Buying a flat where the deposit has not been protected?
11:21 AM, 24th June 2024, 2 years ago
5
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Hi all. I’ve been offered a flat where the tenants have been renting for more than 3 years on a rolling periodic agreement.
However, the existing owner/manager has not protected the deposit. Is this the current landlord’s problem?
Do I set up a new AST agreement with my solicitor or take over the existing agreement and protect the deposit as it should be?
Or do I walk away?
Any advice would be greatly appreciated.
Mike
Tags:
Buying a tenanted property, deposit, rolling periodic tenancy, Tenant Deposit, Tenant Deposit not protected
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Member Since June 2019 - Comments: 781
12:51 PM, 24th June 2024, About 2 years ago
It is generally accepted that you cannot undo a previous landlords error.
The current landlord needs to address the issue before you could confidently buy such a property. The tenants are under no obligation to sign a new contract with you.
Member Since August 2017 - Comments: 15 - Articles: 20
1:37 PM, 24th June 2024, About 2 years ago
Hi Mike, under deposit protection regulations, you are only legally responsible for protecting the deposit when you Receive it.
So the non-protection is the current LL/agents problem.
When you purchase the property you inherit the existing AST with all its terms and conditions, there is no legal obligation to issue a new one, nor does the tenant have to sign it.
You or your solicitor do have to issue S3 &s48 notices on your new tenants to show you are the new landlord and that rent is now due to you etc..
Your legal obligation for the deposit starts when it is transferred to you (you receive it) you then have the 30days to protect and issue the tenant with the certificate and prescribed information
Member Since November 2020 - Comments: 12
11:12 AM, 25th June 2024, About 2 years ago
Reply to the comment left by Julie Ford at 24/06/2024 – 13:37
Thanks for the very useful information, much appreciated
Member Since July 2017 - Comments: 462
12:57 PM, 25th June 2024, About 2 years ago
Or you could insist the purchase goes ahead only on the condition that firstly the seller refunds the deposit in full to the tenant. You would then take over the tenancy without any tenant’s deposit. If the discount to market price, because you are buying a property with a tenant in situ is substantial then do you really need to keep back 5 weeks rent as a deposit?
Member Since October 2020 - Comments: 1173
4:16 PM, 26th June 2024, About 2 years ago
You will probably find that this is just one of several potentially costly mistakes the landlord made. NEVER buy a tenanted property without doing full due diligence on both the property and the tenancy. Start with a read of this thread: https://www.propertytribes.com/26-questions-to-ask-when-buying-a-property-with-tenants-in-situ-t-12038.html