Is it unwise to place an offer on a tenanted property?

[whichwayfornow]

I wonder if anyone has been in this position and whether it is generally considered unwise.
We are in a bit of a difficult situation where we need to move out of our accommodation soon. There aren't many suitable properties for us to buy on the market at present but we have a few viewings lined up. A couple of the houses currently have tenants in situ. Both have apparently been given official notice. If we really like one of these properties, how should we proceed? Would it be reasonable to place an offer but not progress further until the tenants have actually moved out? Is it generally unwise? The agents have described the tenants as 'good tenants' but obviously they would need to find a home and there isn't much available at present.

See, it would never occur to me to do that. I'd consider it my own problem to sort out and would rent an Airbnb for the month or stay with a friend or something.

Well more fool you to be honest.

You have to remember tenants have rights, and wanting to keep to their rights doesn’t make them awkward or doing anything wrong. What this means, is that formal notice must be served via S21 and then tenants are perfectly entitled to be there right until the day the notice expires….currently 4 months because of Covid. And they might go then because their next property isn’t available yet or they haven’t found one and do t want to be homeless. Also, if they don’t go then, there are legal processes which have to be adhered to in order to lethally evict them and these can take a year.

Mortgage companies will not release funds with a tenant in place. Solicitors won’t exchange with one in place.

And the key point, is there is no way if knowing when the property will be vacant until it actually happens. Having a date the chain wants the properties all to complete won’t make it happen (the tenant has rights to formal notice and to the full period and then to legal process if they don’t go) and having served notice you cannot be sure when a tenant will go…..so you have no certainty about dates you might be able to exchange. For anyone with something to sell, this makes it practically impossible to proceed. For a FTB or cash buyer, you might not be keeping others waiting, but you yourself could be waiting for months or over a year. A mortgage offer might expire.

So in short, no don’t offer on a tenanted property.

LLs who try to market tenanted properties are being greedy and wanting to sell and keep earning rent. Informed LLs know that part of the process of being a LL and selling is you give notice well before you want to sell and wait however long it take for the property to be vacant before marketing it. If this takes months or over a year, it’s just tough luck.

@maofteens yes, but voids need to be part of your business plan if you rely on rent for income, to cover the mortgage etc. By marketing while still tenanted and especially in these times which give tenants more leeway due to COVID you are asking your buyers to take the risk of tenants staying out so that you keep your income up until the last minute.

Bad tenants who don’t pay is very bad, but a separate issue. Nothing to do with buyers.

Yes, LLs need to accept there will be a void period when selling the property. Factoring in that loss of revenue as part of the overall business plan, is part of sensible business planning.

Tenants pay a lot of rent. They aren’t being done a favour by being allowed to live in a property, so that the LL can have it back whenever they want. Their rent and tenancy agreements give them legal rights to notice being given, a notice period and legal processes if they don’t go at the point the notice expires. The LL knows this when they start letting property and if they aren’t willing to follow the law they shouldn’t be letting and can be in legal hot water.

People who get irrational about ‘awkward’ tenants who aren’t willing to simply get a phone call or text from the LL saying they are planning to sell, and start immeditly looking for somewhere else to live, fail to realise the perfectly reasonable rights of tenants. When they sign their contract with the LL, the LL is confirming the legal rights to receive proper notice (it can’t be usually given until at least 4 mi this into a contract…..doesn’t seem u reasonable as that’s only 16 weeks if living there) and to be in the property for the full notice period. During Covid this was 6 months.

Why should a LL or someone buying a hosue be annoyed that a tenant isn’t immediately exiting the property, if they have never been given formal notice or had the full notice period? That’s not awkward, but wanting the rights and short term security that Oahu g rent entitles people to.

And I agree with PP that when tenants haven’t vaccated by the time their notice period expires, it often is for perfectly good reasons….they could be homeless or for the purposes of council housing or benefits, be making themselves intentionally homeless…..so why would they do that? There are legal processes for evicting tenants, and the tenant is entitled to those processes to be followed.

