Help – I’m buying a property with an existing tenant

Help – I’m buying a property with an existing tenant

8:00 AM, 12th February 2018, About 4 years ago 12

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I actually spend my time refurbishing property and reselling it. I have zero experience in the rental market and no knowledge on how to be a landlord.

The property I’m about to buy is comprised of three flats, one has a tenant and I am told is on a fixed contract until next February. This is not an issue to me as I will be kept busy refurbishing the other flats and I am quite happy to be receiving some rent in the interim period.

I would appreciate any advice on what I should be looking out for. The areas that concern me are:
1. Do I have to give some form of notice to the tenant upon purchase?
2. Presumably he had paid a deposit, how does my purchase affect this?
3. Any other advice you experienced Landlords are able to give.

Many thanks

Jose



Comments

by Graham Bowcock

9:02 AM, 13th February 2018, About 4 years ago

Dear Jose

Others have provided some good advice about the pitfalls, but do not be put off. Make sure you use a solicitor who understands investment property and the things they need to look out for. It has never been more vital to get everything in order. If you are taking a mortgage, then your lender will need to know that everything is okay as well.

As for an agent, then a decent agent should be able to give proper, robust, written advice. Don't go for the cheapest. My suggestion would be to use a firm that offers general professional services, not just an adjunct to an estate agent; that way they may have more experience (and PI cover!).

There is a notice procedure whereby you have to give the tenant the name of the new owner and a correspondence address.

Make sure that the deposit was properly protected when the tenancy started.

Regards

Graham

by Mandy Thomson

10:18 AM, 13th February 2018, About 4 years ago

Hi Jose
I'm with Mark on this, but would add that you should make sure an agent you choose is reputable by which I mean ensure they belong to ARLA Propertymark, NALS or RICS and check out reviews on Google and All Agents.
ALSO do a landlord foundation course, such as the one run by the NLA and join a landlord association because even if you use a reputable managing agent, there will still be issues they need to defer to you and legally the buck still stops with you.
However, to get you started, in answer to your original questions:
1. Do I have to give some form of notice to the tenant upon purchase?
Answer: Yes, but all it is simply a letter giving your name and a contact address for you in England or Wales. If you employ an agent later, you will need to ensure you repeat this with the agent's details. This is known as a section 48 notice.
2. Presumably he had paid a deposit, how does my purchase affect this?
Answer: you must get details of the deposit scheme from your solicitor (as it was a tenanted purchase, your solicitor should have ensured this was covered) and, if the solicitor hasn't already (get proof), inform the tenant of the change of landlord by letter with legally recognised proof of service. You will then need to either re-protect the deposit (if it was protected under an insured scheme or you want to change to a different scheme) AND, even if you merely change the landlord's name to your own, serve (or get evidence the solicitor served) the prescribed information (the information the scheme will forward to you) on the tenant within 30 days of your completion date).
3. Any other advice you experienced Landlords are able to give.
Answer: As stated at beginning of my post.


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