Buying a home to live in that has a tenant in situ need advice

GDB2222

Tabieth said:

GDB2222 said:

m0bov said:

The LL is profiting by keeping rent coming in whilst it's for sale. The buyer is taken the risks whilst the LL profits.

When owner occupiers sell, they don’t move out before they put the property on the market. They profit by continuing to live in the place. The buyers are taking the risk of the sellers simply deciding not to sell. 

Property is in short supply in this country, and it is sensible that we (as a nation) try to make the best use of it. Leaving property empty for 4-6 months while it is being sold is extremely wasteful. 

Clearly owner occupiers don’t move out before they put their property on the market. But they do enter into a contract where they legally commit to full vacant possession. If for whatever reason the seller does not move out on completion day then completion doesn’t happen and they are in breach of that contract. So the buyer has assurance that, while not 100% guaranteed, the seller will leave the property.

Contrast that with tenants who have entered into no such legal contract. If they don’t move out it’s the seller who is legally liable, not the tenant. The buyer has far less assurance of full vacant possession as the tenant (unlike an owner occupier) has nothing to lose by staying on. 

A seller would undoubtedly be most unwise to exchange contracts before the tenants move out. I'm not suggesting that. 

This particular seller wants some progress on the part of the buyer before he asks the tenants to leave. I think that's sensible. Others here think the landlord is profiteering at the expense of the buyer. Maybe, we just have to agree to differ.

SneakySpectator

RHemmings said:

m0bov said:

The LL is profiting by keeping rent coming in whilst it's for sale. The buyer is taken the risks whilst the LL profits.

I don't think it's simple as that it's the buyer taking the risk. When contracts are exchanged, these will typically be for vacant possession. Therefore, if exchange does happen and the tenant is still there, then the landlord will most definitely legally be on the hook. 

Therefore, the seller may not want to exchange while the tenant is there. If exchange then gets pushed back because the tenant doesn't leave, then there is the risk that the buyer pulls out, and both seller and buyer lose out.

It's often been advised on here to not sink money into the purchase until the property is vacant. If the buyer says that the purchase will stall until the tenant has moved out, then it will be possible to see how the seller reacts.

If I was the buyer, I would make it very clear that no exchange of contracts will happen unless the contract is for vacant possession. And that exchange of contracts is expected by <date>. 

GDB2222 said:

Even if the op finds an owner occupied flat to buy, there’s plenty of opportunity for that transaction to fall through, too. How do you calculate the difference in the risks? 

(Cut and paste of comment failed. Italics are the quote)

This is very true; there are all sorts of things that can derail a purchase. But, here we're talking about one particular problem. Which it appears that the OP's seller is making a bigger risk by not giving notice. E.g. in the following quote from the OP.

SneakySpectator said:

Yeah I'm having second thoughts as well now, the estate agent straight up told me that once we are further down the line and close to sealing everything, the tenants will be issued their section 21 notice. 

So I'm looking at 2 months of conveyancing before the section 21 even gets issued, then 2 months notice for that, then if they refuse to leave another few months, then court orders, repossession order etc. I was "assured" by the EA that 

"I’ve spoken with the owner, and he has confirmed he will give notice to the tenants when we are further along the legal process, and we won’t exchange contracts until the tenants have moved out and you’ve viewed again to ensure that your happy. You solicitor will also advise to view the property prior to exchange anyway."

But I've not even done an initial survey yet and I don't want to start sinking solicitor fees into this only for it to drag out for half a year only to find out there's some major issue after the tenant left. 

So solicitor I'm using has a no deal no fee structure, so yes I would lose out on some initial costs but the bulk of the costs would be refunded to me if the deal falls through. 

Also while the estate agent did say the seller won't evict until we're further along the process, she did assure me that no contracts will be exchanged until the tenant is out of the property, furniture cleared out and keys handed back. 

