BTL property sold with tenant

cidfenmaria

What is the pros & cons of buying a property with a tenant and what are the things needed to be aware of? Or what approach to take

e.g. It says once the AST reach the end the new owner have the option to vacate the property. Is that true (with terms?) or notice needed to be served.

Would the AST become invalid as it's with the seller's name on it.

Thanks for any advice

tacpot12

Cons:

• you are inheriting the tenant's expectations of the landlord. If the landlord has been good, their expectations of you might be quite high.
• you might be inheriting bad tenants
• you might be inheriting a problem property, where the tenants are aware of faults that the seller has not disclosed (talk to the tenants and the letting agents!)  
• you might be inheriting a bad letting agent that the seller can't be bothered to get rid of (the agent might have been part of their decision to sell)
• you haven't picked the tenants yourself
• the rent may not be set correctly
• you are NOT inheriting the landlord's savings towards boiler replacement, repairs and redecorating, etc. You will need to put aside this capital when you complete the purchase, put the first few month's rent to one side for these expenses or accept that you will have to find money from your own resources to do repairs that needed. 

Pros: 

• There is no void period while you wait to find and vet tenants.
• The tenants are in place and paying rent.
• The letting agents are in place and know the tenants (talk to the agents about the tenants!) 

Other things to think about: 
You need fo fornally notifiy the tenants of who their new landlord is within two months of the sale going through. See this webpage for further details: Shelter Legal England - Tenant's rights when a landlord sells - Shelter England

dinosaur66

advantages you should be getting the property 10% plus  under market price as tennant in situ are very hard to sell -thats it.

disadvantage in most of the cases i have enquired the tennant is paying 20% plus under the local average rent 

IMO there is no advantage to having the tennant in situ when you buy a property in todays market / cannot asses the property clearly /tennant will most probably have been there a long time and everything is neglected / poorly maintained

 way more tennants looking then there are propertys for rent .

only place i would consider it is a scotland flat where this is common and you can pick up £20k to £30k a tennant in situ paying about £350 month because of the small outlay.

i still would not do it but the figures add up.

user1977

cidfenmaria said:

It says once the AST reach the end the new owner have the option to vacate the property. Is that true (with terms?) or notice needed to be served.

Same rules apply as if you were the original landlord, no more and no less. No guarantees that the tenant will go quietly.

Would the AST become invalid as it's with the seller's name on it.

No. New landlord steps into the shoes of the previous one.

user1977

tacpot12 said: 

• The tenants are in place and paying have an obligation to pay rent but may or may not actually be doing so

Amended above.

_Penny_Dreadful

cidfenmaria said:

What is the pros & cons of buying a property with a tenant and what are the things needed to be aware of? Or what approach to take

e.g. It says once the AST reach the end the new owner have the option to vacate the property. Is that true (with terms?) or notice needed to be served.

Would the AST become invalid as it's with the seller's name on it.

Thanks for any advice

What does,”once the AST reach the end,” mean? The end of what? The fixed term? The notice period of a Section 21 or 8? None of those things end an AST as that can only be done by the tenant or a court. So how exactly is the AST reaching its end? 

An AST doesn’t end just because there’s a change of ownership. The new owner would become the landlord with all that entails and the new owner would need to serve the appropriate notices to the tenant informing them there’s a new landlord or no rent is due. Furthermore, the new landlord would be reliant on the previous landlord issuing the prescribed notices or good luck issuing a valid Section 21. 

