Creating a new tenancy while property is on the market for sale?
3 years ago | 7 comments
Buying tenanted property – can you ‘reset’ the tenancy to ensure it is valid?
10:02 AM, 30th January 2023, 3 years ago
33
Hello, We are considering buying a block of 5 flats, all tenanted. Some have been on-boarded through an agent and others have not.
Our concern is that at least some are not valid tenancies in which prescribed information was not given or deposits protected in the correct way, which could cause us major issues down the track.
If we as new landlords were to create new ASTs and ensure everything was done correctly, or the current vendors were to do this before exchange, could that ‘reset’ the tenancy anew and so any historical missteps would be wiped clean?
If we were to create new ASTs, and the tenants were happy to sign them, if down the track they realised the previous landlords hadn’t protected their deposits properly, but we had, would we still be liable for the previous landlords mistake?
Buying tenanted properties seems awfully risky if so.
Thank you,
Laura
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Member Since October 2013 - Comments: 1640 - Articles: 3
10:48 AM, 30th January 2023, About 3 years ago
Interesting question. I would appreciate the answer from the other side. I want to sell my last tenanted property.
Member Since January 2020 - Comments: 559
10:49 AM, 30th January 2023, About 3 years ago
Buying tenanted properties is definitely risky.
You cannot “reset” a tenancy that is already in place. If buying a tenanted property, part of the due diligence has to be making sure that all pre-start compliance has been done properly.
If the former owner has not complied properly, then that issue will carry forward – be careful in particular where deposits have not been protected as there may be a penalty.
Member Since October 2022 - Comments: 402
11:00 AM, 30th January 2023, About 3 years ago
Serve the correct info, protect the deposits. Get the gas safety certificates EPCs and electric safety done. If need be confess to the court these things were not done correctly and they won’t hold it against you. I have the case law somewhere
Member Since May 2016 - Comments: 24
11:12 AM, 30th January 2023, About 3 years ago
Reply to the comment left by David Houghton at 30/01/2023 – 11:00
Thats interesting, could you direct me to that case law?
Member Since July 2013 - Comments: 1264 - Articles: 1
11:16 AM, 30th January 2023, About 3 years ago
I think it will be a new tenancy anyway as you are now the landlord, your conveyancer should advise you
Member Since January 2018 - Comments: 17
11:20 AM, 30th January 2023, About 3 years ago
Reply to the comment left by Layla . at 30/01/2023 – 11:12
I too would be interested in that case law please.
Member Since January 2020 - Comments: 559
11:24 AM, 30th January 2023, About 3 years ago
Reply to the comment left by Puzzler at 30/01/2023 – 11:16
You have no rights to create a new tenancy unelss the tenant agrees. The tenant is entitled to occupy under the original tenancy that they signed.
As the new landlord you must serve notice under the Landlord and Tenant Act to advise the tenant that you are now the landlord and to provide a correspondence address. Other than that the arrangement in place continues.
If the tenant will agree to a new tenancy document, then it’s good practice to sort it out, but if they don’t agree there’s nothing you can do.
Member Since September 2018 - Comments: 3515 - Articles: 5
11:34 AM, 30th January 2023, About 3 years ago
sounds like a bloody nightmare. If the current LL has not done everything to the latter of the law for each and every tenancy then you as the incoming LL will take the hit later on and that in itself is a financial unknown (so not something you can negotiate on in regards to the sale price either)
As someone said, you can offer the tenant a new tenancy with you (as the new LL) but they can refuse.
Personally I’d avoid unless you use the tactic of agreeing a price on the premise of full vacant possession? If they have done their LL job properly then it wont be an issue. I know not nice to give existing tenants notice, but you can then (before the notice hits) offer them a new contract with you as the incoming LL so they don’t have to move? Might be a solution?
Member Since January 2020 - Comments: 13
11:51 AM, 30th January 2023, About 3 years ago
Reply to the comment left by David Houghton at 30/01/2023 – 11:00
Hi I would like to see the reported case on this point and would welcome it being shared on the form for all of us to benefit from it, thank you
Member Since January 2020 - Comments: 13
11:52 AM, 30th January 2023, About 3 years ago
Reply to the comment left by David Houghton at 30/01/2023 – 11:00
please share the reported case