Has anyone ever bought a property with a protected tenancy

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    Has anyone ever bought a property with a protected tenancy

    Next week I will be viewing a property with a sitting tenant who has been there for years. I understand that she has a protected tenancy and I was wondering what other people's experiences were of such tenancies and the things I should be asking or looking for.
    Obviously it would be much cheaper than the surrounding properties because I could not let it out. This will be factored into my decisions.
    I have had a look at the property on the agent's website and the bathroom and kitchen look quite shabby.
    The rent looks reasonable for the area.
    I am wondering how the rent normally increases with these types of leases. Is it RPI? Or does someone from the council decide on a fair rent?
    Presumably if the property is quite shabby, there is no incentive for the landlord to improve as he would not get his money back?
    Is rent arrears the only way that the tenancy can be terminated?
    I look forward to hearing others' experiences.

    #2
    I am not an expert but I had some experience with a regulated tenant.

    I inherited a property with a regulated tenant. The rent can be raised every 2 years by application to the Rent officer and can only go up by a set amount. Pretty much the only way the tenant can be evicted is by rent arrears and our tenant was on LHA. sometimes tenants are willing to be bought out of their tenancy - ours wanted £100,000!

    Because there is often no original lease it can be difficult to know who is responsible for what in terms of maintenance & repair. In any case, your statutory duties trump any lease so you may find you have to spend a considerable amount of money bringing the property unto scratch (eg EPC rating) without being assured of an increase in rent. (You can apply for an additional rent increase if you substantially improve the property).

    There can be problems if your tenant, who may well be elderly, goes into hospital or a care home as this doesn't break the lease but may result in no rent. Also a regulated tenancy can be passed on to a family member who resides at the property meaning it may be a long time before you get the property back vacant.

    I would not advise buying a property with a regulated tenant as there are a lot of issues to contend with but if you do make sure you do your homework first.

    Good luck.

    Comment


      #3
      There are two aspects to this: the general and the specific.

      The previous post pretty much covers the general. I would add that buying a property with a protected tenancy should very much be regarded as a long term investment, but one which (assuming you pay the right price) has the potential for significant profit early if the tenant moves out. You should only go for it if you are prepared to be relaxed about it. It is the sort of investment worth thinking of if, say, you want to put some cash in trust for your grandchildren, or, if you are not that old, you want something to fall back on in retirement. It is also important to remember that any rented property is not just an investment but also a business that needs managing.

      As to the specific, as with any property purchase you (or in practice your conveyancer and surveyor) need to do the usual due diliigence.

      Comment


        #4
        jpucng62,

        Why is the rent not payable if the tenant goes into hospital or care home.
        I can understand if the rent was being paid for by the LA or UC in which case the benefits would stop if the tenant was in a care home or hospital. But if the rent was paid out of their own funds, why does this stop? And why would the tenancy not end?
        I do realise that this is a long term investment and need to think about the price I would pay. Also need to find out exactly who lives there and who has the tenancy.
        I am not sure yet, but it may well be that there is no TA.

        Comment


          #5
          You need to find out when the tenants 1st moved in and are there any relatives living there too, how long have they been living there too ?

          You may not even get full possession of the property in your life time too, depending on what you find out about the tenants and family members living there due to succession rights under 1977 rent act.

          Rent is still payable on any tenancy if someone goes into Hospital, LHA/HB can be paid up to one year if someone goes into Hospital.

          If you decided to refurbish the property and the tenant agrees to this, you will not get full market rent, the increase would only be 15% on top of a existing Fair rent registered under 1977 rent act, 1999 Capping order "Maximum fair rent order"

          The rent service know comes under "VOA" valuation office agency.

          Possession order's called "cases" under 1977 rent act are Discretionary only for a LL by Sale and Very difficult to obtain more than likely LL would end up with a Huge legal bill for nothing.

          If you buy a property with a Protected tenant living there, seek advice from a Housing Solicitor, not a conveyancing solicitor.
          Thunderbirds are go

          Comment


            #6
            Forgot to add EPC rating wouldn't apply to regulated tenancy and repairs would be subject to section 11, L&T act 1985 or what ever was agreed at the start of the tenancy with the 1st LL.
            Thunderbirds are go

            Comment


              #7
              Only buy it if you want the long term investment like others have said. You should get an expert to value it if you don't know how to value it taking into account the protected tenancy.

              Dont buy it imagining that you can find a loophole in the law to get the tenant to leave. It's not called a protected tenancy for nothing.

              Dont buy it if your ambition is to be a property developer. The tenant is unlikely to leave or want you to cause her much disruption for the sake of ambitions that are yours not hers.

              Not saying you would do this but don't buy it with any ideas about 'persuading' the tenant to leave by using crafty underhand techniques. Once this comes to court, and it will, the courts will take any profit you would have made from getting rid of the tenant and award that to the tenant.
              ​​

              Comment


                #8
                Originally posted by 45002 View Post
                Forgot to add EPC rating wouldn't apply to regulated tenancy and repairs would be subject to section 11, L&T act 1985 or what ever was agreed at the start of the tenancy with the 1st LL.
                According to the below page the EPC does apply to a regulated tenancy unless the T refuses permission for doing the upgrade work.

                https://england.shelter.org.uk/legal...​​​​

                Comment


                  #9
                  Originally posted by KeepTheFaith View Post

                  According to the below page the EPC does apply to a regulated tenancy unless the T refuses permission for doing the upgrade work.
                  https://england.shelter.org.uk/legal...ance_standards


                  Yes, your correct i missed that part out, Thankyou.....
                  Thunderbirds are go

                  Comment


                    #10
                    In reply to your direct question to me about the tenant going into hospital etc - the rent would still be due, but I think many tenants of this type are in receipt of LHA which may cease or be paid elsewhere (eg care home). I should have said the tenancy doesn't end and therefore you could end up with a problem. I believe the basic tenet is that if there is any chance that the tenant may want to go back to the property the tenancy cannot be ended so you would probably have to go to court to get clarification about regaining the property. As with many situations, huge weight is given to the tenant and their rights and less to landlords &, dare I say it, common sense!

                    You could end up with a property in poor condition, empty for a prolonged period, with no right to do anything about it and possible rent arrears too.

                    As Keep the Faith says, EPC regs will apply in the future and if the property is poorly maintained this could result in significant costs to you, the landlord.

                    It is a very complicated situation to buy into, fraught with difficulties, but if you outlive your tenant it could be profitable. Our regulated tenant outlived 2 generations of my family & it was then left to the 3rd generation to deal with the mess at the end. It will be profitable but it has caused a huge amount of stress & anxiety too.

                    Hope that helps.

                    Comment

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