RHemmings

SneakySpectator said:

RHemmings said:

m0bov said:

The LL is profiting by keeping rent coming in whilst it's for sale. The buyer is taken the risks whilst the LL profits.

I don't think it's simple as that it's the buyer taking the risk. When contracts are exchanged, these will typically be for vacant possession. Therefore, if exchange does happen and the tenant is still there, then the landlord will most definitely legally be on the hook. 

Therefore, the seller may not want to exchange while the tenant is there. If exchange then gets pushed back because the tenant doesn't leave, then there is the risk that the buyer pulls out, and both seller and buyer lose out.

It's often been advised on here to not sink money into the purchase until the property is vacant. If the buyer says that the purchase will stall until the tenant has moved out, then it will be possible to see how the seller reacts.

If I was the buyer, I would make it very clear that no exchange of contracts will happen unless the contract is for vacant possession. And that exchange of contracts is expected by <date>. 

GDB2222 said:

Even if the op finds an owner occupied flat to buy, there’s plenty of opportunity for that transaction to fall through, too. How do you calculate the difference in the risks? 

(Cut and paste of comment failed. Italics are the quote)

This is very true; there are all sorts of things that can derail a purchase. But, here we're talking about one particular problem. Which it appears that the OP's seller is making a bigger risk by not giving notice. E.g. in the following quote from the OP.

SneakySpectator said:

Yeah I'm having second thoughts as well now, the estate agent straight up told me that once we are further down the line and close to sealing everything, the tenants will be issued their section 21 notice. 

So I'm looking at 2 months of conveyancing before the section 21 even gets issued, then 2 months notice for that, then if they refuse to leave another few months, then court orders, repossession order etc. I was "assured" by the EA that 

"I’ve spoken with the owner, and he has confirmed he will give notice to the tenants when we are further along the legal process, and we won’t exchange contracts until the tenants have moved out and you’ve viewed again to ensure that your happy. You solicitor will also advise to view the property prior to exchange anyway."

But I've not even done an initial survey yet and I don't want to start sinking solicitor fees into this only for it to drag out for half a year only to find out there's some major issue after the tenant left. 

So solicitor I'm using has a no deal no fee structure, so yes I would lose out on some initial costs but the bulk of the costs would be refunded to me if the deal falls through. 

Also while the estate agent did say the seller won't evict until we're further along the process, she did assure me that no contracts will be exchanged until the tenant is out of the property, furniture cleared out and keys handed back. 

That makes it less of a risk for you. My slightly cynical mind suggests that you check the contract carefully for any clauses that might result in you paying even without a deal. 

RAS

No deal, no fee may not cover disbursements, so you could still be on the hook for things like searches. Read your paperwork and clarify if need be.

And, remember that your mortgage offer is often only valid for 6 months, and you may have to pay fees for that even if the sale fails.

SneakySpectator

RAS said:

No deal, no fee may not cover disbursements, so you could still be on the hook for things like searches. Read your paperwork and clarify if need be.

And, remember that your mortgage offer is often only valid for 6 months, and you may have to pay fees for that even if the sale fails.

Yeah I won't get back everything I've paid for in terms of fees but at least if I can protect myself from some of them. 

As for the mortgage application fee, I decided to include it in the loan so if the mortgage does fall through or expires, I'm not on the hook to pay it.

saajan_12

SneakySpectator said:

RAS said:

SneakySpectator said:

RAS said:

Why can't you get a mortgage longer than 25 years? 30+ is pretty normal now.

Inflation will eat into the cost of your repayments within say 5 years. It'd be reasonable to expect to clear a 35 year deal in 25 years.

Because I'm 36... A 25 year mortgage is already making me work until 61, I really don't want to be working into my 70's. 

When your mortgage becomes a smaller portion of your living costs, you overpay. I actually started with a 15% mortgage, oh joy, but when the rate halved, I decided to pay a little more than half each month. That soon cut the amount of capital I owed, which began a virtuous cycle so I paid off 75% in the next 15 years.

