Would you buy a tenanted property for less or pay more for a vacant house?

Peggy0628

Hi,

I'm looking to buy my first home (currently renting privately) but the house prices are crazy at the moment (that may or may not change in the future, of course).
There is a house for sale I would like within my budget, but it's currently rented out (and it's being sold as such). The price of this house is approx. 20% less than other comparable houses in the area (I'm guessing it's because it's rented out so not appealing to many buyers). 
Would it be a good idea to buy the tenanted house, wait a while for the tenants to move out (or give them s21 notice when they're fixed term runs out) in order to save money on the purchase price as all the other non-rented houses are more expensive? I am able to pay my rent/bills etc so won't be relying on the rent from the rented house for income (that money would be later used to help to pay for redecorating, new boiler, carpets, insulation etc after the tenants leave).

So my question is, is it a good idea buy by a tenanted house for cheaper price or continue saving and hoping to buy a vacant house for more (all vacant houses in the area are over my budget at the moment)?
I really want to have a home of my own but as a single person really struggle to find affordable properties so I'm trying some out of the box thinking to get me on the property ladder (I'm almost 40 and been renting my whole adult life).

Any suggestions are welcome. Thanks!

user1977

Leaving aside all the other complications around being a landlord...assuming you need a mortgage, do you qualify for a buy to let mortgage? Generally BTL lenders prefer you to own your own place first, and the minimum deposit will be higher. And you'd then need to remortgage to a standard residential mortgage in order to move in.

molerat

How long do you want to wait until you move in - 2 years or more ?

Have you got the time, energy and money to be a landlord - carrying out repairs and carrying out your landlord obligations ?

Can you afford the tenant not paying rent for a year ?

Maybe worst case scenarios but it could happen.

Peggy0628

My plan is to get the tenants out asap (depending on the exact terms of their tenancy agreement - I don't know the exact details).
I don't need a mortgage to buy this tenanted house but would need one to buy a more expensive vacant house, that's why I'm considering this option. So technically, if the tenants stopped paying rent, it would not cause me any problems (well, it would be a problem but there would be no risk of defaulting on mortgage and such).

Niv

Peggy0628 said:

My plan is to get the tenants out asap (depending on the exact terms of their tenancy agreement - I don't know the exact details).
I don't need a mortgage to buy this tenanted house but would need one to buy a more expensive vacant house, that's why I'm considering this option. So technically, if the tenants stopped paying rent, it would not cause me any problems (well, it would be a problem but there would be no risk of defaulting on mortgage and such).

What I think people are getting at is yes you could issue a S21 on day one. They could ignore it and not move out so the only way you can get them out is to take them to court which will cost you and could take 18+months to achieve.


There is a reason its being sold with tenants in situ - possibly because the tenants do not want to move. And without knowing what their tenancy says, it may not be straight forward to move them on.

YoungBlueEyes

Is it in an area you’d want to live in? Or are you only considering it because it’s cheap?

theoretica

Peggy0628 said:

My plan is to get the tenants out asap (depending on the exact terms of their tenancy agreement - I don't know the exact details).

Think about why the current owner may have chosen to sell at 20% less, rather than getting the tenants out themselves and selling for much more...  that the property is offered tenanted and that much cheaper seems a fair indication that getting vacant possession won't be so easy.

Peggy0628

YoungBlueEyes said:

Is it in an area you’d want to live in? Or are you only considering it because it’s cheap?

I live in this area. The house it literally stone's throw away from where I am right now, I can see it from my window.

Soot2006

Given what you say about not needing a mortgage for this property, I'd recommend getting a small mortgage and then buying the house you really want to have and live in.

Peggy0628

Niv said:

Peggy0628 said:

My plan is to get the tenants out asap (depending on the exact terms of their tenancy agreement - I don't know the exact details).
I don't need a mortgage to buy this tenanted house but would need one to buy a more expensive vacant house, that's why I'm considering this option. So technically, if the tenants stopped paying rent, it would not cause me any problems (well, it would be a problem but there would be no risk of defaulting on mortgage and such).

What I think people are getting at is yes you could issue a S21 on day one. They could ignore it and not move out so the only way you can get them out is to take them to court which will cost you and could take 18+months to achieve.


There is a reason its being sold with tenants in situ - possibly because the tenants do not want to move. And without knowing what their tenancy says, it may not be straight forward to move them on.

The current tenants only moved in this summer and the house went on the market about 2 weeks ago. I think the owner wants a quick sale and with the tenants still in the initial fixed term of their agreement, it may be faster to sell with the tenants than wait several months to get them out (by the time, the house value could be less than it's now).

Van_Girl

You're assuming the tenant is on an Assured Shorthold Tenancy, allowing you to issue a section 21

But they may be on an Assured Tenancy - in which case you cannot use Section 21, and it is much more difficult to remove a tenant with an assured tenancy

Never mind, if they've only just moved in then they're more likely to be on an AST