Buying a property with a regulated tenant in?
I have chance of purchasing a reasonable property via an auction.The problem is that the tenant has been living there for many years and is on a regulated tenancy. I’m not sure how long this tenancy has been in place or the details about it. The rent is £3000 a year which is about 50% market rate for the house.
Is there a way of buying the house and then increasing the rent or what are the rules about evicting the tenant? I could let the tenant stay but the rent would need to increase. Could this end up being a hot potato or can there be a way forward?
Any advice will be greatly received.
Carl
P.S this is in England if that makes a difference to tenancy laws.
Editors Comments
A Google search on the word regulated tenancy and found a PDF explanation document produced by “Communities and Local Government which you may find useful – see >>> http://www.communities.gov.uk/documents/housing/pdf/138295.pdf
- There are many forms of regulated tenancy, find out exactly what you are dealing with.
- We are not aware of any lenders who will provide finance on properties with regulated tenancies. You may not require finance but if any readers are aware of lenders offering terms we would be very interested to know about them.
Question from Editor Regarding Properties with a Regulated Tenancy
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How much discount would you expect to receive on a property with a regulated tenant vs an identical property with vacant possession?
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Would the expected discount vary depending on the age of the tenant?
Comments
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Tenants in common - sale after husband passing
Member Since April 2015 - Comments: 6
12:27 PM, 2nd September 2015, About 11 years ago
Carl
Does the Regulated Tenancy give the tenant the right of a life tenancy – ie. until the death of the tenant or such time as they decide to give up the tenancy?
David
Member Since July 2013 - Comments: 1266 - Articles: 1
7:29 AM, 3rd September 2015, About 11 years ago
No you can’t renegotiate the tenancy or evict the tenant. It may be their children also have the right to succeed the tenancy. If you could do either, the current owner would probably have done it. That’s also probably why it’s for sale by auction. Give it a wide berth unless you can be in for a very long haul (you would need to find out the exact terms). If you can, or it’s an investment for your heirs then it might be a good buy.
Member Since January 2015 - Comments: 68
5:47 PM, 3rd September 2015, About 11 years ago
Carl
There is certainly a marketplace for such houses but buyers need to understand that they are buying. In my experience the chances of obtaining vacant possession are very remote. Quite often such properties are owned by portfolio owners who play the numbers game; so many come empty each year to give them a return.
Repairing obligations for the landlord are pretty much as for an AST, but you don’t get the rent to match so there needs to be great care taken when buying to make sure there are no significant obligations.
The rent is capped and is usually set by the Rent Service. As I say they are not market rents.
As for valuation then a chartered surveyor (with experience of this sort of work) would be able to come up with a figure for the property as an investment. It’s not the sort of question most estate agents could answer authoritatively.
As for funding there are lenders who will fund provided it stacks up (again as an investment) but it is not mainstream BTL.
Finally, as Puzzler mentioned, beware of succession rights, although successions can possibly be at a market rent and so are less appealing to the tenants’ family than they used to be.
Graham
Member Since July 2014 - Comments: 7
7:03 PM, 4th September 2015, About 11 years ago
Hi many thanks to all that has replied.I have decided to not to pursue it any further in light of whats been said thus far.As Graham mentioned,it looks like it only works as a portfolio of them and sell them as they become vacant.(hopefully)this situation is not for me,so i’m looking at other opportunities,Thanks again.Carl