This makes a lot of sense actually. I thought you get charged for making overpayments though?

lincroft1710 said:

SneakySpectator said:

RAS said:

Why can't you get a mortgage longer than 25 years? 30+ is pretty normal now.

Inflation will eat into the cost of your repayments within say 5 years. It'd be reasonable to expect to clear a 35 year deal in 25 years.

Because I'm 36... A 25 year mortgage is already making me work until 61, I really don't want to be working into my 70's. 

A 30 year mortgage would take you to 66 yrs old by which time state pensions may not start until the age of 70. My mortgage wasn't paid off until I was 68, but my work pension adequately covered the repayments.


Trying to buy a tenanted property is not a sensible idea, the vendor is seemingly offloading their property portfolio but for whatever reason is unable to get the tenant to leave.

Yeah I'm having second thoughts as well now, the estate agent straight up told me that once we are further down the line and close to sealing everything, the tenants will be issued their section 21 notice. 

So I'm looking at 2 months of conveyancing before the section 21 even gets issued, then 2 months notice for that, then if they refuse to leave another few months, then court orders, repossession order etc. I was "assured" by the EA that 

"I’ve spoken with the owner, and he has confirmed he will give notice to the tenants when we are further along the legal process, and we won’t exchange contracts until the tenants have moved out and you’ve viewed again to ensure that your happy. You solicitor will also advise to view the property prior to exchange anyway."

But I've not even done an initial survey yet and I don't want to start sinking solicitor fees into this only for it to drag out for half a year only to find out there's some major issue after the tenant left. 

In principle I'm not entirely against starting the conveyancing process in parallel with waiting for the S21 - its a risk, but can pay off if its a property you really want and most tenants do leave per a S21, even if they don't have to. 

However a chain free, freehold property sale has every chance of completing within 2 months, so it could all align if the S21 was already served. Still waiting and expecting the buyer to expend money while the LL won't even send a piece of paper is VERY cheeky. 

If you really liked this property, I would take back some control and say you'd like to place an offer but conditional on the LL serving S21 notice to the tenant FIRST and a letter from the tenant confirming they plan to leave upon expiry. Or better still, conditional on the LL speaking to the tenant, agreeing a termination date and formalising that via a notice from the tenant to the Landlord with expiry = 2 months from now. 
If not forthcoming, then walk away. 

SneakySpectator

saajan_12 said:

SneakySpectator said:

RAS said:

SneakySpectator said:

RAS said:

Why can't you get a mortgage longer than 25 years? 30+ is pretty normal now.

Inflation will eat into the cost of your repayments within say 5 years. It'd be reasonable to expect to clear a 35 year deal in 25 years.

Because I'm 36... A 25 year mortgage is already making me work until 61, I really don't want to be working into my 70's. 

When your mortgage becomes a smaller portion of your living costs, you overpay. I actually started with a 15% mortgage, oh joy, but when the rate halved, I decided to pay a little more than half each month. That soon cut the amount of capital I owed, which began a virtuous cycle so I paid off 75% in the next 15 years.

This makes a lot of sense actually. I thought you get charged for making overpayments though?

lincroft1710 said:

SneakySpectator said:

RAS said:

Why can't you get a mortgage longer than 25 years? 30+ is pretty normal now.

Inflation will eat into the cost of your repayments within say 5 years. It'd be reasonable to expect to clear a 35 year deal in 25 years.

Because I'm 36... A 25 year mortgage is already making me work until 61, I really don't want to be working into my 70's. 

A 30 year mortgage would take you to 66 yrs old by which time state pensions may not start until the age of 70. My mortgage wasn't paid off until I was 68, but my work pension adequately covered the repayments.


Trying to buy a tenanted property is not a sensible idea, the vendor is seemingly offloading their property portfolio but for whatever reason is unable to get the tenant to leave.

