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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

Would we be unreasonable to buy a property that already has tenants?

100 replies

notamum3210 · 28/09/2015 13:49

Posting here for traffic and perspectives, advice etc. Fiance and are are both really quite clueless

We are in the fortunate position of being cash buyers budget around £140,000. We'd like to move in together next summer and are both in rentals at the moment until then. Fiance has thought that it might be a good idea to look at purchase somewhere now(ish) that currently has tenants.

This, he argues, would guarantee some income which we could put towards refurbishment, furniture etc. Then, when tenants move out, we could move in. I love the sound of the extra cash but I'm sceptical over whether its really that straightforward.
I'm not sure whether this would make us liable for landlord insurance, letting agent fees or general management of the property.
Does anybody have any experience?

OP posts:

mandy214 · 28/09/2015 13:56

Firstly it will probably be more expensive become it comes with an income.

Secondly as soon as you buy it, you become liable for all those things you list. And tax on the rental income. Your mortgage might be at a higher rate as it will be a buy to let, at least temporarily. Also if the tenants move out at a time which doesn't coincide with when you can move out of your rentals, you might be liable for rent and mortgage payments at the same time. There are various legal requirements as landlords which you must meet.

It can still work but its not a quick money spinner - you need to do your homework.

Original poster

notamum3210 · 28/09/2015 13:57

Thank you for replying - I agree, we do need to our homework. Is there a site or book you can recommend?

We won't have a mortgage- as I said in the OP, we're cashbuyers.

OP posts:

WorktoLive · 28/09/2015 13:58

So you're planning on buying someone's home and then kicking them out?

Why not put your money in savings/high interest current accounts to earn money without hassle and buy a property next year when you are ready for it?

Original poster

notamum3210 · 28/09/2015 14:01

Hi WorktoLive - of course we don't want to kick somebody out of their home! The properties we have our eye on are all shorthold tenancies with fixed tenancy end dates. We (or rather my fiance as I'm more sceptical) want to wait until their tenancies come to an end and then move in.

I'm afraid buying a property any later than next summer is not an option...too complicated/unnecessary to explain why on here.

OP posts:

sharonthewaspandthewineywall · 28/09/2015 14:01

Thats not what the OP said at all work.
She distinctly says when they move out

Thelushinthepub · 28/09/2015 14:06

It's a good idea. I've been a landlord and the main issue is really the risk. What if they smash the house to smithereens. What if they break the boiler. What if you have a long protected legal battle to get them out. If they don't pay the rent you'll be ok as no mortgage. But you didn't choose the tenants so you haven't vetted them.

Aside from that, it's a good idea. You need to declare the income in your self assessment and get landlords insurance.

Lelania · 28/09/2015 14:11

As a renter I'd be gutted if my tenancy wasn't renewed so waiting til this runs out to move in could still be forcing someone to leave their home when they don't want to. If you're ok with that then do your homework and see if you're prepared to take the associated risks if possibly disgruntled tenants living in your home. They might not be so inclined to take care of it of they are being forced to leave. Especially it they've been there a while

WorktoLive · 28/09/2015 14:14

Aren't most/all private tenancies shorthold and have to be periodically renewed with ££££s in fees charged?

Just because the tenancy is a short term one doesn't necessarily mean that the tenants want to move out, just like Lelania says.

I still think you should just buy a house when you need it and save the money in the meantime.

Thelushinthepub · 28/09/2015 14:17

But OP could Make some money in the meantime by buying a tenanted house so it would be more sensible than just waiting?

redstrawberry10 · 28/09/2015 14:17

Why not put your money in savings/high interest current accounts to earn money without hassle and buy a property next year when you are ready for it?

can you point out where these are available?

Viviennemary · 28/09/2015 14:18

I think it would be more straightforward to buy somewhere and then let it out on a short-term let than to buy a place that already has tenants. Then you can make it clear to the people that it's a short term arrangement.

Thelushinthepub · 28/09/2015 14:20

Oh come on you're not going to earn anything on £120k in savings accounts. She could be earning say £400 a month rental money!

Lightbulbon · 28/09/2015 14:21

Everyone's on short tenancies! It doesn't mean the tenants want to leave. Kicking people out at your convenience is so selfish. Don't you realise how much hassle and cost this will be to the tenants?

Original poster

notamum3210 · 28/09/2015 14:23

I understand what's being said here. Does it make a difference that its a very studenty area? It's very likely that the tenants are students who would be moving out anyway.

