buying house with tenant -bit long sorry

shykins

hope this is the right place to post this,, its a bit of any unusual one

we are purchasing a house with a tenant already installed with a short term tenancy ending december 2005... the person we are buying off has signed a contract with an agent to find the tenant and manage the letting

we hope to complete in october 2005 before the 6 month tenancy ends and i told the agent we would handle the letting from then on and renew the tenancy if the tenant wanted in december, the agent seemed pretty aggrieved that we were 'cutting him out the deal' and told me there may be legal implications as as it is standard to pay them to renew the tenancy an amount equal to one half of one months rent... apparently this is standard if a tenant chooses to stay and covers their costs to renew the tenancy etc..

my question is as we did not make the original contract with the agent are we really liable to pay them to re-organise the tenancy should the tenant wish to remain in the house as we are more then capable of doing this ourselves with no cost rather than the approx £250 they wish to charge

thanks in advance for any advice or suggestions
x

calleyw

I have no idea but would never buy a house with a tenant.

we had problems when we found a flat we liked it had a tenant and the we found out that there was a problem with there contract and they where refusing to move. And it was going to take months and loads of money to sort out so we walked away and found another property.

Hope someone else has a better and more detailed answer.

Yours

Calley

BrokeBrokeBroke

And a lot of lenders won't touch a property with a 'sitting tenant'

Bossyboots

You need to see the agreement between the agent and the current owners firstly to see if it actually says that in it. He might be trying it on and no such arrangements exists.

Secondly, as you point out, that agreement would be between the vendors and the agent anyway so in theory, no, they cannot insist you pay them any money.

It also appears that you are saying the money is paid to the agent for renewing the tenancy, which they are not being asked to do. I could understand their point if they were saying that they found the tenant and therefore wanted a payment in respect of that (a bit like paying an employment agency when you retain a member of staff who was temping) but again, this agreement would be with the vendors and not able to be carried over to a buyer.

basill

I presume when you buy the property the tenant and agent come as a pair.

I let my flat and as a newbie used an agent to find and vet the tenant. There was a (pretty substantial) fee which included drawing up the tenancy agreement. Once the initial 6 months were up I was dismayed to find that the fees were payable again even though the tenants were happy and wanted to stay.

I had no problem with the finders fee when the agent actually had to find a tenant but felt it was unreasonable to charge it all again when the agreement was renewed.

My solution was to approach the tenants and ask them to give notice to the agency. We then retyped the agreement changing the relevant names and dates so we had an agreement directly with them. We gave them a couple of weeks rent free for their cooperation and still came out ahead.


B

shykins

thanks for your replies which are helpful

therre are no lenders so we dont have that worry and the person is NOT a sitting tenant just on a short term let

bossy... i am glad u see it the way i do... i spose they are asking a further payment to retain the tenant (as with an employer) but they have been paid once by the seller

basill ...the agents have been paid a finders fee by the seller and have been managing the let for 6months and have received that money.. to add to that they are getting paid commission on the sale and i feel its unfair that they try and enforce a renewal fee against us..

i like your idea of approaching the tenant direct but i fear she may be acquainted with the agent so may tell them our plan...

i still feel they cant enforce renewal agreement with us as we didnt sign anything with them

ty again for the help and i will let u know wot occurs when the agents ring me this week

xx

GDB2222

Well, I am pleased that you got the answer you WANTED to hear, but I am afraid it's all !!!!!!.

It is absolutely standard practice in the lettings market to continue to pay the agent if the tenancy continues. It would be usual for the commission level to drop a bit after the first year, but you would need to see the agency contract. It certainly makes no difference whether you redraw the tenancy agreement.

The only unclear point is the one you mentioned, that the agency agreement is with the original owners. Without seeing the agreement, it is unclear who would be liable after the property changes hands. If the current owners have any sense, they will require you to take over their obligations under the agency agreement as part of the sale.

