New landlord buying tenanted property

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    New landlord buying tenanted property

    Landlord one (LL1) currently wishing to sell their tenanted property, which they let and manage themself (In england). Acceptable offer received from another investor (LL2) who wishes to buy the property with the tenants in residence.
    It has come to light that LL1 used her own very shoddy tenancy agreements and has not registered the deposits with any of the 3 schemes. I have tried to call LL1 to see if her tenancies pre-date 2007, but:

    Scenario 1: Tenancy pre-dates 2007 and has been periodic since, therefore tenancy not been renewed so didn't need to protect deposits. Would the new buyer need to protect these if he wanted to put in writing a much more thorough agreement and renew the tenancy. As deposits received more than 30 days ago, how would this work.

    Scenario 2: Current tenants moved in after April 2007 and therefore deposits should have been protected, how can the new landlord keep the tenants but get things done properly! My thoughts were to preferably get tenants to pay the deposit again and sign a new tenancy agreement, then new deposit is protected and old deposit returned.

    #2
    Your scenario 1 has been superceeded by the Localism bill which tightened the deposit protection requirements from May this year. Whilst nothing has been proved in court, the general consensus is that tenancies prior to April 2007 still require retrospective protection of any deposit paid.

    I assume you are LL2 in this case?

    If new LL buys the property they take on all responsibility for the tenants, the terms of the existing agreement and the deposit protection. If tenants have proof that they did in fact pay a deposit amount at the start, and LL cannot get the vendor LL to pass over an equivalent amount as part of the sale, then LL 2 will have to secure the amount in a scheme and provide the tenants with the information from that scheme, from their own pocket!

    If you are LL2, then please do not progress with this purchase until you see and have a solicitor check the current tenancy agreement, as you will inherit all the existing terms and conditions therein, and cannot change anything. You also need to ensure it is infact an AST, and not some other form of agreement which may lead you into serious problems like being unable to evict the tenants!

    Comment


      #3
      Easiest way would be to make it a condition of purchase that the deposits are protected with the DPS by the vendor.

      As recent as 1 month ago I managed to get a Landlord to protect a deposit with the DPS. LL had unwittingly held deposit since 2009.

      In scenario 1 and 2 be warned that tenant does not have to agree to signing your new AST



      Freedom at the point of zero............

      Comment

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