Anyone not wanting to abide by the rules and regulations, which paying rent gives tenants right to and LLs to be bound by, shouldn’t get into the j dusty, in the same way anyone setting up any business should only do if prepared to follow the regulations that apply to that industry.

And I say this as a LL.

@WombatChocolate

You have to remember tenants have rights, and wanting to keep to their rights doesn’t make them awkward or doing anything wrong. What this means, is that formal notice must be served via S21 and then tenants are perfectly entitled to be there right until the day the notice expires….currently 4 months because of Covid. And they might go then because their next property isn’t available yet or they haven’t found one and do t want to be homeless. Also, if they don’t go then, there are legal processes which have to be adhered to in order to lethally evict them and these can take a year.

Mortgage companies will not release funds with a tenant in place. Solicitors won’t exchange with one in place.

And the key point, is there is no way if knowing when the property will be vacant until it actually happens. Having a date the chain wants the properties all to complete won’t make it happen (the tenant has rights to formal notice and to the full period and then to legal process if they don’t go) and having served notice you cannot be sure when a tenant will go…..so you have no certainty about dates you might be able to exchange. For anyone with something to sell, this makes it practically impossible to proceed. For a FTB or cash buyer, you might not be keeping others waiting, but you yourself could be waiting for months or over a year. A mortgage offer might expire.

So in short, no don’t offer on a tenanted property.

LLs who try to market tenanted properties are being greedy and wanting to sell and keep earning rent. Informed LLs know that part of the process of being a LL and selling is you give notice well before you want to sell and wait however long it take for the property to be vacant before marketing it. If this takes months or over a year, it’s just tough luck.

The last bit is very true but unfortunately also very rare. At least half the properties I've been interested in over the past few months have been tenanted.

On the flip side, owner occupiers are often super awkward as well. A friend of mine has been waiting to complete for months, given notice on her rented flat, all ready to go, and the vendors pulled out at the very last minute because they'd changed their minds. Just decided they didn't want to leave London after all. Absolutely nothing she can do about it, she's thousands of pounds down and really stuck now.

@lawofdistraction

it would never occur to me to do that

It would genuinely never occur to you that you can stay in your home until you've found somewhere else to live?!
I suppose just casually moving into an Airbnb or with a friend might be an option if you're coming from a furnished property with few possessions and don't have any children. Back in the real world...

It isn't my home though, is it? That's kind of the point. When I rent somewhere, I agree to a number of terms and conditions, and one of those is to vacate when given X amount of notice.

Obviously it's completely different if the tenant is vulnerable and has nowhere to go, or needs to be evicted in order to get social housing, but if I were in a position to buy my own property, I certainly wouldn't expect to stay past the notice period and inconvenience the buyers (who could themselves well end up in a terrible position if I didn't go) just because my timings hadn't worked out. I would consider it my own problem to deal with.

Obviously yes, I am an absolute mug to think about other people.

Oh and BTW @lawofdistraction I said it would never occur to me to do it, not that I can't understand why anyone would do it.

Sorry, when you rent a property it isn't your home?! What the hell is it then?!

I think that the issue about people not always moving out by the end of their notice period is complex and simply thinking people who do this are selfish, fail to recognise the complexity and are a little black and white in their thinking.

As a PP said, we are often not talking about single people with lots of financial security behind them who are footloose and able to move their limited possessions out quickly or doss at a friends for a few weeks, or to last minute rent an expensive AirBnB or alternative.

Often we are talking about families. They have often established themselves in an area with schools and the property works for their workplace. People often don’t have large amounts of surplus mo ey to splash at short term solutions.Lots of areas have a limited supply of family accommodation and if rents have risen, people can really struggle to find a property that is affordable, will take children, is practical for school etc. It usually isnt for want of trying.

So what is that person to do? They have children and are in a property where notice has been served and is running out? They are trying to find a new property but haven’t managed to. Many won’t have somewhere they can take a whole family and all their furniture and belongings for a few days…and what happens after that few days? So what is the alternative? It’s simply to stay until the issue is sorted out..land it could be sorted in another week or couple of weeks or a month or whatever. Isn’t it too simplistic to just say ‘well that tenant was wrong and they should have been out of the owners property and it’s totally unacceptable that they weren’t’ ….but if they have genuinely tried really hard and haven’t found somewhere, what alternative is there?

