Buying a property already tenanted.

[mystic08]

My son is planning to buy a flat to rent out. He's seen a couple on the Internet that have tenants in situ. I have two questions on his behalf. Are tenanted properties usually less than the usual market value? Also, what is the best way to check the tenant is a good one and hasn't defaulted on the rent? If the owner is keen to sell we wouldn't accept his word about whether the tenant is a good one or not.

[jpkeates]

Buying the property with a tenant in situ is usually a reason for some kind of discount.
A landlord buying a property will also normally have no chain, which is another positive.

The only way of telling that the tenant has been paying the rent is to get the landlord to show you their bank records.

If your son is starting out, this is likely to be more complex than buying a property with no sitting tenant and letting it through an agent.
Otherwise, they're starting with a slightly complicated position (the seller's tenancy agreement persists for example) and will be learning on the job.

[mystic08]

Many thanks. The asking prices seem comparable with other untenanted properties in the area so if he is interested he will put in a offer that is a few thousand lower in light of what you've said. You're right he doesn't need a mortgage so could complete quite quickly once he commits. He will be learning on the job as it's his first rental property but no doubt good old Mum will be expected to help out.

[theartfullodger]

If they moved in early enough or if landlord messed up paperwork they might be un-evictable. Don't believe vendor or agent.

[mystic08]

Thank you. Sadly I've learned not to trust too many people in this world. Sad!

[mariner]

Tell son to join NLA/RLA & undertake some LL. Mistakes at the start can be very expensive - same as learning to drive.

[boletus]

Are tenanted properties usually less than the usual market value?

Yes.

Also, what is the best way to check the tenant is a good one and hasn't defaulted on the rent?

A bit old skool this but history repeats itself. Be 100% sure* you are not buying a property with a good tenant who has never defaulted on the rent but can't ever be evicted.

They are worth around half of usual market value.

Maggie Thatcher liberated the dead UK rental market by allowing landlords to take back possession of their property (eventually and with fair notice).

The anti-landlord brigade are intentionally or unintentionally reversing this and bringing the awful previous situation back in.

In short, don't do it unless very experienced.





*I've seen Assured Tenancies with fake or coerced AST's in auction legal packs from highly respected auction houses.

[Marty115]

I brought a tenanted property late last year so ill tell you my experience of it...

Much like you i did check online the implications of doing this and similar to above was found. I checked with the letting agent who couldn't be more helpful whilst buying. I confirmed with them that once we complete i would not need them to manage the property any further. I was advised by many including the agent that when we completed i would receive all the paperwork in relation to tenancy as the tenancy would not be ending on completion therefore i would need all documents relating to the tenancy.

On completion i came to find out that the stack of paperwork i was expecting for a 5 year tenancy was around 6 pages which was most recent tenancy and a gas cert. They advised me that they would not provide me with anything more due to GDPR, this was never explained prior to purchase and my solicitor believes they are hiding something such as not doing right to rent and such.

I explained this to the tenant and that if there was an issue with something previous to completion unfortunately i wouldn't know Luckily the tenant was pleased to be rid of the agent due to how they operated and understood how awkward they were being. She submitted a DSAR to try and obtain the documents in relation to the tenancy and they advised her they have shredded them.

I have conducted all my legal obligations within the week of completion however due to this being an ongoing tenancy it is to late. Time will only tell how much of a problem this will be come eviction but so far the tenant has been great.

Safe to say that in future i will not buy another tenanted property as i don't think it is worth the stress of not being 100% compliant. If you buy a business you get to see all the details before you take over the business but unfortunately it does not seem to be the same with tenants.

[RedHitman]

I had a very positive experience buying with tenants in situ, and the main reason I bought the house I did was because it had tenants in it.

I went to meet them after the completion date and offered a new AST with a slightly reduced rent as a sweetener. That way I was able to give them up to date documents of everything they require (GSC, EPC, Deposit protection info etc etc) and I knew it was all done correctly.

There's been a few hiccups with a broken boiler and broken shower at one point, but they've always paid rent on time and in general have been good tenants.

[mystic08]

Many thanks for all your replies. Lots to mull over.