Buying with “sitting tenants”

August 7, 2015

Finding a buy-to-let property with a tenant already occupying is in many respects an ideal situation for a new landlord looking to buy that property, there will be income from day one of ownership and all the hassle of finding a tenant would have been avoided, however before any potential buyer goes rushing ahead with the purchase there are a few issues to consider when buying a property with a tenant already installed.

If for example the property has “sitting tenants” all matter of research should be carried out.

The length of time the tenant has been in the property is very important to know, not just the date of the last tenancy agreement, these days most tenancies are assured shorthold tenancy agreements but it should not be taken for granted that is the case on the property about to be purchased, absolute clarity as to what type of tenancy agreement is in place on the property is required.

If the tenants have been in the property since before 15th January 1985 they will almost certainly be ‘protected’ tenants which means that they will be almost impossible to ever evict, all rents for protected tenancy properties have to be set by a rents officer, in the case where tenants that were first installed between 15th January 1989 and 27 February 1997,  it’s likely that they will be assured shorthold tenants, but you should find out whether a ‘section 20′ notice has been served on them, otherwise they will only be assured tenants. If this is the case you will also find it difficult to evict them if needed.

If a section 20 notice has been served then you need find out when,  if after the tenancy began then  it will not be an assured shorthold tenancy, you will need to be able to prove that the notice was served technically before they moved in, should you ever need to evict them.
The most simple scenario for a potential landlord is that the tenancy started after 27th February 1997 as they will almost definitely be assured shorthold tenants.
The above information is a brief guide as to what type of tenancies you might encounter when buying a property with a sitting tenant, to be completely sure that you are not getting trapped into an agreement that is not in your favour take professional advice through a solicitor or the letting or management agency you intend to use.

 

Alex Evans

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