I need to make it clear that my fiance and I are not heartless, selfish people who would make people homeless to make some money - it's just an idea that we discussed and I thought I would come here for some advice.

OP posts:

leghoul · 28/09/2015 14:28

it's not more expensive at all - it will have 'sitting tenants' and thus be (or should be) sold at a reduced price to normal (most people dont want to buy a property with tenants, who may be hard to evict!)

Sleepybeanbump · 28/09/2015 14:28

In the nicest possible way, I think given how little you know about what is involved in buying a tenanted property (will it make you liable for upkeep? You even need to ask?!) I think it could be disastrous for all involved if you took on the responsibility.

Also, nearly all tenancies are assured short hold. Just cos there's an end date doesn't mean the tenants want to move out. They're probably hoping to renew. Sometimes tenants who don't want to leave just don't, and it could cost you thousands of pounds and months of stress going to court. Especially if they have nowhere else to go- councils advise tenants not to leave even when asked to by landlord as it makes then inelegible for council housing.

summerainbow · 28/09/2015 14:30

If you going to buy student flat that sounds like a good idea but you will then have to remember you will then be living with student s. It's not fun being woken up at 4 o'clock in morning . By shouting people .every night . Or grown men playing football against your wallsin summer evenings . Then you have the parties.

MascaraAndConverse · 28/09/2015 14:32

What if they want to renew their tenancy?

leghoul · 28/09/2015 14:32

it will make you liable for all sorts of things. Landlord and tenant insurance/liabilities, you'll have to put deposit in a govt approved scheme - your home insurance will be up the creek - all sorts of stuff . I'm afraid unless you want to be a landlord, at least for a while, don't do this. You can't force people to move out, but you can renew their ASTA for a set period e.g. a year, and after that year you have to give them 2 months notice to leave. Don't stuff it up though as you get end up with them on a licence and having to go to court and no income at all,etc, worse case scenario..

heliotropia · 28/09/2015 14:34

Last year I was living in a rented property and the landlord wanted to sell it. He told us about 4 months before our contract was due to end, so we had time to look elsewhere. If you handle it sensitively and give the tenants enough time to make arrangements and find somewhere to move to then I don't think this should be a problem at all. It might be good to be prepared to be a bit flexible with their moving-out date though - just in case they need a bit more time to find elsewhere.

IsabellaofFrance · 28/09/2015 14:39

I agree with the PP who said that you sound clueless, and its this naivety which means you should stay well away from rental properties.

I am a landlord, we have a handful of properties and are looking to get more in the future, but its a full time job. Do you have the time for this?

LeftMyRidingCropInTheMortuary · 28/09/2015 14:44

Well next summer is only 6 months away. Not much time to find a place, buy it, get it ready for someone, get them in and then out again and then get it ready for yourselves.

Once you deduct costs, you're not making that much, I reckon, to make the TIME and HASSLE and PAPERWORK worth it. Not to mention the risk that it all goes tits up - they wreck the place or refuse to leave.

As mentioned already:

Legal costs to draw up tenancy agreement
Letting agents fees
Extra insurance
Repairs
Doing the tax
registering as a Landlord (in Scotland anyway)

Even the best tenants will make wear & tear / mess. Experience talking here.

Wouldn't you rather pick a place you want to live in rather than confine yourself to an already let property?

You say you wouldn't chuck someone out and would want someone who was aware it was a short term thing - but what if their circumstances change? Are you prepared, ultimately, for a court battle?

Just look for a place, buy a place and move in. Like normal people! And I don't like to say it, but don't be so greedy! Just appreciate you're lucky already and don't push it!

WorktoLive · 28/09/2015 14:44

Lots of information on savings/current accounts here. Where is your money now?

You will need several accounts, but should be able to get a minimum of £2/300 per month in interest, but if that sounds like too much hassle, it's still nothing compared with being a landlord.

SilverDragonfly1 · 28/09/2015 14:44

Would it be likely to come as a shock to the tenants to not have their tenancy renewed? The landlord would already have told them he was selling and, if scrupulous, issued official notice of when they need to leave. So they would already be aware they needed to start looking for a new place.

All the other things mentioned are very relevant though.

ChattingAway · 28/09/2015 14:45

If a landlord is selling the property, regardless of whether this OP buys it or not, the tenants are probably going to have to leave the property. It may be their home, but it's not their house. At least this way they have more time in the house before they have to move.

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