FlorayG

There are actually a lot of pros. I was specifically looking for a property with a tenant in situ because you then KNOW in advance what kind of tenant you are getting, Several tenants were really difficult to get appointments with and every one of those was living in a tip. The one I eventually bought the lady has kids and pets, the house was spotless, she asked ME loads of questions when I viewed, we have got on great ever since despite the fact that I put the rent up to market rate immediately
You must be aware that you become the tenant's landlord the day you complete. Make sure the previous landlord has all the necessary safety certificates in place and ask them to show you the part of their bank account with regular payments made.
If you don't like the tenants, don't buy the house, you will struggle to get them out

dinosaur66

FlorayG said:

There are actually a lot of pros. I was specifically looking for a property with a tenant in situ because you then KNOW in advance what kind of tenant you are getting, Several tenants were really difficult to get appointments with and every one of those was living in a tip. The one I eventually bought the lady has kids and pets, the house was spotless, she asked ME loads of questions when I viewed, we have got on great ever since despite the fact that I put the rent up to market rate immediately
You must be aware that you become the tenant's landlord the day you complete. Make sure the previous landlord has all the necessary safety certificates in place and ask them to show you the part of their bank account with regular payments made.
If you don't like the tenants, don't buy the house, you will struggle to get them out

i would not do it again now but had a similar situation

bought a house from a doctor who was an accidental landlord

priced cheaper because he did not want to evict his tennants

home report everything was a 1

house very nice and spotless and as you say tennants pleased to ask and answer any question

tenannts have lived in the village all there life / owned an inherited house but rented it out 

and the rent for there inherited house pays for the rent they now pay me and they live in a much nicer property.

both have very good jobs

but when you look at the photos on rightmove of tenant in situ situations i think we both found the 1 in a 100 tennants

PRAISETHESUN

cidfenmaria said:

What is the pros & cons of buying a property with a tenant and what are the things needed to be aware of? Or what approach to take

e.g. It says once the AST reach the end the new owner have the option to vacate the property. Is that true (with terms?) or notice needed to be served.

Would the AST become invalid as it's with the seller's name on it.

Thanks for any advice

There's a lot of responsibilities that come with becoming a LL - I suggest you read up on them! Your post suggests you don't understand how tenancies work if you think the tenant has to leave just because you've ought the property!

The AST the current owner/tenant has is legally valid and will remain so on the sale of the property. Change of owner/LL does nothing to change that. The only way to change the terms of the AST would be to have the tenant agree to sign a new document (absolutely zero requirement for them to do so). At the end of the fixed term, then the AST will automatically roll over onto a periodic tenancy which will continue on the same terms - this is governed by housing law and is not something you can change. If you want to take possession of the property then you will need to issue S21, and then the matter to court if the tenant does not leave, same as everyone else.

ReadySteadyPop

dinosaur66 said:

advantages you should be getting the property 10% plus  under market price as tennant in situ are very hard to sell -thats it.

disadvantage in most of the cases i have enquired the tennant is paying 20% plus under the local average rent 

IMO there is no advantage to having the tennant in situ when you buy a property in todays market / cannot asses the property clearly /tennant will most probably have been there a long time and everything is neglected / poorly maintained

 way more tennants looking then there are propertys for rent .

only place i would consider it is a scotland flat where this is common and you can pick up £20k to £30k a tennant in situ paying about £350 month because of the small outlay.

i still would not do it but the figures add up.

I find that unlikely to be honest, job openings have dropped a lot recently I believe, many young people for example will just stay at home now.

Murphybear

FlorayG said:

There are actually a lot of pros. I was specifically looking for a property with a tenant in situ because you then KNOW in advance what kind of tenant you are getting, Several tenants were really difficult to get appointments with and every one of those was living in a tip. The one I eventually bought the lady has kids and pets, the house was spotless, she asked ME loads of questions when I viewed, we have got on great ever since despite the fact that I put the rent up to market rate immediately
You must be aware that you become the tenant's landlord the day you complete. Make sure the previous landlord has all the necessary safety certificates in place and ask them to show you the part of their bank account with regular payments made.
If you don't like the tenants, don't buy the house, you will struggle to get them out

I worked in the field for many years and have done literally hundreds of inspections.  The tidiness varied from so good it was obsessive (a bit like my ex husband ) to a tip plus everything in between.  There is no legal requirement for tenants to keep the place immaculate, it just has to be handed back in the same condition as it was when they moved in minus fair wear and tear.  

Also based on my experience there is very little correlation between being a good tenant and being untidy.  Many people are unnaturally untidy.