Buying a house with existing tenants in situ

[Mrsbennington]

Hi, grateful for advice on this one please.

I want to buy a house as a rental - funds etc in place so no probs there.

One of the properties I am looking at already has a tenant and whilst this really wouldn't bother me (unless they were the nightmare tenant from hell!) as I am looking to rent it out anyway I do wonder about any possible legal problems or things to look out for. I suppose it's mostly in regard to when their existing rental contracts end and I assume they would need to sign new agreements with me as their landlord prior to me gaining title?

I assume they will give access to a surveyor given the necessary notice in their existing rental contracts. Do I need a solicitor experienced in this area if I pursue this?

Many thanks.

[Luc28]

Hi Mrs Bennington

It's quite a standard think now to buy property with tenant in place so most solicitors should be fine with this. There's a few things you need to check first before you proceed with any tenanted purchase;
-check the agreement in place with the tenant who's living there and what term
-ask if they were referenced fully before moving in
-is a bond held if so where is it held and it it insured/protected?
-Does the current landlord have an inventory (statement of condition) for when the tenant moved in
-have periodic inspections been carried out

• record of rental payments ... Do they pay on time
  

-pets?
-is there a letting agent managing the property .. You may/may not want their services to continue ... Current landlord needs to notify them if property is to be sold.

The tenants would have to give access for viewings and surveys. If for any reason they won't give access the current landlord can gain access with their own key if they have served 24hours written notice for access directly to the tenant. Usually tenants are happy to show you round just make sure they know that your buying it to keep them in place and its in their best interest to give access. Remember it can be a scary time for a tenant if the property they rent is put up for sale.

Best of luck with your purchase ... If you have any questions I'm more than happy to help

X

[Redhound]

I would want to know why the existing landlord was selling if they were good tenants! Main thing would be to check it is an assured shorthold tenancy not one of the older types of contract where they might have lifetime tenancies on a low rent. Unless the property price reflected this. I would seek legal advice on the rest I would think any property lawyer would know about this. The modern contracts have something in them about the tenants allowing reasonable access but def get this particular contract carefully checked legally.

[Luc28]

Forgot to mention you may not need a new AST if durning a fixed term a section 48 notice can be served notifying tenant if change in landlord details ..... Just double check with your solicitor as they may insist on a new AST

[Mrsbennington]

Thank you so much Luc very helpful lnfo thank you. From the photos the property looks good and well maintained but I haven't had a physical viewing yet. I am intending for it to be managed by an agent and not looking for a monthly return - I would have over 40% equity from the start or more so only needs to run itself). I am more hoping for the long term property growth gain. I think the legalities of any contract they have at present with their ll scares me more than anything else.
Thank you too Redhound think I need to do a little rearearch

[Collaborate]

Also make sure that there are up to date safety certificates.

[caroldecker]

there is no requirement for the tenants to allow viewing and surveyor access and the landlord cannot let themselves in. A landlord can only access a property to repair and inspect state of property - all other access is illegal without the permission of the tenant.
If you want them to remain as good tenants then you need to be sure they are on your side.

[specialsubject]

beat me to it on that. Access to a rental property is ONLY with tenant permission at reasonable notice, unless it is an emergency. Doesn't matter what the contract says, doesn't matter if you have trades booked. (Been there, although it worked out in the end).

'let yourself in' - absolutely not!!!

I'd start with a letter to the tenants, giving your contact details, explaining the plan and asking if it is possible to arrange access.

if they have a fixed-term tenancy, you take over as the landlord and NOTHING changes until it expires. There is something to do with deposit transfer, not sure what.

[Mrsbennington]

Thank you all again - never realised they didn't have to provide access for viewings! If I went any further I definitely wouldn't want to get on the wrong side of tenants - I am looking for an investment and hope that if I am decent then maybe they would be too (naïve?) but I do intend to use an Agent and not rely on my own (lack of) knowledge! - this would be a one off fist time venture for me and I would hope to be a decent landlord providing a decent property someone would like to call home (and hence stay!) like I say my interest is more in the property gaining value than any monthly income as I would need to borrow next to nothing to buy this as have had a recent inheritance.

[SmallGreenBouncyBall]

it seems you need a lot more reading on tennant/landlord rights and obligations.
btl can be a good investment but a lot can go wrong as well.
so do your research, get the right insurances in place.
good luck!

[caroldecker]

Also many (most?) agents run roughshod over tenants rights, relying on the fact they probably need a reference. You, as the landlord, need to know your rights and obligations.

[caroldecker]

Also, property only makes a good investment if you have a large mortgage - if you are an inexperienced cash buyer looking for an investment, then shares are the right way to go.

[specialsubject]

sweeping statement there!!

With recent changes I would say that BTL now makes almost no sense with a mortgage of any kind.

[caroldecker]

Depending on the time period, shares outperform/are the same as property. They are also much less hassle, offer much greater diversification and therefore lower risk - for the same amount of money shares are a much better investment.

The joy of property is leverage with a mortgage to increase your return significantly above the increase in house prices.

[specialsubject]

still not sure - if I'd bought a house in London 10 years ago, I guarantee it would have greatly outperformed shares bought at the same time. Or even 20 years ago.

yes, shares a more liquid asset.

[caroldecker]

10 years ys, 20 years about even, 30 years shares. What about a non-London property?

[whataboutbob]

Cjeck the type of tenancy especially if they are elderly. If they ,moved in in the 80s or earlier it will be rent controlled and they will be nigh on impossible to get out. If it's an AST you should be OK ie able to increase rent/ gain possession if you want