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Original poster

Buying property with tenants in situ -

22 replies

good96 · 30/05/2023 23:35

I’ve just recently completed on an investment purchase on a block of flats - all are tenanted and it seems that they are all long term with the newest tenant moving in back in early 2020.
Concerns I have at the moment, the previous landlord was useless and neglected maintenance issues (which I was not fully aware about- I knew refurbs would be required over time) but also, the landlord was charging these tenants way under the market price for rent. It’s a block of 10 flats - 2 bed flats being rented out for £500 a month and 1 beds for £425. The local market area - 2 beds are going for a minimum of £650 and 1 beds £500. Without rocking the boat too much and end up loosing all these tenants, has anyone had experience in dealing with this?
They are clearly reliable having been in there for so long and no issues were reported but I really need to increase the rent in order to make the purchase sustainable.

OP posts:
Beenhereforever1978 · 30/05/2023 23:38

This hasn't come up before completion? I'm confused as to your actual questions here, perhaps it would help if you listed them.

SwedishDeathClearance · 30/05/2023 23:38

You have 10 BTL flats
Not sure that mums net is the right place for advice
Lawyer and accountant would be better- what do they advise?

HeddaGarbled · 30/05/2023 23:39

You’ve bought a whole block of flats without doing proper research and want Mumsnet to give you free financial advice?

SwedishDeathClearance · 30/05/2023 23:40

You need to understand the benefits rental amount in your LA I would imagine.

LuluBlakey1 · 30/05/2023 23:41

good96 · 30/05/2023 23:35

I’ve just recently completed on an investment purchase on a block of flats - all are tenanted and it seems that they are all long term with the newest tenant moving in back in early 2020.
Concerns I have at the moment, the previous landlord was useless and neglected maintenance issues (which I was not fully aware about- I knew refurbs would be required over time) but also, the landlord was charging these tenants way under the market price for rent. It’s a block of 10 flats - 2 bed flats being rented out for £500 a month and 1 beds for £425. The local market area - 2 beds are going for a minimum of £650 and 1 beds £500. Without rocking the boat too much and end up loosing all these tenants, has anyone had experience in dealing with this?
They are clearly reliable having been in there for so long and no issues were reported but I really need to increase the rent in order to make the purchase sustainable.

Do you mean you need to put up the rents in your shabby flats so the tenants effectively pay for the much needed repairs and refurbishments of their homes as well as your mortgage (or profits)?

Beenhereforever1978 · 30/05/2023 23:42

HeddaGarbled · 30/05/2023 23:39

You’ve bought a whole block of flats without doing proper research and want Mumsnet to give you free financial advice?

Yeah I'm struggling with this one too!

friskybivalves · 30/05/2023 23:46

I feel you may have misjudged the pace of the wicket here, in more ways than one.

justasking111 · 30/05/2023 23:48

Well you're going to need new tenancy agreements. Even if you put the rents up to market rates bringing in 2k pcm 24k per annum. You're going to have to up your game, boilers, carpets, redecorating, to bring them up to a good standard. Ditto fabric of building. Windows, paintwork, roof, guttering etc

SheilaFentiman · 30/05/2023 23:49

Hi there, are you looking for some frothy landlord hate for your local news site?

CBA, TBH

Tinkerbyebye · 30/05/2023 23:57

Why would you buy a bunch of flats without doing due diligence. Then saying you need to increase rents to cover what I assume is your borrowing, plus I would hope the investment needed in repairs

then you come here for advice!

google it, it will tell you what you need to do

imisscashmere · 30/05/2023 23:59

HeddaGarbled · 30/05/2023 23:39

You’ve bought a whole block of flats without doing proper research and want Mumsnet to give you free financial advice?

😂

LauraNicolaides · 31/05/2023 00:19

Where are the flats? If rents are significantly below the market rate then in many parts of the country, even if current tenants can't afford to pay, it won't be difficult to find others who will. The reason for rising rents is that there is a shortage of rental accommodation.

And in fact if you're planning on refurbing flat-by-flat it would help to have some tenants leaving so that the those flats can be brought up to standard between lets. It's just about impossible to do anything but minor patch-up jobs at any other time - you need empty flats.