We aren’t talking g about non-rent payers here. We are talking about people who continue to pay rent right until they go. Yes, the LL won’t be able to exchange on selling the house (really shouldn’t be trying to sell with a tenant in situ) and they won’t be able to let to anyone else (contracts with a new tenant shouldn’t be agreed and formalised until vacant possession for exactly this reason)

I suspect many of those quick to say ‘it is the LLs house’ know little if the legal rights if tenants, and those who say ‘it is never right to stay after a notice period has expired’ and view it as a criminal offence, have never rented property with small children in an area with limited family rentals.

Again, being a LL is complex and there are lots of things to consider if thinking about being one. Coping with notice periods, tenants who don’t vacate when given notice, dealing with void periods when trying to sell or at other times, being prepared for the significant outlay (much more than in a domestic property that is owner occupied) on decoration and replacement of items, being able to make money and also to deal with the above issues and take them in your stride rather than being stressed by them…..makes you realise it’s not easy money and it’s not something that suits many people. Too many LLs really shouldn’t be LLs.

@lawofdistraction

Sorry, when you rent a property it isn't your home?! What the hell is it then?!

It's your home for the agreed period, which you signed up to, with a legal contract. After that, it isn't. Not sure what else to say.

@WombatChocolate I do understand all that. I just said it wouldn't occur to me to stay if there was any other option not to. And I'm someone with far less family support etc. than most people take for granted. Perhaps I am too much of a rule follower but I have always gone when I've been given notice, including when I was living in poverty. I'm sure that does make me a mug. I just personally would hate the thought of someone's sale (who may be in a situation with kids starting a new school etc. or nowhere else to go) falling through because of me. I would also hate the stress of it.

It isn't my home though, is it? That's kind of the point. When I rent somewhere, I agree to a number of terms and conditions, and one of those is to vacate when given X amount of notice.

Yes it is your home. That's what a tenancy agreement means.

Rozzie, I expect the tenants who have outstayed their notice because they haven’t found somewhere to move their family to, are also totally stressed out and hating the situation too. Most would feel incredibly under pressure and awkward in this situation, but if children are involved, sometimes people choose to bear that stress and pressure to maintain a bit of stability for the kids. It doesn’t mean they haven’t thought about or considered the LL or people waiting to move in etc etc, simply that they might have zero places to actually go.

Moving/not moving isn’t about being a mug.

And tbh, if the LL has arranged a sale whilst the property is tenanted, or has signed other new tenants when the property is still tenanted, it is the LL who is at fault for not waiting for vacant possession, and I have little sympathy for them if they then find the tenant hasn’t gone on or before notice runs out. And again, I say it as a LL.

It isn't my home though, is it? That's kind of the point. When I rent somewhere, I agree to a number of terms and conditions, and one of those is to vacate when given X amount of notice.
No, the tenancy is only ended by the Courts issuing a Possession Order, even then the tenant is within their rights to stay and await a bailiff's warrant. It is the owner's house but the tenant's home. I was a homeless officer for donkey's years and that is the legal position. Furthermore, if the tenant is relying on assistance from a local authority they would be very unwise to leave the tenancy and go to friends or an Airbnb as doing so could render them intentionally homeless having left secure accommodation without making suitable long term, secure arrangements.

@CloseYourEyesAndSee

It isn't my home though, is it? That's kind of the point. When I rent somewhere, I agree to a number of terms and conditions, and one of those is to vacate when given X amount of notice.

Yes it is your home. That's what a tenancy agreement means.

So you think having a tenancy agreement means you can stay somewhere as long as you want? Interesting.

@WombatChocolate

Rozzie, I expect the tenants who have outstayed their notice because they haven’t found somewhere to move their family to, are also totally stressed out and hating the situation too. Most would feel incredibly under pressure and awkward in this situation, but if children are involved, sometimes people choose to bear that stress and pressure to maintain a bit of stability for the kids. It doesn’t mean they haven’t thought about or considered the LL or people waiting to move in etc etc, simply that they might have zero places to actually go.

