the country for work, planned to move back eventually so rented it out rather than sell.

10 years and several tenants later, there are no signs of me returning; me and partner want to buy a place to live, so I have to sell else I open myself to higher rate of stamp duty (wouldnt be selling otherwise).

The property management company have told the tenant I want to sell and offered him first option, he doesnt want to buy. His contract expired. I dont want to be an !!!!!! and kick him out without warning so I offered him a final 6 month contract, no rent increase (actually he has never had a rent increase) and the option to exit the contract at any point that he finds a new place to live without any penalty.

No response.

management company ,one month ago regarding contract "Just to let you know that we haven’t heard from the tenant yet in regards to the below. His mobile hasn’t the facility to leave a voicemail either."

Realistically (I doubt he is going to respond now) what can I do (I dont want to deal with him direct, I really want to get the flat sold as soon as possible, Im happy to change management companies, I would be happy to sell with sitting tenant but i have been told this is almost impossible - is this true?)

Would be nice then if he helped you out a bit by moving in a reasonable time?

gingercordial

BlueC said:

SDLT_Geek said:

BlueC said:

dimbo61 said:

Sorry BlueC but if the poster owns one property and buys a second property he pays not just stamp duty but 3% extra.
Start eviction process ASAP as you have a much better chance of selling a vacant property than one with tenant/s 

I think he needs to speak to a conveyancer about this, because it is my strong understanding that if the property you are buying is for your own main residence (and you are only allowed one main residence) then you will only pay standard SDLT rates on it.

Your strong understanding is wrong in this case.

Ha I thought it could be, but can you explain the intricacies of it?

If for example, in addition to the rental property, the OP also currently owned another house that was currently his main residence then he could sell that and buy another main residence without having to pay 3% extra SDLT on his purchase. i.e. the rental property he owns would be irrelevant.

You need to remember this is a surcharge on "additional properties".  It is not, and has never been, a surcharge on buy to lets.  The media just portrayed it that way as it makes for good headlines, and also it would be the most common reason for owning multiple properties.

If you own a buy to let (property 1) and you also already own your own main residence (property 2), and you sell your main residence and buy a new one, you started with 2 properties and you end up with 2 properties.  You have not acquired an additional property.

If you only own the buy to let (property 1) and you don't own a main residence at all (maybe you are renting somewhere else but don't own it), when you then go on to buy a main residence you now end up owning 2 properties whereas before you only owned 1.  You do now own an additional property and so you pay the 3% surcharge on that purchase.  This is the OP's situation if he goes ahead and buys with his partner without getting rid of the BTL first.

PRAISETHESUN

Someone else has touched on it already, but I'd also advise against offering a new contract if you want the tenant out quickly! As it stands they are presumably on a periodic tenancy, so you can start the process and issue S21 at any time. If you offer them a new fixed term contract, you can't even start the process until the fixed term ends, and there's no guarantee they will leave anyway, so all you've done is wasted 6 months of what is likely to be a very long process.

Start the process now and them wait to see if the tenant leaves. You might find offering an incentive will help, but this will need to be taken into account of any potential increase in sale price. It's certainly not impossible to sell with a tenant in situ it's just that this isn't as popular in some areas of the country.

Crashy_Time

jameslester78 said:

About 10 years ago I bought a flat, got made redundant, moved to the other side of the country for work, planned to move back eventually so rented it out rather than sell.

10 years and several tenants later, there are no signs of me returning; me and partner want to buy a place to live, so I have to sell else I open myself to higher rate of stamp duty (wouldnt be selling otherwise).

The property management company have told the tenant I want to sell and offered him first option, he doesnt want to buy. His contract expired. I dont want to be an !!!!!! and kick him out without warning so I offered him a final 6 month contract, no rent increase (actually he has never had a rent increase) and the option to exit the contract at any point that he finds a new place to live without any penalty.

No response.

management company ,one month ago regarding contract "Just to let you know that we haven’t heard from the tenant yet in regards to the below. His mobile hasn’t the facility to leave a voicemail either."

Realistically (I doubt he is going to respond now) what can I do (I dont want to deal with him direct, I really want to get the flat sold as soon as possible, Im happy to change management companies, I would be happy to sell with sitting tenant but i have been told this is almost impossible - is this true?)

Wouldn`t your profit from ten years as a landlord cover any extra SD?

Snookie12cat

Crashy_Time said:

jameslester78 said:

About 10 years ago I bought a flat, got made redundant, moved to the other side of the country for work, planned to move back eventually so rented it out rather than sell.

10 years and several tenants later, there are no signs of me returning; me and partner want to buy a place to live, so I have to sell else I open myself to higher rate of stamp duty (wouldnt be selling otherwise).

The property management company have told the tenant I want to sell and offered him first option, he doesnt want to buy. His contract expired. I dont want to be an !!!!!! and kick him out without warning so I offered him a final 6 month contract, no rent increase (actually he has never had a rent increase) and the option to exit the contract at any point that he finds a new place to live without any penalty.

No response.

management company ,one month ago regarding contract "Just to let you know that we haven’t heard from the tenant yet in regards to the below. His mobile hasn’t the facility to leave a voicemail either."

Realistically (I doubt he is going to respond now) what can I do (I dont want to deal with him direct, I really want to get the flat sold as soon as possible, Im happy to change management companies, I would be happy to sell with sitting tenant but i have been told this is almost impossible - is this true?)

Wouldn`t your profit from ten years as a landlord cover any extra SD?

Contrary to popular belief, landlords are not making loads of money renting the property out. The profit is in selling it. Considering depending on the cost of the new house, say its £400k - hes looking at £15k EXTRA in SD plus the normal amount. Its not exactly clever to waste all the money you would have made in owning the BTL paying extra SD. 

canaldumidi

jameslester78 said:

About 10 years ago I bought a flat, got made redundant, moved to the other side of the country for work, planned to move back eventually so rented it out rather than sell.

Th missing information is where the OP has moved to: 1) is OP renting somewhere 'the other side of the country' to live, or 2) did OP buy somewhere 'the other side of the country' which is now being sold in order to buy something else?

If 1), then OP is increasing number of peoperties owned from 1 to 2, so addtional 3% SDLT applies

If 2) then OP is not increasing number owned, and is selling/replacing his main residence, so no additional 3%

That aside, OP should immediately serve a S21 Notice. The tenant has ignored earlier attempts to mutually agree a way forward eg tenant buys, or moves out voluntarily with LL's flexible notice offer.

S21, assuming valid, is 2 months followed by up to 6 more for court process (assuming England).

SDLT_Geek

canaldumidi said:

jameslester78 said:

About 10 years ago I bought a flat, got made redundant, moved to the other side of the country for work, planned to move back eventually so rented it out rather than sell.

Th missing information is where the OP has moved to: 1) is OP renting somewhere to live, or 2) did OP buy somewhere 'the other side of the country' which is now being sold in order to buy something else?

If 1), then OPis increasing numberof peoperties ownd from 1 to 2, so addtional 3%SDLT applies

If 2) then OP is not increasing number owned, and is selling/replacing his main residence, sono additional 3%

Good point.

theoretica

Also, if you buy a new main residence and then sell your old one you need to pay the extra stamp duty but can reclaim it if you sell within 3 years.  In this situation, even though this property is not a main residence would the same apply?  All the webpages I see say you need to sell your previous main residence for this to happen, but it seems worth investigating, and maybe this counts as it was a main residence many years ago.