How to purchase with tenants in situ?
10:14 AM, 7th January 2021, 5 years ago
31
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As a novice, I was wondering what steps do you take to secure a property at Below Market Value (BMV) when the property is being sold with the tenants in situ?
I’m sure lenders prefer the security of houses to be bought with vacant possession?
How can this be resolved without the professionals getting involved and legally?
Many thanks
Angela
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Member Since August 2015 - Comments: 226
5:18 PM, 10th January 2021, About 5 years ago
Yes Trish, one of the many additional questions that have to be asked in these situations and why you use an experienced commercial conveyancer.
Member Since January 2020 - Comments: 559
6:25 PM, 10th January 2021, About 5 years ago
Reply to the comment left by Trish at 10/01/2021 – 16:44
I would suggest Trish that your solicitor failed you.
There should have been a specific pre-contract enquiry about the tenancy, including the rent, which the vendor has a legal obligation to answer correctly. It’s odd that your solicitor didn’t ask this given you were buying with the tenant in situ.
Member Since October 2018 - Comments: 149
10:53 AM, 11th January 2021, About 5 years ago
Reply to the comment left by Seething Landlord at 08/01/2021 – 17:15
“surveyor’s assessment of the value that a property is likely to achieve if offered for sale on the open market.” That is the accepted Industry Market Value, just because someone is willing to sell at less for Personal or whatever reason does not reduce the MV – its called a Discount!
Member Since May 2014 - Comments: 49
12:05 PM, 11th January 2021, About 5 years ago
Reply to the comment left by Graham Bowcock at 10/01/2021 – 18:25
Maybe I forgot to mention the tenant in situ to the solicitor……..
Member Since January 2020 - Comments: 1103 - Articles: 1
1:36 PM, 11th January 2021, About 5 years ago
Reply to the comment left by John Mac at 11/01/2021 – 10:53
I think we are at cross purposes on this. What you describe as “Industry Market Value” is obviously valid for certain purposes such as mortgage lending, probate (is that the same or lower?), assessment by a Court etc., where there has to be some basis for arriving at a judgement.
I am concerned with “True Realisable Market Value”. My point is that as a seller you can argue until you are blue in the face that a surveyor has valued the property at £x but if nobody is prepared to pay that amount it is not the true value. As a buyer, if you think you have bought at a discount you are deluded unless you can immediately find someone else who is prepared to buy from you for a higher price.
Member Since October 2018 - Comments: 149
1:39 PM, 11th January 2021, About 5 years ago
Reply to the comment left by Seething Landlord at 11/01/2021 – 13:36
I’ve done exactly that, bought BMV, got the keys, given them to an EA & sold later at the market Value.
Member Since July 2013 - Comments: 1266 - Articles: 1
7:34 PM, 12th January 2021, About 5 years ago
Reply to the comment left by Trish at 11/01/2021 – 12:05
A risky strategy, you took on a tenant with no tenancy agreement?
Member Since August 2015 - Comments: 226
8:30 PM, 12th January 2021, About 5 years ago
Dear Trish,
You need to check this comment but my experiences in such situations are any existing tenancy continues and you need to serve a notice to tell them you are new landlord etc. However that tenancy should have been carefully vetted and no doubt disclosed to your lender.
Member Since September 2020 - Comments: 158
10:52 PM, 12th January 2021, About 5 years ago
Reply to the comment left by John Mac at 11/01/2021 – 13:39
I’m with Seething Landlord on this one, but it’s semantics. I would argue ‘Below Market Value’ is a bad term. Market value is time bound and realised by a transaction at an instance in time. A valuation made by a surveyor is an expected/estimated/perceived market value, not the market value itself…..in a fast moving market, the surveyors value may differ from the transaction (or true) market value.
When you have bought and sold in a short period of time, you have actually witnesses two different market values that were on set at those two instances in time taking into account the multitude of factors associated with the separate transactions.
Member Since May 2014 - Comments: 49
8:55 AM, 13th January 2021, About 5 years ago
Reply to the comment left by Puzzler at 12/01/2021 – 19:34
There was a tenancy agreement in place which was terminated on completion day and I put a new agreement in place the same day