Yeah I'm having second thoughts as well now, the estate agent straight up told me that once we are further down the line and close to sealing everything, the tenants will be issued their section 21 notice. 

So I'm looking at 2 months of conveyancing before the section 21 even gets issued, then 2 months notice for that, then if they refuse to leave another few months, then court orders, repossession order etc. I was "assured" by the EA that 

"I’ve spoken with the owner, and he has confirmed he will give notice to the tenants when we are further along the legal process, and we won’t exchange contracts until the tenants have moved out and you’ve viewed again to ensure that your happy. You solicitor will also advise to view the property prior to exchange anyway."

But I've not even done an initial survey yet and I don't want to start sinking solicitor fees into this only for it to drag out for half a year only to find out there's some major issue after the tenant left. 

In principle I'm not entirely against starting the conveyancing process in parallel with waiting for the S21 - its a risk, but can pay off if its a property you really want and most tenants do leave per a S21, even if they don't have to. 

However a chain free, freehold property sale has every chance of completing within 2 months, so it could all align if the S21 was already served. Still waiting and expecting the buyer to expend money while the LL won't even send a piece of paper is VERY cheeky. 

If you really liked this property, I would take back some control and say you'd like to place an offer but conditional on the LL serving S21 notice to the tenant FIRST and a letter from the tenant confirming they plan to leave upon expiry. Or better still, conditional on the LL speaking to the tenant, agreeing a termination date and formalising that via a notice from the tenant to the Landlord with expiry = 2 months from now. 
If not forthcoming, then walk away. 

I tried this but the EA came back saying the LL doesn't want to evict the tenant and then I back out of the deal down the line and now the LL has a property with no income, which is understandable. 

But once the initial things have been done and we've progressed a little, I'm going to demand the LL issue the S21 notice, I've shown commitment on my end, now he needs to show commitment on his end. 

Thing is I don't know what the norm is and to be honest if I was a seller I too would want to keep the tenant in there until the last minute if possible too. But at some point the seller is going to have to evict them because I ain't singing nothing until they've been evicted, furniture removed, keys handed back.

eddddy

SneakySpectator said:

 But at some point the seller is going to have to evict them because I ain't singing nothing until they've been evicted, furniture removed, keys handed back.

That's not likely to be an issue. Realistically, it's unlikely that anyone will ask you to exchange contracts until the tenant has vacated the property.

The seller would be taking a bigger risk than you, if contracts are exchanged while the tenant is still occupying the property.


But insisting that all the furniture is removed before exchange of contracts isn't really necessary. It wouldn't be unreasonable for the seller to say they want to clear the furniture during the period between exchange of contracts and completion.

SneakySpectator

eddddy said:

SneakySpectator said:

 But at some point the seller is going to have to evict them because I ain't singing nothing until they've been evicted, furniture removed, keys handed back.

That's not likely to be an issue. Realistically, it's unlikely that anyone will ask you to exchange contracts until the tenant has vacated the property.

The seller would be taking a bigger risk than you, if contracts are exchanged while the tenant is still occupying the property.


But insisting that all the furniture is removed before exchange of contracts isn't really necessary. It wouldn't be unreasonable for the seller to say they want to clear the furniture during the period between exchange of contracts and completion.

The only reason I'm insistent on furniture being removed is 1) I don't want to pay to have them removed myself, and 2) I don't want the previous tenant coming back claiming x and y furniture was legally his and I got rid of it without his permission etc. 

Tiglet2

Your solicitor won't agree to exchange contracts until the flat has been vacated.  Once the flat has been vacated, your solicitor will suggest you go and view it again, to confirm that the property has been left in a reasonable condition.  This, again, would be before you exchange.  You then confirm to the solicitor that you are either happy to go ahead with the exchange, or not.   I would imagine that the tenant, having vacated before exchange, would have taken his furniture with him, except that belonging to the landlord, i.e. white goods (if any had been supplied).