Moving/not moving isn’t about being a mug.

And tbh, if the LL has arranged a sale whilst the property is tenanted, or has signed other new tenants when the property is still tenanted, it is the LL who is at fault for not waiting for vacant possession, and I have little sympathy for them if they then find the tenant hasn’t gone on or before notice runs out. And again, I say it as a LL.

Why do you keep talking about other people? I literally said what I would do. I'm not talking about people in precarious situations with nowhere else to go. I have a friend who felt fine about staying in her rented property until her own flat completed, whereas I would have felt very guilty doing so. She had the means to go elsewhere such as an Airbnb or someone's couch, she just didn't want to because it was lots of hassle, and felt entitled to stay even though the buyers had nowhere to live. I would have felt too guilty to do it but again, perhaps I'm a mug for not putting myself first more.

I do agree with you that landlords should only market the flat after tenants have vacated. This would solve this entire situation in which tenants and buyers are both victims.

Rozzie, I understand you’re saying what you would do.

One thing, is that existing tenants have no relationship or responsibility towards new tenants/buyers of the property. It is only the LL/owner that has this relationship/responsibility.

So, if a LL markers and accepts an offer in a property it is nothing to do with the tenants. If the sale is delayed and the potential buyers inconvenienced to the point they lose their own buyers, because the tenant remains there behind when everyone wants to exchange ( perhaps because notice hasn’t been issued, or perhaps the notice period isn’t up or perhaps the tenant has nowhere to go and simply chooses not to vacate but to wait for legal eviction proceedings) then this is ALL due to the LL. Any inconvenience caused to the buyers is due to the LL marketing the property before it was vacant. Therefore, the tenant would have no need to feel guilty or bad about the buyer….the buyer has nothing to do with them….the only person the tenant has any responsibility or relationship with is the LL. A Ll might pressure a tenant to move on and try to make them feel guilty with reference to the buyer etc, and sometimes the buyer themselves might wrongly make co tact with the tenant and the tenant might feel under pressure….but this is entirely wrong and falsely applied, as the tenant has zero responsibility and needs to have no concern about a house sale or buyers. The same goes for if a LL has foolishly signed a contract for a new tenancy before the property is vacant.

LLs do sometimes do this and then it transpires that the notice they issued their existing tenant is null and void, or the notice period still has time to run, or the tenant doesn’t vacate. Yes, a new tenant is waiting to move in and they might be homeless….who is responsible? It’s the LL for signing before vacant possession was gained. And why? It’s down to greed if not wanting void periods with no rent. But void periods of some length are unavoidable and just have to be accepted. Where the LL is greedy and behaves so people are waiting to take possession, it is down to them and not the tenant.

Just mentioning facts and not making any criticism of what you’ve said Rozzie.

So you think having a tenancy agreement means you can stay somewhere as long as you want? Interesting.

No, obviously not. Having a tenancy agreement means you can stay as long as it's legally permitted for you to stay.

Thanks so much for all the responses. Really helpful.

I can totally see this from the tenant's perspective and agree with @WombatChocolate and others that the LL should ensure that the property is vacant before marketing it. Absolutely some LL are greedy, others may be ill informed neither of which bode well. We saw one property where notice hadn't been given and were informed by the EA that they wouldn't serve notice until they had received an offer plus they tried to lie that 2 months notice is currently correct. Totally put me off the property and agent.

At present there are so few properties which are suitable for us so it makes it more difficult. Hopefully lots more will be marketed in September.

Are you definitely not going for this one now OP? I have the same issue with few suitable properties, which is why I am considering pushing ahead with the tenanted one.

Rozzie, there are lots of threads on MN where people have done this. They seemingly hadn’t read threads like this one before doing so.

Often they start by blaming the tenant for not moving out, although often it emerges that actually notice hasn’t even formally been given, let alone the 6 or 4 months expired.

