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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Leak from upstairs flat - liability?
Member Since January 2015 - Comments: 1450 - Articles: 1
12:44 PM, 4th February 2023, About 3 years ago
Simplest is to get the current landlord to rectify all tenancy discrepancies prior to exchange of contracts, failing that completion and this inserted in Special Conditions in the contract and to provide documentary evidence that this has been done. Your solicitors have to approved, and can amend, the draft contract sent by the sellers conveyancer.
Failure to do this, and, to provide the evidence this has been done = do not complete and charge the contract rate of interest until this has been done.
Or walk away from this transaction?
Member Since December 2022 - Comments: 18
5:00 PM, 5th February 2023, About 3 years ago
Buying a tenanted property is clearly more risk than buying with vacant possession. However, if you conduct your due diligence fully during the conveyance, you are purchasing a going concern with immediate positive cashflow.
I purchased a small development of 6 flats in 2018 and although there are no longer any of the original tenants, it has been a strong investment as we reviewed the AST’s in place at the time of purchase with our legal team.
Personally I would not purchase with tenants if the appropriate paperwork was not in place as its just not worth the gamble.
Member Since November 2014 - Comments: 44
7:15 PM, 5th February 2023, About 3 years ago
Reply to the comment left by Kate Mellor at 02/02/2023 – 17:07
It has never been stated that a deed is a must. We are giving what is best practice or opinion if you like. There is no legal requirement to put an AST in writing but 99.9% of landlords do.
A deed of surrender is the best practice/professional way things are done. This would then be followed (best practice by an indemnity).
Hope that helps.