Buying a house with problem tenants currently in situ

Exodi

GoogleMeNow said:

The process may not take longer than 6-7 months, but the eviction process cannot start until the end of the notice period.  The pandemic has meant longer delays due to backlogs.  If there are any mistakes with the S21 Notice, then the whole process starts from the beginning again.

By chance, the last similar thread I was was reading, the S21 notice was found to be invalid (4 months after offering on it):

https://forums.moneysavingexpert.com/discussion/comment/78640190#Comment_78640190.

Suffice to say the buyer ended up cutting their losses and moving on in the end.

GDB2222

LHZ said:

Bit of an update. I spoke to EA and they confirmed that the tenants were in arrears and that the landlord had begun the eviction process at the start of March. The end of notice period is 8th April. No court date has been given yet. The EA said he imagines the process taking up to 7 months worse case scenario. He also said that there were a number of similar cases ongoing within his portfolio.

Anyway, I said I've been advised not to proceed until the tenants are gone and he said that the vendor is likely to want to put the house back up for sale in that event. He said that she would want some commitment my side such as swapping solicitors details to draw up a memorandum of sale but that we wouldn't proceed further, and incur costs, until tenants were gone.

How does this sound? Is there a soft option for me to give the vendor some security or am I being dumb by even entertaining it? For what it's worth, I really like the property and I managed to get it at the asking price. I had bid £10k over asking on a similar property recently in the same street and got outbid.

What the EA is suggesting is actually pretty reasonable. You need to explain the situation to the solicitor, and get his agreement not to start chargeable work until you are satisfied that the eviction process is almost complete - for example, the court order has been made.

It takes time after the court order for the bailiffs to evict the tenants, but it also takes time for your solicitor to deal with the purchase.  The advice from others has been to wait until the property is vacant, but you need to balance that against the fact that you seem to be buying at a reasonable price. So, you may have to show some limited progress with the solicitor to keep the seller happy. 

You said the tenants are seriously in arrears, ie several months rent in arrears. The landlord should therefore have served a S8 notice. The good news is that such cases are much easier for the landlord to win in court, compared to S21, and there is some anecdotal evidence that they go through the court system more quickly. 

I suggest that you ask for copies of the notices served on the tenants, so you have a much better idea of what is going on.

You should of course keep looking. This might drag on for ages, and you might find something better in the meantime.

MEM62

LHZ said:

Anyway, I said I've been advised not to proceed until the tenants are gone and he said that the vendor is likely to want to put the house back up for sale in that event. He said that she would want some commitment my side such as swapping solicitors details to draw up a memorandum of sale but that we wouldn't proceed further, and incur costs, until tenants were gone.

How does this sound?

It sounds like your desperation to buy the house is encouraging you to make unwise decisions.  The pressure is not on you - it is firmly on the vendor.  He will have considerable difficulties trying to find someone to will to proceed in these circumstances.  Just hold your ground, state that your offer stands, that you will proceed when the tenants are gone and will not be entering into any other interim agreements or contracts.  

LHZ

MEM62 said:

LHZ said:

Anyway, I said I've been advised not to proceed until the tenants are gone and he said that the vendor is likely to want to put the house back up for sale in that event. He said that she would want some commitment my side such as swapping solicitors details to draw up a memorandum of sale but that we wouldn't proceed further, and incur costs, until tenants were gone.

How does this sound?

It sounds like your desperation to buy the house is encouraging you to make unwise decisions.  The pressure is not on you - it is firmly on the vendor.  He will have considerable difficulties trying to find someone to will to proceed in these circumstances.  Just hold your ground, state that your offer stands, that you will proceed when the tenants are gone and will not be entering into any other interim agreements or contracts.  

