Should you buy a property with sitting tenants?
Have you found the perfect buy-to-let investment property in Southend but discovered it has sitting tenants? Before you consider buying property with tenants, or make an offer or walk away from the purchase, here are some points to consider. Property in Southend that’s for sale with sitting tenants, is often on the market at astonishing prices, regularly under the true market value.
If such a property does catch your eye, it is worth checking whether it’s occupied by someone with a “protected tenancy” under the Rent Act 1977 before you make an offer.
This fundamentally means the tenant – and possibly their spouse or another family member – has the right to live in the property for the rest of his or her life. Plus, they have the right to pay a “fair rent” which is usually considerably below market rates.
As a landlord, your ability to increase a protected tenant’s rent is also very limited. Until recently, this often meant landlords would only buy investment properties with vacant possession for obvious reasons.
However, houses for rent in Southend are increasingly sold by one landlord and bought by another if tenancy agreements began after 27 February 1997 because this was when assured short hold tenancies became the norm. The property comes complete with tenants, who remain in the property even though the owner changes.
This can be a relatively painless way of becoming a private landlord in Southend, as long as the tenant is paying the rent, you will be receiving income from the property from the start. Check very carefully early on in the discussions what rent the tenant is paying and ask for a full copy of their rent statement and tenancy agreement. When you view the property, you will be able to see how the tenants live their life. Ask them about the property, you may find they are very happy to fill you in on repairs that you might not otherwise notice.
The deposit regulations can trip up the unwary. Ask for a copy of the deposit certificate and check that the deposit was registered within 30 days of the tenancy beginning and the money is where it was supposed to be, and that the tenant received the proscribed information. If they did not, take careful legal advice from an expert before proceeding as you can find yourself unable to evict them should you need to.
Normally, if you purchase a property that is already being rented, you will take over the fixtures, furniture and fittings, which are usually included in the property’s asking price. This means you save some initial fitting out costs. Bear in mind, however, that if the tenant leaves you may still need to bring the property up to a better standard in order to find a new good tenant.
If the tenants are keen to remain in their home after the transfer of ownership, they are probably happy, which will give you, the landlord an easier life. And after all, that’s surely want all landlords are hoping for!
1 You should still make full enquiries about any existing tenants and take legal advice before going ahead with the purchase.
We are happy to offer half an hour of face-to-face advice to local landlords in difficult situations free of charge. Please telephone and ask to speak to Martin, Marcus or Crystal.