Have you done your sums? Can you raise enough debt to finance the refurbs? And where does the revalued block and the higher rents leave your yield?

You will probably be better asking about all this stuff on landlordzone.com. (And surely you've got some experience already? I can't believe you've gone from zero straight into buying ten flats?)

Ponderingwindow · 31/05/2023 00:34

Are flats below market rates because of the state of maintenance? if so, you can’t realistically raise the rent in advance of making the repairs.

mondaytosunday · 31/05/2023 01:00

Are they below market rent even in the state they are in currently? If so, see what the lease says about increases and write saying they will go up by X amount on Y date.
Otherwise you renovate the flats before you up the rent. You need to specify if it's possible for the existing tenants to still live there while work is going on, the extent of that work, and what their compensation will be for the disruption. I renovated a flat for a tenant before they moved in. They asked to move in a month earlier than planned, but work was ongoing. The kitchen and bathroom were more or less ready, and I charged her half rent until the builders finished. But you have to check your insurance about this.
How long are the terms of the leases? Before renewals, you could tell them you can only renew if you can do up the flat. They will of course benefit from this but if their rent will subsequently increase they may not be able to afford it.
Unless there's a health hazard you can't force them out unless their term is coming to an end.
I hope you got a proper survey before you bought, but it does seem you have walked into this without doing your research.

Twiglets1 · 31/05/2023 05:39

LuluBlakey1 · 30/05/2023 23:41

Do you mean you need to put up the rents in your shabby flats so the tenants effectively pay for the much needed repairs and refurbishments of their homes as well as your mortgage (or profits)?

Show quote history

Exactly! Surely no LL is that naive to buy 10 shabby flats then think they can charge the tenants extra rent to renovate them.
They are clearly below market rent BECAUSE they are shabby.

SwedishDeathClearance · 31/05/2023 09:14

in many places there are 2 rent levels:
The rate funded by benefits (which for a 1 bed suggests is a single person rate)
The open market rent

The property type and location typically determines which a flat would fall into. So when you say they are below market rate do you mean they are below the amount that would be paid by benefits- as that sounds like it is the market rate for a block of 10 flats. If so you can put the rent up but you cant exceed the benefits amount in reality.

LuluBlakey1 · 31/05/2023 10:44

SwedishDeathClearance · 31/05/2023 09:14

in many places there are 2 rent levels:
The rate funded by benefits (which for a 1 bed suggests is a single person rate)
The open market rent

The property type and location typically determines which a flat would fall into. So when you say they are below market rate do you mean they are below the amount that would be paid by benefits- as that sounds like it is the market rate for a block of 10 flats. If so you can put the rent up but you cant exceed the benefits amount in reality.

This shows how disgusting landlords who own these properties are- what a way to earn a living! Moral cesspits.

LardyDee · 01/06/2023 17:43

LuluBlakey1 · 31/05/2023 10:44

This shows how disgusting landlords who own these properties are- what a way to earn a living! Moral cesspits.

Show quote history

You mean that some of them are willing to let to tenants on benefits at below the market rate?

OhcantthInkofaname · 01/06/2023 19:11

I suggest you think along the lines of the
tenants are paying the right amount for the condition of the units. If you want to increase the rents you're going to have to increase the standards of the units.

2bazookas · 01/06/2023 19:23

the previous landlord was useless and neglected maintenance issues (which I was not fully aware about

suggests you haven't ever been inside the flats you bought.

You'll probably find that the low rents reflect the very poor state of repair and maintenance. Mould, leaky plumbing, no safety checks, bad wiring....

rainingsnoring · 01/06/2023 19:34

HeddaGarbled · 30/05/2023 23:39

You’ve bought a whole block of flats without doing proper research and want Mumsnet to give you free financial advice?

Exactly.
You really didn't think through these issues prior to buying?

BMW6 · 01/06/2023 21:01

So you didn't view these flats before making an offer?
Didn't investigate what remedial works were needed to bring the flats up to standard?
Sounds like this is your first time in this field - is that so?

WTF are you playing at?

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