This is a fair point. Also in the back of my mind is that the cost of living crisis has to bite soon and this will surely have an impact on house prices? The smart move might well be to completely back off and wait for the inevitable cooling of house prices. I'm sure I'll get more for my money in a year or two.

babyblade41

LHZ said:

MEM62 said:

LHZ said:

Anyway, I said I've been advised not to proceed until the tenants are gone and he said that the vendor is likely to want to put the house back up for sale in that event. He said that she would want some commitment my side such as swapping solicitors details to draw up a memorandum of sale but that we wouldn't proceed further, and incur costs, until tenants were gone.

How does this sound?

It sounds like your desperation to buy the house is encouraging you to make unwise decisions.  The pressure is not on you - it is firmly on the vendor.  He will have considerable difficulties trying to find someone to will to proceed in these circumstances.  Just hold your ground, state that your offer stands, that you will proceed when the tenants are gone and will not be entering into any other interim agreements or contracts.  

This is a fair point. Also in the back of my mind is that the cost of living crisis has to bite soon and this will surely have an impact on house prices? The smart move might well be to completely back off and wait for the inevitable cooling of house prices. I'm sure I'll get more for my money in a year or two.

What if you are wrong on house prices... I'm not sure by using this thought process it will come back & bite you.

House price may not go up in quite the same percentages but I doubt if they will come down.

People buy & sell  houses whatever happens & maybe they might rise even more 

I seriously doubt you will get more for your money by waiting  a year or two. I wouldn't touch this house for all the reasons stated above but you could find you get a lot less  in the future on other proceed able  properties

saajan_12

I think we need a dose of reality and weighing up risks here. Here's the worst case for some of the paths you could take..

1. Exchange contracts allowing tenants in situ -> Tenants don't leave, you breach mortgage terms and fail to complete, lose deposit or become a LL, can't move in. AARGH TERRIBLE
2. Exchange contracts stating vacant possession, while tenants still physically there -> Seller can't provide vacant possession, no completion, you're stuck at current place and trying to claim damages from seller and all resulting hassle. BAD
3. Start conveyancing while tenants still there, wait for tenants to leave before exchange -> Tenants don't move before you give up, lose the £2-4k in costs and have to start again. MEDIUM
4. Exchange solicitor details, wait for tenants to leave before starting chargeable work -> Tenants don't leave before you give up, lose the £100 in solicitors costs to open a file and check your ID (not even that if you can apply it to a subsequent purchase). No time lost as you're continuing to view elsewhere. PRETTY MILD
5. Walk away / do nothing until tenants leave -> Seller finds another buyer and you don't find another property in the same price range due to being outbid / prices rising etc

The agent is suggesting option 4, which really isn't that bad. Meanwhile it gets you more likely for the seller to stick to you if you do want to buy this property. Its all very good for people on the internet to suggest the 0 risk way, but doens't account for what you'd miss out on.

peterhjohnson

I suspect there are a few professionals who know how to make a profit buying in this situation. They'll know the most effective way to get rid of the tenants. They've probably got knowledge of how long it takes locally right now.  They'll also know  what (low) price to offer such vendors so that they don't lose money - ever - or maybe on average.

If the OP is such a professional, s/he would not be asking here. So I say the OP should run away from this property. It will eventually be sold to a professional for much less money than the OP has offered.

eddddy

peterhjohnson said:

I suspect there are a few professionals who know how to make a profit buying in this situation. They'll know the most effective way to get rid of the tenants. They've probably got knowledge of how long it takes locally right now.  They'll also know  what (low) price to offer such vendors so that they don't lose money - ever - or maybe on average.

If the OP is such a professional, s/he would not be asking here. So I say the OP should run away from this property. It will eventually be sold to a professional for much less money than the OP has offered.

What makes you think that will happen?

I know loads of landlords who have served section 8 and section 21 notices - sometimes to "problem tenants". They've never ended up having to sell to a professional at a bargain price.

lookstraightahead

This is like asking whether you should go in a hot air balloon with no balloon. You just don't. 

canaldumidi

lookstraightahead said:

This is like asking whether you should go in a hot air balloon with no balloon. You just don't. 

A hot air balloon with no balloon is just...... hot air.

A property for sale with tenants is just..... hot air.