Buying with tenants in situ BUT leaving prepaid rent to previous owner to boost offer

lb00

My brother and I are working in London and have found a nice flat we would like to buy. The flat asking price is 675, we have offered 620 which was rejected. The flat is currently being rented with the tenancy expiring end of September. We are happy to wait until Sep to move in.

As we are FTB we do not want to go above 625k to avoid losing the stamp duty relief and pay 8k more. The EA has proposed that we offer 625 and complete quickly by the end of May, but agree to leave the rent from June to September (10k) with the seller. This would mean the effective offer price is 635k. The crucial bit is that the rent has been paid in advance for the full year, so it's effectively already with the seller, meaning we wouldn't need to transfer it to them. Is this legal?

What scares us is that we would still have to enter the lease with the tenant from June to September, becoming the new landlord and therefore being responsible for property maintenance. Is there a way we can buy the property but the seller can still act legally as the landlord until the end of the tenancy, being responsible if anything happens? Or is it possible, even if we become the landlord, to require formally the old seller to step in if something breaks down between June and September?

We are buying cash so no need to have vacant possession

Thanks very much in advance for your help!

swingaloo

What makes you think the tenancy is expiring at the end of September? Dont even think about buying and exchanging contracts with a tenant still in situ.

user1977

Other than the potential risk of being stuck with the tenant for much longer than you expect, two questions:

1. How are you funding the purchase? You haven't mentioned a mortgage, but a standard residential mortgage won't allow you to buy with a tenant in place

2. FTB relief on SDLT only applies if you're buying a property intending to occupy it as your main residence. That may be your ultimate aim, but I think you're on dodgy ground if the property is going to be tenanted for (at least) an initial period of several months.

sheramber

The tenants may not move out In September and then a court order would be required to evict them. That could take months. 

Tucosalamanca

swingaloo said:

What makes you think the tenancy is expiring at the end of September? Dont even think about buying and exchanging contracts with a tenant still in situ.

Agreed. There'e potential for a protracted legal battle to evict them at the end of the tenancy and the property could be completely trashed by the time possession is granted.
Taking on all responsibilities of a landlord. Understanding landlord duties and risks involved.
Insurance, safety checks, deposit holding, declaring taxable income, tenant's rights, etc etc.

lb00

We are buying cash so no need to have vacant possession

lb00

user1977 said:

Other than the potential risk of being stuck with the tenant for much longer than you expect, two questions:

1. How are you funding the purchase? You haven't mentioned a mortgage, but a standard residential mortgage won't allow you to buy with a tenant in place

2. FTB relief on SDLT only applies if you're buying a property intending to occupy it as your main residence. That may be your ultimate aim, but I think you're on dodgy ground if the property is going to be tenanted for (at least) an initial period of several months.

So you think we would not qualify at all for FTB relief or we could based on the fact the tenant is in situ and we would just be letting the tenancy expire and then move in?

swingaloo

The tenancy does not 'just expire'. At the end of the fixed period it becomes a rolling tenancy which can only be ended by the tenant or a court. You really need to do some research regarding what you are thinking of taking on here.  And please dont take any advice from that estate agent.

propertyrental

Tenancies don't 'just expire'. They have to be formally ended either by the tenant serving notice, or by a court order.

And if you purchase without vacant possession, you will become landlords. There are many legal obligations that go with that. Are you familiar with them and prepared to take them on?

My advice? Look for another property.

user1977

lb00 said:

user1977 said:

Other than the potential risk of being stuck with the tenant for much longer than you expect, two questions:

1. How are you funding the purchase? You haven't mentioned a mortgage, but a standard residential mortgage won't allow you to buy with a tenant in place

2. FTB relief on SDLT only applies if you're buying a property intending to occupy it as your main residence. That may be your ultimate aim, but I think you're on dodgy ground if the property is going to be tenanted for (at least) an initial period of several months.

So you think we would not qualify at all for FTB relief or we could based on the fact the tenant is in situ and we would just be letting the tenancy expire and then move in?

I would come down on the side of it not qualifying.

But I wouldn't be doing it anyway - why would you want all the risk and hassle of being a landlord? You could still be waiting a year from now to get vacant possession.

_Penny_Dreadful

user1977 said:

lb00 said:

user1977 said:

Other than the potential risk of being stuck with the tenant for much longer than you expect, two questions:

1. How are you funding the purchase? You haven't mentioned a mortgage, but a standard residential mortgage won't allow you to buy with a tenant in place

2. FTB relief on SDLT only applies if you're buying a property intending to occupy it as your main residence. That may be your ultimate aim, but I think you're on dodgy ground if the property is going to be tenanted for (at least) an initial period of several months.

So you think we would not qualify at all for FTB relief or we could based on the fact the tenant is in situ and we would just be letting the tenancy expire and then move in?

I would come down on the side of it not qualifying.

But I wouldn't be doing it anyway - why would you want all the risk and hassle of being a landlord? You could still be waiting a year from now to get vacant possession.

I think the OP would qualify for FTB relief providing all the other conditions are met.  At the effective date of the transaction, there must be a clear intention to occupy the dwelling as the purchaser’s only or main residence and the fact that circumstances make it either impossible or impractical to immediately occupy the dwelling do not prevent relief being due.