Assuming you have a solicitor acting for you, ask him/her to advise.

shykins

its not a case of asking cos i WANTED to hear something i was asking for opinions

the vendor has hardly got the brain he was born with so there is no way he will consider asking us to take over his obligations.. and his licensed conveyancers arent too bright either... i think they are having problems handling a leasehold sale as it is without any complications

anyone else got opinions on this??? forewarned is forearmed as they say

Natelle_2

A Lanlord's point of view.

1. Have a look at this link http://www.odpm.gov.uk/stellent/groups/odpm_housing/documents/divisionhomepage/036727.hcsp for usefull information.
2. Ask to see a copy of the agency agreement the current owner has with the agency. Check to see if any reference is made to period of notice required to end agreement. As soon as you become the owner of property give notice to agent. You don't have to have an agent.
3. Assuming the current tenancy agreement covering the property is an Assured Shorthold Tenancy then you do not have to draw up a new agreement in December 2005 if you are prepared for the current tenants to continue renting. You let the agreement change automatically to a Statutory Periodic Agreement, which will be under the same terms to both you and the tenant. It also gives you advantages in the period of notice you have to give to the tenant if you want the tenancy to end in the future for any reason. There is no need to draw up a new agreement and therefore no entitlement for the agent to charge a renewal fee. It is just a way of agents making extra money, from both the landlord and the tenants, for basically doing nothing other than printing of a new agreement and getting the tenants to sign it.
4. Insist on seeing a copy of the current tenancy agreement prior to completion of your purchase.
5. Tell the current tenants, yourself, at the earliest opportunity, that you will be continuing with their tenancy if that is your decision. Tell them direct, don't leave it to the current agent, as the tenants may not receive the same message as you send via the agent.

Remember these are my personal views as a landlord who manages his own properties.

Don't let the managing agent intimidate you.

EJS

shykins

many thanks for your helpful post.. just a couple of questions if i may

1... when u say i should give notice to the tenant upon completing.. what do i actually say to them or should the tenant just give notice that she wishes the shorthold tenancy to stop??

2..i believe she does wish to stay so Statutory Periodic agreement sounds ideal.. is there any paperwork i would have to provide her with or is just an automatic change if we dont re issue her with a contract??

i am ploughin thru the site you mentioned and its proving very helpful .. thanks again for your well worded reply

x

Natelle_2

In my point 2.
' Ask to see a copy of the agency agreement the current owner has with the agency. Check to see if any reference is made to period of notice required to end agreement. As soon as you become the owner of property give notice to agent. You don't have to have an agent.'
I am refering to the agreement with the agent, to manage the property. You will probably find there is either a one or three month notice period. Having said this it may be that, although the tenancy agreement moves with the property from the current owner to you on the completion of the purchase, the managing agreement between the current owner and the agent does not automatically transfer to you, as it is a contract between them and a seperate entity entirely from the tenancy agreement on the house. Any tenancy agreement is covered by the Housing Act, but the agency agreement is not it is purely a civil contract. Check this out further.

2..i believe she does wish to stay so Statutory Periodic agreement sounds ideal.. is there any paperwork i would have to provide her with or is just an automatic change if we dont re issue her with a contract??
You don't need to issue a new tenancy the change is automatic if you do not give her notice. The tenancy basically just carries on with the current terms until either you or the tenant wish to end it a some point in the future. You would only have to give two months notice where as the tenant only has to give one month, after the original minimum period. What you must do, once you are the owner of the property, is to inform the tenant that you are the owner and give her your address. This will clase as an addendum to the original agreement.

If you are going to manage it yourself, and there's no reason not to as it's not rocket science, then remember remember to get the rental paid direct to you and not through the agent. If the tenant pays by standing order then you need to get a new mandate signed by the tenant for payment to your bank account. You also need to instruct the agent to pay to you the security deposit that they hold for the tenant and you need to put this into a seperate account from your current account. Open a savings account that requires no more than 30 days notice and put the deposit into it. Once you have the deposit inform the tenant that you are now holding the deposit.

Hope this is of help and I haven't gone on too long.

By the way a helpfull book is 'The Which? Guide to renting and letting'