About to buy a property with two in-situ tenants

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    About to buy a property with two in-situ tenants

    Hi there!

    Here is some background:

    Q1 – Where is the rented property located (England / Wales / Scotland / N Ireland)?

    England

    Q2 – What type of Tenancy Agreement (TA) is this e.g. sole tenant / multiple tenant / room only?

    AST - 1 person in 1 3-bed annex, the other is 1 person in 1 1-bed annex. Each are attached to a house but have their own entrances and there is no internal access from the main house to the annexes.

    Q3 – What date did current TA start dd/mm/yy?

    Not known but I gather two month's notice is statutory on 8th and 11th October 2016 to vacate on those dates in Dec.

    Q4 – How long was initial fixed term (6/12/24 months / other)?

    6 I believe

    Q5 – Does the TA state that rent is due weekly? / 4-weekly? / per calendar month (if so, on what same date each month)?

    Not known

    Q6 – Did the TA require a tenant damage deposit to be paid? If so, on what date was this paid (dd/mm/yy)?

    Not known but I assume there is a deposit for each tenancy.

    Q7 – If your query relates to a notice for repossession from the landlord (a Section 8 or Section 21 notice) or a tenants's notice to quit to the landlord, please provide the exact date the notice was sent/received (dd/mm/yy).

    N/A

    Q8 – Does the landlord live in the same property as the tenant?

    They did but see below.

    I hope you can help me as this is a bit complicated:

    I'm proposing to buy a house for our family to move into. The house is large and has two annexes which has tenancies as above. The house itself (which could easily accommodate us) is currently empty. The vendor doesn't want to serve notices on his tenants until he is assured the house will be sold to us, so the plan would be that on exchange of contracts the vendor will serve 2-month notices on each tenant on the anniversary dates of 8 & 11 October. The idea is that we would then complete on the property just after those dates in December, when it is totally vacant. The current tenants are fully aware that the house has been for sale for a while and they have been kept up to date with all developments. While it's not great that we have to be essentially asking someone to move, we absolutely want to do this properly so it is fair and ethical.

    We are currently also in rented accommodation (about a mile away) and are paying a sizeable rent ourselves. We have the cash (just about) to purchase the new house outright.

    Apart from having to continue paying rent ourselves, having to wait two months between exchange and completion (and not even knowing if it will go smoothly) is a bit of a concern, as we will have given 1 month's notice to our own landlord and if it goes wrong we may end up without somewhere to live since we won't have vacant possession of the new property and we will have served notice on our current. We also have to insure the new property from date of exchange, which is expensive as most of it (the non-tenanted bit) will be empty for 2+ months and insurers get a bit jittery about that. We're awaiting quotes on insurance.

    An obvious option (as we only have to serve 1 months' notice to our own landlord) is to exchange contracts on the property we're buying, and move in as tenants into the main part of the new property for a nominal rent, and then we complete when the vendor's notices have run their course and the property is vacant. The vendor likes that idea: they get to keep the rent going, and we take over the council tax on the empty main property, and we don't have to insure an empty house or continue paying rent. Their solicitor is not so keen.

    If we can't persuade the vendor's solicitor the other option is to purchase the house very quickly (so we can give notice of 1 month) and then move in and use the time to clean our "old" property ready to hand back 1 month later. Which means we'll also take over the two tenancies. This time it's our solicitor who is not keen on that option - apparently it is a real can of worms as you are inheriting any issues with how the tenancies were drawn up.

    Any thoughts on either of these situations or ways of persuading the vendor's solicitors that renting to us on an AST would be OK? Or indeed, any other options we might not have thought of which could save us £ks in renting our current house? This last is important as we have pretty much used up all the cash we have with this, but ultimately will not be paying £2k a month in rent, so we're looking forward to that!

    #2
    You need to find out when the tenants say (not when vendor or solicitor say) they 1st moved in. If early enough it might not be an AST and eviction tougher/impossible (almost). Regardless of paperwork, signed ASTs etc etc (no, really!).

    Note also even if ASTs & all paperwork perfect any notice does not end tenancy nor require tenant to leave. To get that to happen requires court & possibly months being notice expiry.
    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

    Comment


      #3
      The first thing to do is to suggest/act/require the seller to serve notice to the tenants now.
      Even better get the tenants to serve notice on the landlord (they won't do that unless they're daft).

      Serving notice on a tenant actually does not require them to leave, they have every right not to and wait to be evicted.
      If they want to move into council housing, the council will tell them to wait to be evicted - which is a process that can't begin until the notice has expired and can take many months (often 4-6 months).

      So your best bet is to make vacant possession a condition of purchase and make it the sellers problem.

      There are some special types of tenancy if the tenants have lived there for a long time (if they or one of their parents moved in before 1990 for example) where eviction is almost impossible.

      If there's the possibity of you moving in with the tenants in place, it's key to know exactly what the tenancy agreements say and have confirmation that the tenants aren't on "regulated" tenancies. They should be on standard Assured Shorthold Tenancies - and don't believe the documents., you need to be absolutely certain when the tenants moved in, and certain that they didn't inherit the tenancy.

      It would be interesting to know why the seller's solicitor isn't keen on you renting the property between exchange and completion.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        Thanks both for the interesting replies so far. Rereading my points at the start, I realise I must have deleted the bit where I say they are both AST's. But I take the point - I haven't seen the documents nor any info relating to deposits. One of the tenants has been there for 20 years, so it's entirely possible that he may feel differently about his arrangement even though it's nominally an AST.

