Buying a house with tenants in-situ?

[Wondersense]

Does anyone have any experience of this? I'm a first time buyer and thinking of putting in an offer for a house that currently is occupied by tenants, who are friends of the landlord. The tenants have already been given notice, which is 6 months, but I think that was only recent so they still have at least 5 months to go.

Does anyone have any experience with this? How different is it to being in a chain? There are websites online that cover something like this, but all the ones I've found so far are aimed at landlords who are buying a house with tenants already in them, not an average buyer who will want to live in that house themselves.

I'm concerned because if they don't find somewhere to live within 6 months and refuse to move for some reason, that will leave me without a house. The busiest time of year in terms of listings is coming up, and I don't want to miss out as I've been looking for a house for a while now. Normally, I wouldn't consider it, but it's a cozy home in a decent street, in the town I want where the volume of homes that come on the market is very low.

You won’t be able to get a mortgage while the tenants are still there as the property would need to be sold with vacant possession.

So the vendor shouldn’t have put the property on the market yet unless they are expecting to sell to cash buyer who doesn’t need a mortgage and may be intending to let out the house to tenants themselves.

6 months' notice? Is that a proper s21?

Honestly? This has the makings of you being dicked about all over it. I'd keep looking, if I were you. And try to not incur much in the way of costs until the tenants leave, if you leave your offer on the table while you're looking elsewhere.

Have you asked the tenants what their intentions are?

Just because the landlord has given notice, it is only a notice. The tenants can ignore the notice and the landlord would have to begin court proceedings in order for the court to evict them. This could take months and months. You say they have six months notice, but that isn't usual. The usual notice is two months, but perhaps because these are friends the landlord is trying to be helpful by giving them more time. However, if the tenants don't go in that time, the landlord will still have to start legal proceedings by applying to the court for eviction.

If you are serious about buying this property you'll need to be very patient as your solicitor will only proceed with vacant possession, i.e. the tenants will need to have vacated before your solicitor will exchange contracts.

If you look at the house buying thread on MSE, there is lots of advice regarding this subject. Please read the advice there and make sure you understand the risks.

As above you won't be able to get a residential mortgage on a property with tenants in situ. So they need to move out prior to exchange.

The risk is the tenants don't leave when required and you're left with a house you can't live in. And not being able to get a mortgage.
Nothing to stop you putting in an offer though that's conditional on the property being vacated, and saying you're happy to be patient until the tenants have left.

I’d walk away from this one.

Tell the landlord you’ll only be interested if and when the tenants vacate.

100% this.

No decent solicitor would exchange contracts with tenants still in situ.
Proceed if you want, with this in mind and the generous timeline for the tenants to depart, but it could all go pearshaped down the line when you've invested a lot of time in it and then they refuse to lease.

We did, the tenants were still in when we viewed but had been given 2 months notice. We made it clear when we offered that we would not exchange contracts until we’d inspected the house again after the tenants departure. After our offer was accepted we proceeded as a normal purchase with searches, survey etc. Tenants moved out, we viewed again and were happy and then we exchanged about a week later.

It worked ok for us but it was a risk and we were prepared to walk away (and lose money on fees, searches etc) if they didn’t move out before exchange because we had been looking quite a while and knew the house was exactly what we wanted and nothing else similar had come on the market.

5 months sounds a long time to wait for the tenants to move out in your situation though and I think I’d be less willing to wait that long- the two months notice tied in ok with the speed of our purchase and meant we hadn’t wasted a lot of time if it collapsed.

What’s the rentals like nearby , are the tenants likely to find somewhere similar quite easily?

If you plan to live in the house yourself, do not touch a tenanted property with a barge pole. It should be marketed empty. There is a risk the tenants won't leave, and they might leave it in a shocking state when they do.

I bought a house with tenants Insitu but I wanted it as btl not to live there myself so tenants just remained.