And then gradually they realise the seller is the problem in marketing a property which isn’t vacant and has no certain vacant and therefore exchange date. And usually they finally walk away.

Your solicitor will advise you against proceeding or offering until vacant. Your mortgage company will want to know it is vacant.

Honestly, unless you’re a cash buyer looking to do a BTL then don’t do it.

Yeah, these are all reasons I hadn't proceeded before. The agent kept reassuring me that the tenant has been paid to go, is happy to go, etc. but we all know they will say anything.

I started to feel that I was being too fussy in declined any tenanted properties...when I was looking in Brighton I'd say easily 90% were tenanted. For some reason most of the ones coming on in London in areas I'm interested in are also tenanted atm. I do also really wish they just weren't allowed to market them until vacant.

If it's worth anything, the tenants' stuff appeared to be mostly packed up ready to go when I viewed so it does look like he's planning to go. I'm also not in any hurry to move, really. Would you still recommending forgetting it and looking elsewhere?

My gut feeling is that I should say I'm not proceeding at all until he's actually gone but that will mean they'll definitely look for another buyer, right?

Really you shouldn't offer until it's vacant. Yes, could mean someone else buys it.

If everything really is packed up and ready to go, I'd still be wary - could have been like that for months with them still legal tenants but not living there.

The things you can do to minimise rather than remove the dangers are to ask for evidence that formal notice (S21) was issued and evidence if the date. Ask The EA to verify in writing that they have seen documentation to confirm the date and amount of notice given. This will tell you when the tenant's notice runs out. Most tenants will go by this point and you can see how far ahead it is. As seen above in this thread, you can never guarantee they will go, which is why it's best to wait for vacant posession. Tenants can remain until legally removed by the eviction process which can take well over a year from the end of the notice period expiring. Their contract gives them the legal right to this.

Too many people get into offering. The owner has told the EA that the tenants wwill be gone in a couple of weeks and well before exchange. When pressed further down the line after offer, it often transpires formal notice hasn't even been issued, so the 4 month notice period has not even begun. By the time the buyer realises this, they have spent money on surveys and searches. Few EAs will be able to reassure you and will have seen (or push to see) documentary evidence of S21 being issued.

Usually these LLs hope to sell to another LL who is a cash buyer. The buyer takes the tenant on in situ as their own tenant, and all the stuff about issuing notice etc isn't so relevant when mortgages are not needed and someone doesn't want to move in. Still requires legal work to ensure it all works smoothly and rights of tenant are protected and buyer isn't buying something with a sitting tenant with a tenancy that can never be ended.

It could be the LL sellers hope to attract such buyers. If they can't, they will then often hope to get another buyer. Some will have given formal notice and others won't. None can say for sure when the tenant will go. That's the problem.

Personally, I wouldn't - they have rights as tenants that exist beyond the terms of the contract with the landlord. If the tenant loses job etc and approaches local council for rehoming as unable to find anywhere then the council will tell them to stay put and wait to be evicted which can tak a while through the Courts. The tenant may not continue to pay rent in those circumstances. Also, there are often situation where the tenant just can't find somewhere suitable (kids schools etc).

If the tenant moves out before evicted they aren't able to ask Council for help etc. It's risky I'd say, most will have been lucky and it worked out fine but I'm too aware of the potential problems that I wouldn't offer with a sitting tenant. Personally, I see it as greedy anyhow - should put up for sale with vacant possesion - just because you can, doesn't mean you should (landlord selling whilst tenancy ongoing).

thanks for the advice.

The agent is making me feel as if I'm kicking up a fuss and being demanding, and I feel that maybe people in my life are not giving me very good advice. One of my friends said 'well why don't you cross that bridge when you come to it' re tenant not leaving but he's not the one spending his very hard-earned cash on solicitor fees and surveys! And also just wasting time and energy that I could put into looking at other properties.

I'm in a bind because I do love the flat and location and I think it's a good investment but I do also have a lot of anxiety about the tenant. It's a single man, no kids living there etc. but I very much get the feeling he's not happy about going. The landlord might well have paid him off or whatever but that doesn't mean he has to go, does it? He can't waive his rights?