Taking the plunge

[CuthburyKid]

My Wife and I are taking the plunge into the buy to let market but we need some advice. We are in the process of buying a house but this house already has tenants in, we were told by the estate agent before making an offer that the current tenants contract ran until May this year and so we wouldn`t be able to make any changes to there existing contract until then, It turns out that the tenants are friends of the Landlord and have been paying less than the going rate in rent (appx £100 per month less) and that the contract they signed was back in 2012 and has not been renewed since just rolling over. The current Landlord did not get a deposit or references either because they were "friends". These findings have put us in a bit of a position and we are unsure what to do next, we could exchange contracts but not complete until the current tenants have left this means the Landlord would have to give them 2 months notice (as I understand) or we could just carry on and complete and then draw up new contracts but this would be highly risky and could lead to sitting tenants ?? Thats the infomation as I understand it but would really appreciate some feedback from people more experienced. Our solicitor says we should contact the Estate Agent and tell him the infomation he gave us which led us to make an offer was false and so we should say we will only complete when we have vacant possession ??

Any advice greatly received

[Carryon Regardless]

Making an offer on false information is irrelevant as there is nothing binding until exchange of contracts, otherwise it's good advice from the solicitor.

Or you could revise your offer to account for a period of uncertainty / reduced rents until you repossess following ownership.

The more simple option is to exchange when vacant possession is available, repossessions can be too problematic especially if some other form of agreement raises it's head later.

[CuthburyKid]

Hi Cor

Thanks for your thoughts, it just seems that things are a bit messy, we were happy to wait until May when we thought the tenants current contract expired and then we would renegotiate a new one on our terms. The tenants in there now have expressed a wish to stay on and understand that their rent would increase but the worries we have is nothing seems to be written down in black and white, the current Landlord is not very forthcoming with a copy of the original contract from 2012 (which leads me to believe there may not even be one) he has failed to supply a certificates for the electrics or the boiler (pretty basic stuff) either. A concern I have is that if we go for vacant possession he may say well I don`t want to sell to you then and we have invested a fair bit of money already, and there where other people interested in the property when we put our offer in

[Richlist]

Thats good advice from CoR.

1.I guess it really depends on how much you are paying for the property compared to its market value. In addition things like:

* Buying with sitting tenants.

* Having below market rents.

* No deposit

* No references

etc

would normally all lead to a below market value offer.

2.How reliable is the new information you've got ? are you sure its accurate ?

3. There is no legal requirement for an electrical certificate.

4. There is no legal requirement for a contract to be in writing......a verbal contract is sufficient.

5. If there is no gas certificate its just another bargaining tool to get the price down along with everything else.

[Melboy]

You walk away from this if this purchase starts to get iffy in anyway or getting out of control.

You will be heading for an expensive lesson on how not to buy a house with sitting tenants.

This "landlord" clearly doesn't have the first idea on what his his role is. He is seriously breaking the law for not having a gas certificate for starter's and he risks at best a £5,000 fine for not having one in place and at worst manslaughter charges should anything happen to his tenants by way of gas CO poisening.

Your solicitor should be advising you, and he probably is, that under no circumstances purchase this property until you are perfectly clear on what documentation is in place regarding these tenants and he has that confirmation in writing on his desk.

Without these docs. you could be well and truly stuffed.

[CuthburyKid]

Thanks for the advice the solicitor says he is going to turn the screw a bit and make some pressing enquiries......... we wait and see

[Carryon Regardless]

Thinking you can introduce your own contract in May is possibly misguided.

We are unable to 'substantially' change an existing agreement, without sight of a formal contract you have no idea what is in place. I would also have fear that the vendor could 'help' his 'friends' leaving you with the result.

It doesn't sound like you have great experience in this industry. If you take ownership with them in possession there is nothing to cause them to sign any agreement. They may play you as T's often do. It could be many months of no rent and adverse situations before you gain possession.

With the possible complications I would far prefer vacant possession. The possible later claims in court as to what was 'said' before your involvement could really screw you over, after all how could you contradict the claims ?

Afterthought, if you are raising a mortgage I would be surprised if the provider didn't insist on vacant possession within their contract.