        Comment


          #5
          If the tenancies began before 1990 (remembering that regulated tenancies can be inherited), it won't matter that the documentation says they're ASTs.
          You need to be sure that they are what they purport to be.
          Note that solicitors and conveyancers often aren't as au fait with this subject as they should be.

          If you were to become the landlord, you would want the tenant's deposits to be transferred to you as part of the completion process.
          The deposit must be protected all the time, so mechanically this can be a little tricky.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            I am surprised that your solicitor isn't strongly advising you against this course of action. Once you've exchanged contracts you are legally bound to complete the purchase but at that point the seller hasnt even begun to evict. Will he bother? Will the property be mortgaged? What does your lender think about the arrangement?

            The protected tenancy issue is a real possibility and the next step must be to check the dates they originally moved in, (with them)

            Comment


              #7
              You really need to ask the tenants when they moved in 1st
              I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

              Comment


                #8
                Originally posted by DPT57 View Post
                I am surprised that your solicitor isn't strongly advising you against this course of action. Once you've exchanged contracts you are legally bound to complete the purchase but at that point the seller hasnt even begun to evict. Will he bother? Will the property be mortgaged? What does your lender think about the arrangement?

                The protected tenancy issue is a real possibility and the next step must be to check the dates they originally moved in, (with them)
                Hi there, our solicitor is extremely keen for us not to exchange/complete and effectively take over the tenancies. I previously thought it would be the simplest solutions as they are ASTs hence easy to end, but having read these points so far...not so convinced! In theory we could exchange and the vendor could simply not bother to serve notice so I would probably want them to do that before we exchange. What happens then? If we took over the tenancies, would that eviction notice still stand anyway? So more and more (and with other comments) I'm thinking this would be ill-advised.

                Our solicitor was much more keen on the "we rent the main house on an AST from the vendor and they get on with evicting" route, which of course means that they don't get the rest of the money (completion) until the tenants are gone. Maybe the vendor's solicitors are not themselves so sure that the tenancies will be easily ended, which is why they are not keen on that route. However, provided they eventually left, it wouldn't materially affect us unless there was some dispute with them caused by our living there.

                BTW there is no lender involved.

                Comment


                  #9
                  The notice would survive a change of landlord, but it would be an extra complication and it's hard for you to know that everything that needs to be done for a notice to be valid has been done.

                  If you need to go to court to progress the eviction, the form requires statements relating to the original deposit process, for example, which you would not know for certain and could not easily attest to - and if the tenant had a different recollection and was believed, you might find the judge believed them.

                  I think your solicitor is giving you good advice, however, you should also consider what might happen if the tenants don't want to leave or are not evictable at all.

                  You're no longer able to complete (which is a right legal mess to be in) and living next door to people who have every reason not to be very neighbourly.

                  I am slightly suspiscious of the sellers disinclination to serve notice on the tenants.
                  There's no reason not to, and I suspect that the seller is suspiscious that they won't want to go, and wants to lock you into the sale before this is "discovered".
                  That way when it takes 6 months for the tenants to be evicted, you're stuck waiting to complete, rather than, for example, waiting to exchange and able to pull out.
                  When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                  Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                  Comment


                    #10
                    If he moved in 20 years ago IT IS NOT AN AST regardless of lovely signed paperwork. So no s21, no 2 months notice, much harder to evict.

                    Do you appreciate the point being made, even if unhappy about it?

                    The market valueof a AT tenanted place is less than an AST. (due to eviction issues), a regulated even less.

                    Concerned you don't make a painful, expensive, mistake......
                    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                    Comment


                      #11
                      I absolutely appreciate the point - definitely, and thank you! I didn't quite appreciate what I was potentially getting in to here. A bit of context - the vendors have downsized and have built their own property next door, and the property we're interested in has been on the market a while. Because of its status of having tenants / a number of kitchens, it's been difficult for any normal purchaser to buy and we simply gave up finding a mortgage, hence the cash purchase. They have been hugely helpful (and I really mean that, they are nice people). I genuinely don't think there's anything underhand as far as our relationship with them is concerned (we will be next door to them, after all) but the legal side of the tenancies obviously is now a big worry since it is sounding more and more likely to bite us in the bum if things haven't been properly done.

                      It may be we would have to evict them, as jbkeates said, and it is entirely possible that the one who's been there 20 years may never be evicatable.

                      Comment


                        #12
                        Given a bit of thought to this, and we think the answer is to offer a refundable (if property does not get vacated by a certain date) deposit to the Vendor as assurance that we wish to purchase, so they can then evict the tenants. We exchange and complete once the property is vacant. That is one suggestion the agent made when we first got our offer accepted, and it seems that might get us out of this catch-22 where we will be locked into buying if we exchange contracts.

                        Comment


                          #13
                          I'm with Artfullodger on this one - we have seen this many times before.

                          Why does the vendor not get shot of the tenants and sell with vacant possession? The many failed sales suggests regulated tenants you will not be able to move on. Asking the tenants outright about the situation is vital - why are you avoiding this contact?



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

                          Comment


                            #14
                            I think you need to prepare yourself for the idea that you are not going to get full vacant possession of this property in anything like a sensible timescale and you will probably need to walk away.

                            Comment


                              #15
                              See the link below to get an idea of how long it can take to evict an AST tenant.

                              http://www.landlordzone.co.uk/forums...ess-statistics

                              Comment

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