Buying a property with tenant in situ and needing a major increase in rent ?

by Readers Question

9:09 AM, 16th October 2015
About 3 years ago

Buying a property with tenant in situ and needing a major increase in rent ?

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Buying a property with tenant in situ and needing a major increase in rent ?

I am buying a property with a tenant in situ and need a major increase in rent, but will the tenant sign a new agreement?rocket

This is a product of landlords not doing proper rent increases each year then when it is really needed it has a major increase.

If I keep the rent as is I am sure the tenant will sign, but with a £150 increase I expect he will make it as difficult as possible.

It is not a problem if he goes. What are your thoughts?

The seller wants to exchange asap and has reduced the price, but not a lot and prices are going up approx £5000 a month.

Many thanks

Peter



Comments

Paul Franklin

11:06 AM, 16th October 2015
About 3 years ago

The tenant doesn't have to sign a new agreement for you to increase the rent. If he's on a stat periodic tenancy after a fixed term hs ended it can be increase to market rent level by following the procedure in Section 13 Housing Act 88. You just have to use the correct form.

This is of course as long as the tenancy did not start before Feb 1997 in which case it could be assured, as opposed to an AST.

money manager

13:36 PM, 16th October 2015
About 3 years ago

How much does it really matter? A unit we have just commenced the purchase of was newly let (actually they haven't even moved in yet) at a submarket rate and then offered for sale. At first potentially bad news, we considered that with the new tenancy it's only viable for investors and the low rent would deter some. But, by the time of completion there is only likely to be around 8 to 81/2 mths left and with cap values moving almost too quickly upward.

Roger Rabbit

14:08 PM, 16th October 2015
About 3 years ago

Always be reasonable with renters. In your situation I would offer the same rent for 12 months but let them know that if they wish to stay another 12 months the rent will be whatever the market rent is at that time

Young Iserlohn

15:35 PM, 16th October 2015
About 3 years ago

I also think that you should let the tenant stay on for another 12 months. In this way, you won't have any void period at the purchase and also save you the trouble of finding another tenant. Remind the tenant that you intend to charge him the market rate after 12 months.

Joe Bloggs

16:22 PM, 16th October 2015
About 3 years ago

Reply to the comment left by "Roger Rabbit" at "16/10/2015 - 14:08":

the tenant has clearly had it too good for too long. why allow this unbusinesslike state of affairs to continue. i would tell the tenant you will be putting the rent up at the earliest legal time possible, but (to keep them sweet) do it in increments over say 2 years so they dont move out (assuming you want to keep them). this is what we did in same circumstances and we made the tenant fully aware of what a good deal they had been getting, and still are.

Jon Pipllman

17:06 PM, 16th October 2015
About 3 years ago

If you don't buy it, what will the seller do?

Would he keep it?

Is there another buyer in the wings?

Would the tenant be served notice and then the property sold vacant?

Would the price come down further?

And

Is the £150 rent increase achievable for a new tenancy?


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