I've done it before many years ago - never crossed my mind there was anything weird about the situation and there weren't any problems.
I'm doing it again at the moment - this one is a bit trickier but I think it's totally worth the risk.
I've seen so many posts on here where people are saying things like "my offer was accepted X months ago and the vendors still haven't found a house...", I don't really think tenants are a whole lot more of a risk than owner occupiers!
At least with tenants there are options like paying them to leave.

But as people have said above, you just don't exchange until the property is empty and inspected to confirm that.

@NoWordForFluffy Yes, it's now the law in Wales.

@GrandHighPoohbah The tenants are friends of the landlords, so if they don't find a place to live in time, I'm thinking the landlord will simply give them a bit longer rather than make them homeless. That's another risk, so I take note of your warning.

@Twiglets1 Well that's that then.

I could say that I'm willing to proceed with a certain offer, once the tenants have left. So far, I don't think anyone else has made an offer, due to that and other reasons that really restricts the type of people one can tell this property to (dog owners, anyone with mobility issues). The house is pretty small, even for a couple, but there's always some big draw back in my tiny price range.

@Tupster Who would confirm that it's empty? Me upon another viewing or something more official?

6 months feels like a ridiculously long time. I hadn't realised it was law in Wales.

@NoWordForFluffy I think it's just you pop round to confirm you are happy it's empty before you give the ok to exchange.

@Frecklespy I've been told conflicting things. The estate agent was under the impression that they're not looking to buy, but are instead looking to rent elsewhere. That would be a potential serious issue as there are so few decent properties on the market in the entire rural county that I live in. Waiting lists of 50 people per property are normal, they get snapped up fast, but half of them don't even have modern central heating! Just those useless and very expensive to run electric panels heaters.

However the other day I was told that the tenants are looking to buy as well....so I have no concrete idea of what's going on with them, other than they are friends of the landlord's.

If you are serious about buying this property you'll need to be very patient as your solicitor will only proceed with vacant possession, i.e. the tenants will need to have vacated before your solicitor will exchange contracts

Thank you. This is is the type of insight I was looking for.

It is long, and it didn't used to be that way. We need it to be honest. Most of Wales is rural and the rental market is a nightmare, so 6 months can fly by. Viewings are arranged last minute, and if you can't drop everything and leave work to attend, tough - it will go to someone else. Landlords get to cherry pick tenants as there are so many people that can't afford to buy. There is a lack of rentals on the market as well as landlords can make 3 times the money renting to tourists.

It's a fucking nightmare. Many people like me are 'hidden homeless' in our 30s because of it. Landlords can basically cherry tenants due to the massive demand. Many properties are lots to the tourism market because owners can make 3 times the money compared to residential letting. If the tenants are getting favourable rent because of their relationship with the landlord (which is likely in my experience), then they are in for a real shock when they enter the normal renting market.

If you are serious about buying this property you'll need to be very patient as your solicitor will only proceed with vacant possession, i.e. the tenants will need to have vacated before your solicitor will exchange contracts

Your mortgage company won’t release funds to exchange on an occupied property. To exchange you have to have lodged your deposit with the solicitor, as does the mortgage co if needed for the deposit, and they need to have agreed and arranged to pay their money in order to be transferred to the vendor. They will not do this until there is vacant possession.

If this is your perfect house you could always make an offer and then decide at which point to start spending serious money (survey / searches )… and keep an eye out for anything else that comes in the market that suits you.

This plus also the sellers have to sign a legal document that confirms the property will be sold with vacant possession (empty).

Hmm really not ideal on all accounts. For you, and for the landlord who might be faced with either losing a sale or making friends homeless.
I saw a previous post where it said at least you can maybe throw money at them to get them out, sounds harsh ( and of course why should you )but if it comes to it you(& landlord?) offering to pay a rental deposit or removal costs or something might make the difference between you losing the house or not.
If it’s that competitive locally maybe them offering 3 months up front might help them get a rental, if they were thinking about buying maybe they have at least a few thousand saved up? How much info can you get out of landlord about how proactive the tenants will be.

@Sodabubbles I'm waiting for that info from the estate agent, but what I've been told so far sounds conflicting and a bit vague.

In Wales you one have to give 6 months notice. Unless tenant breaches the tenancy