Buying a tenanted property

[BarchesterFlowers]

If you were buying a tenanted property when would you expect the landlord to serve notice on the tenants? Acceptance of offer? Post survey by buyer? Any other time?

Soon enough to make sure the tenants have left before exchange.

Your solicitor won't allow exchange unless the property is empty, the tenants don't have to leave just because notice has been served, therefore it could be a long wait if the LL puts off serving notice until the last moment.

When you exchange contracts you are agreeing to vacant possession at completion, which is their responsibility to ensure.
If they don't you can claim any costs you incur as a result. You may be able to negotiate a fixed rate of damages per day but it needs to be up front and I guess it could be subsequently challenged. But you'd need a solicitor.
I'd recommend negotiating a retention until you have checked the property, as if you pay them everything you'll be in a weak position for claiming costs.

Thanks, I know that it needs to be vacant before exchange and the potential for damage etc., etc..

Would you expect a seller to serve notice after acceptance of offer, once proof of funds has been provided or at some later point (therefore delaying exchange).

If later on why?

The place really shouldn't be marketed until empty for the reasons above, unless selling to another landlord.

Your seller wants it both ways, rent to the moment of completion. It doesn't work like that. If notice hasn't even been served...walk away.

It can be up to a year to get tenants out.

Places are often marketed with tenants though Special, fact of life.

I have spoken to two solicitors this morning, neither of whom have ever known a tenant not leave on time. So how common is the actual problem?

I expected notice to be given ‘on the next rent day after proof of funds’ as agreed, however the vendor has apparently had a change of heart!

In the meantime, I am not prepared to proceed/start spending and cash on full surveys and searches without it so the search continues it seems.

There is very little on the market near me, 50% of what is on the market is tenanted following the amendment to BTL rules.

The seller is an idiot - they have a temporary cash flow issue in covering the mortgage and expenses until they get their monies on completion. Much better to market the place when empty or if the tenants have given notice themselves.

if the tenants want council accommodation they will be forced to stay until the bailiffs. It happens a lot. Also if the landlord cocks up the notice the tenants can get it thrown out. They will have to leave in the end but it could be a long time. Fact of life.

find somewhere where the tenants gave notice, not the landlord. Or with a competent landlord, not the idiot here who clearly hasn't even given the notice. What else has this person screwed up?

Wow, I think they are just greedy rather than having a cash flow problem. The only other property I am interested in also has tenants who are in the process of buying their own property so I would be in the same position there.

The rental market is shrinking massively where I live. Bad for tenants.

Special, what is your experience of these things you write about? Numbers, how often etc. The people I know who actually deal with these things don't talk the same story as you at all.

And I certainly wouldn't choose a house on the basis of who gave notice!

The tenants not moving out thing happened to me when I bought my current house - all set to exchange on the Monday & had a call on the Friday to say they were refusing to go anywhere (they had had more than the 2 months notice). Luckily for me they did move on after a few weeks and I still had a few weeks rent left in my previous flat, otherwise I really don't know what I would have done as it would have taken months to get them out.

I wouldn't never buy a tenanted place again, but I'd want to be very sure of where the tenants were going and have a backup plan in case they didn't!

A speedy four months here from notice expiry to bailiff. Trashed property and no rent of course.

London is up to a year due to backlog. Landlords don't get to choose to escalate to the high court. Stats on time to eviction easily available from landlord sites and others, CBA to find it.

Also with so little council housing there is every incentive to keep it slow.

Exchange and the eviction becomes your problem on completion. Along with all the responsibilities of being a landlord and the penalties for getting anything wrong.

Up to you what you want to believe and your attitude to risk . Clearing filth after providing months of free housing does tend to make one less tolerant. If there are few rentals where you live your tenants have more incentive to ignore section 21, which is of course perfectly legal.

Given that I won’t be exchanging without vacant possession most of those risks do not apply to me though, and I am not having to sell to buy.

Not that I am prepared to proceed without my solicitor being in receipt of the notice in the correct form.

Do you have direct experience of this just the once then Special?

I am already a landlord on another (inherited) property, this house is a downsizing house for us but we are selling our family home after completion on the downsized version.

I didn't exchange until I had vacant possession either - the seller was the one starting proceedings against their tenants so I would imagine the same would happen if you were to end up in that situation. (and my solicitor had copies of the notice served - literally no warning until exchange was supposed to happen that anything was wrong). They did leave the house full of random crap and filthy though, which my amazing estate agent sorted before I moved in!

In all likelihood it would be fine, this doesn't happen to most people. The risk if it does happen is the delay in however long it takes to get to court, serve notices etc before the sale can go through - so if you're in a position where you're able to deal with that it's less of a potential problem!

Why keep grilling special when you've already made up your mind to completely dismiss all that she's written, anyhow? It's a risk (and in an area where there's little rental property available, probably a larger one because the tenant will need to be evicted by bailiffs before the council will house them). If you're willing to take it, then go for it, but you know it's there.

Can’t see why someone should not market with tenants in place. We met some lovely tenants whilst looking for a BTL investment property, and we eventually bought with tenants in place. However if you need vacant possession in place you should insist that this happens before exchange,. There is a real risk that otherwise nice people will be forced to hang on until formal eviction, in order to secure a council property. This needs to be the vendors risk.

Yes, fortunately only one filthy kicking so far. Most tenants are normal people.

Glad you now recognise the risk and won't be taking it. Hopefully by telling the seller to let you know when the tenants have gone.

Thanks expatinscotland

Not sure what the is for, I am interested in direct experiences not hearsay, hence the questions.

Neither my solicitor or bank would allow exchange without vacant possession. My question stemmed from it being implied that I ought to be happy to spend getting on for £2k non surveys, searches and fees without notice being served, yet.

I am not, never was.

Yes they may be greedy or they may not be able to fund the mortgage from short term cash - none of us know, but if they really want to sell then they need to bite the bullet and get the tenants out. I would expect them to serve notice on the tenant once you have instructed your survey as they haven't do so before. That's normally when a non-tenanted property would cease to be actively marketed by an EA. It demonstrates commitment on your part and gives the seller some peace of mind. But if I were a landlord desperate to sell, I'd at the very least serve notice before marketing the place because no tenant has to allow viewings, whatever the tenancy agreement states: their common law rights override it.

We once bought a house that was tenanted, but the tenants were related to the seller so it was less risky and we accepted them moving out the day before completion. The place was a filthy tip, but they had moved out. I've sold a house I had rented out, but the tenant gave notice not me. Ended up with about a fortnight between the tenant moving out and the sale completing. Minimal disruption to the tenant as the buyer looked round at the same time the EA's photographer was there.

Commonsense tells us that incidences of tenants staying put until the bailiffs arrive will increase if the private rental market is shrinking due to BTL tax changes precisely because social housing isn't available to tenants who are deemed to have made themselves homeless. Benefits changes mean that increasing numbers of private landlords are refusing tenants on benefits in some areas. I don't have the exact figures, but my source is an excellent one. You only have to watch any of the Channel 5 documentaries on tenants, landlords and bailiffs to get the stats.

Just read my post back - my source on private LLs refusing tenants on benefits is not Channel 5 documentaries, for the avoidance of doubt.