Buy tenanted property with tenant holding over?

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    Buy tenanted property with tenant holding over?

    Hello honoured members of LandlordZONE.
    I'm a newby in this forum.
    (Anyone remember that song the Eagles used to sing,"There's a new kid in Town"?)
    Here's the deal:
    I want to buy a small commercial property that I have spotted. It has a tenant in place - which is what I want - to generate a rental income.
    However the tenant is holding over and a solicitor once told me: "Never buy a commercial property with a tenant who is holding over. The tenant has obligations towards his previous landlord, who held the original lease. But as soon as you buy, you have no rights as landlord. The tenant can do what he or she likes. Including not paying you! And he can also refuse to sign a new lease with you."
    Can anyone please advise me?
    Was this advice correct?
    And if so, is there a way of solving the problem, and buying the property that I have seen?
    Many thanks
    Michael

    #2
    In these days of low interest rates, I would suspect the motives of the seller. If the guy was paying his rent and service charge, I doubt seller could get a better return elsewhere.

    I agree with your solicitor.

    Comment


      #3
      Thank you JKO for helping out.
      The thing is this: What worries me is that I am planning to buy a property with tenants in whose lease has run out.
      Does that mean that they can now live in my property for free, and pay no rent to me?

      Comment


        #4
        ""Never buy a commercial property with a tenant who is holding over. The tenant has obligations towards his previous landlord, who held the original lease. But as soon as you buy, you have no rights as landlord. The tenant can do what he or she likes. Including not paying you! And he can also refuse to sign a new lease with you."

        That all seems far too simplistic to me. I should think it's the sort of advice given to the inexperienced.

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          #5
          Originally posted by Michael 11 View Post
          The tenant has obligations towards his previous landlord, who held the original lease. But as soon as you buy, you have no rights as landlord. The tenant can do what he or she likes.
          That bears little or no resemblance to reality as far as I can see. All rights and obligations are transferred from the vendor to the purchaser.

          A big chunk of the value of such a commercial property as an investment proposition is in the terms of the lease and the quality of the tenant. A property on a lease with a long period remaining tends to be worth considerably more than the same property vacant. A typical investor looking at such a property wants it to be occupied, and to remain so for a considerable period. An empty commercial property is (generally speaking) a liability.

          However, based on this...

          Originally posted by Michael 11
          Does that mean that they can now live in my property for free, and pay no rent to me?
          .. it sounds like a residential property, in which case the solicitor's advice makes more sense. A residential property with sitting tenants can be risky and I think it is fair to say that most landlords would steer clear.
          There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

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            #6
            There is no especial hazard in buying a property where the tenants are holding over under Part II of the Landlord and Tenant Act. It wouldn't appeal to a lender; but the letting continues until either party gives notice to the other …...

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              #7
              I wonder if the solicitor's advice had in mind the Landlord and Tenant (Covenants) Act 1995. If so then whether a purchaser would have all rights as landlord depends upon the nature of those rights and release of the previous landlord

              Comment


                #8
                My suggestion is contact a lawyer before buying the house

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