Regulated Tenancies Explained.

It’s been another busy few weeks in Manchester as myself, Ed, Howard and Peter have been busy putting together the catalogue for our final North West auction of the year, on Tuesday 12th December. This will be only our third Manchester auction and whilst we’re still open for entries, I’m pleased to say it’s already the biggest yet!

As always, there’s a great mix of both residential and commercial properties scattered across the North West, including plenty of the usual tenanted investments, along with those you don’t see all that often these days, such as 2 Holly Bank – a two bedroomed house in the rural village of Chinley which comes with a regulated tenant.

Since putting the property on our website, we’ve had a number of people already enquire as to what exactly a ‘regulated tenancy’ is. So let me explain…

A regulated tenancy is a long-term agreement between a tenant and a private landlord. These agreements date-back to before 15th January 1989 and offer the tenants a right to remain in the property for life.

Often the rent can be much less than current rental values for the same kind of property with an Assured Shorthold tenancy (AST) in place, and therefore offers a different investment model to a landlord. In fact, I’ve known of regulated tenants in the past only be required to pay £1 a year in rent!

So where is the investment then?

Because the rent is usually below market value and the tenant(s) can remain in place for life, the value of the property should be considerably lower than if it was bought vacant or with a more mainstream tenancy in place – you’re effectively getting a discount for the restrictions that comes with the property at the time of purchase.

If you were to buy a regulated tenanted property today, you will probably be inheriting a tenant that has lived there for many years and as such, from my experience, the tenant tends to treat the property as ‘their own’ and thus less likely to pick up the phone to the landlord every time a minor repair is needed. It goes without saying that a landlord should still always ensure that the property and tenant are suitably looked after, but generally, it’s a ‘quieter’ investment than that of a property with an AST in place.

Whilst like with AST’s, the terms of a regulated tenancy vary depending on the individual agreement but often, the landlord is responsible for any structural and external repairs plus the maintenance of gas and water supplies. It is also usual for the tenant to take responsibility for the internal cosmetic requirements – as you would with your own home.

Regulated tenancy properties appeal to landlords who aren’t yield-driven but instead focus on the long-term capital growth of a building. Once the tenancy ends, the property will naturally adjust in value to that of the market price for such a vacant property. So, for example, you might pay 40% less for a property with a regulated tenant in place today and then, if in say, 10 years it becomes vacant, you will benefit from the 40% uplift of it now not having the previous restrictions, plus the general capital growth of the property over those ten years (providing the market does of course increase).

Right of succession

Another factor to consider when looking at buying a property with a regulated tenant in situ is whether there are any rights of succession. Depending on the particular agreement, in some cases the next of kin can acquire a right of succession where they take over the tenancy on an ‘assured’ basis. Whilst this does require them to now pay market rent, they will continue to hold the right to remain in residence for life.

Like with all investment models, there are pros and cons to buying a property with a regulated tenant in place and further information can be found in this Government handbook – but as always, it is important that you carry out full due-diligence to understand the specific circumstances of what exactly it is that you are buying.

Written by Andy Thompson – andy.thompson@sdlauctions.co.uk

EAN Content

Content shared by this account is either news shared free by third parties or sponsored (paid for) content from third parties. Please be advised that links to third party websites are not endorsed by Estate Agent Networking - Please do your own research before committing to any third party business promoted on our website. As an Amazon Associate, I earn from qualifying purchases.

You May Also Enjoy

Breaking News

Popping the Asking Price Bubble

Where in the Uk Can Buyers Snap Up Property Bargains and Where Properties Go for a Premium Above Asking Price   New research from fast selling property company, Upstix has uncovered the UK’s most surprising postcodes for snapping up a property at bargain prices this year, highlighting a widening gap between sellers’ expectations and the…
Read More
Rightmove logo
Breaking News

Highest demand to lease office space since pre-pandemic

The latest insights from the UK’s number one commercial property website Rightmove, reveals that the number of unique enquiries to lease office space is at its highest point since pre-pandemic, as businesses look for spaces that meet modern requirements. Demand to lease office space is 19% higher than the same period a year ago and…
Read More
Planning disputes on new build land
Estate Agent Talk

Planning consultations for major infrastructure to be streamlined

Robert Bruce, a planning and infrastructure partner at law firm Freeths LLP, said he: “Welcomed the change as a significant step to speeding up the DCO process and the focus on the quality and effectiveness of the consultation, rather than box ticking and a risk averse approach to pre-application consultation due to the current legal…
Read More
Breaking News

‘The property ladder pulls further away’ warns Open Property Group

For many first-time buyers across England, the dream of homeownership continues to slip further out of reach. Despite rising wages, soaring house prices are making it harder than ever to get on the property ladder. A leading UK professional house buying company ‘Open Property Group’ based in Buckinghamshire UK, has raised concerns over the ongoing…
Read More
Estate Agent Talk

How Long It Takes to Buy a House in the UK: 5 Common Delays That Can Slow Down Your Home Purchase

Wondering how long it takes to buy a house in the UK? The average timeline ranges from 8 to 22 weeks, but even that can stretch significantly due to unexpected delays, especially if you’re a first-time buyer or caught in a chain. That’s why working with experienced professionals like Belvoir — one of the UK’s…
Read More
Love or Hate Rightmove
Breaking News

Rightmove to host Renters’ Rights Bill webinar with Guild of Lettings

Rightmove is hosting a live and interactive webinar session with the Guild of Lettings to help agents get Renters’ Rights Ready. The webinar will take place from 10:00am – 11:00am on Wednesday 23rd April. Susie Crolla, Managing Director for the Guild of Lettings, will be joining Rightmove to help agents with questions they may have about…
Read More