Purchasing A Property With Existing Tenants

[Hitman]

Hi All,

NB: The tenants described below have just moved into the property in

question and I am not entirely sure if that makes them "Sitting Tenants".

Okay then, here goes.

I am in the process of purchasing the bottom maisonette of a detached

house which is split into two levels of which I own the top section.

My motivation for this purchase is purely based on the fact that I believe

it will subsequently put me in a good position to purchase the entire freehold

for both properties, from our landlord.

With literally days for the sale to be completed and contracts exchanged,

the vendor decided to rent out his maisonette to new tenants, to enable

him cover his mortgage payments. The tenants have since moved in.

I've been extremely unhappy about this and must admit, have considered

pulling out of the whole deal entirely, as I have only recently been involved

in a very lengthy eviction process with a tenant at my other property.

Ironically, the vendor announced his plan to rent his property within an hour

of me returning from the county court where I was awarded possession of

the other house.

It was my wish to fully refurbish the empty maisonette, once purchase was

completed, before letting it out. With tenants having now moved in, my plans

look threatened and it appears the only way I can carry out the required

work will be to evict them after the initial six months. I am informed by the

letting agent they are on an AST but have no proof of this.

I have a number of concerns about purchasing this property with sitting

tenants and would be grateful if you could assist with the following queries.

Question 1:

Due to the problems I've had with my other tenant, I would definitely like to

bring in my own tenants to this new property after the initial 6 months,

through the help of a network of friends and family.

How easy will it be to evict these new tenants after the statutory AST 6

month period, in order to refurbish the property?

Question 2:

As the new owner of the property, will I be bound by the terms and

conditions of the existing tenancy agreement signed between the vendor

and the tenants?

Question 3:

Am I legally permitted to make changes to the existing tenancy agreement

once I become the new landlord, particularly on issues such as damage

deposits?

Question 4:

I had informed my mortgage lender I expected to achieve a higher rental

income than what I am told the new tenants are paying. The rental factor

also played a huge part in my decision to purchase the property. Can I

increase the rent when I become the new owner and when can I do this?

Question 5:

Is there a checklist of things I need to look out for or insist on, from the

vendor, tenants and letting agents, before I complete this purchase?

I would be extremely grateful for your kind response to the above queries

and would also welcome any other useful tips before taking on this thankless

task.

Thank you

RM

[GPEL]

If you buy the property with tenants already in place, you are bound by the terms of their tenancy agreement, with no option to mandate changes. Serve a Section 21 notice to re-possess at the end of the fixed period, though wait and see how they meet their obligations as they may be good tenants. During the fixed period you'd be unable to increase the rent but can afterwards. Finally, it wouldn't be unreasonable for your solicitor to ask the vendor's solicitor certain questions such as evidence of referencing and has the rent been paid on time, confirmation of reasons for tenanting just before exchange etc.

[Melboy]

Any Vendor that moves in Tenants to a Property that is in the process of being sold has moved the goalposts relating to that sale and in this case any selling property that has Tenants in occupation is generally worth less than an untenanted property for obvious reasons.

Unless you are buying this property for a cracking good price I would pull out of the deal or at best negotiate a discount off the selling price because the Vendor has well and truly stuffed you by the actions he/she has taken whilst the selling process was well and truly underway.

To answer your question though there is little you can do.......you cannot alter the AST and you may have difficulty in even evicting them after the 6 Months is up.

Mel.

[philipjm]

you may have difficulty in even evicting them after the 6 Months is up.

Mel.

May, but lets not scare the poor chap. It's unlikely that the tenants wont move out on request providing they're reasonable people. If the S21 is served properly then you could get an accelerated possession order. Make sure you see the AST before you exchange. If its a load of rubbish with nothing under S47 & S48 then you need to be wary. Upon completion it would be advisable to serve S47 & 48 on the tenants.

[Melboy]

May, but lets not scare the poor chap. It's unlikely that the tenants wont move out on request providing they're reasonable people. If the S21 is served properly then you could get an accelerated possession order. Make sure you see the AST before you exchange. If its a load of rubbish with nothing under S47 & S48 then you need to be wary. Upon completion it would be advisable to serve S47 & 48 on the tenants.

You may be absolutely 100% correct, but on the information we have been given by Hitman and bearing in mind his previous experiences I would suggest he has been well and truly stuffed by the Vendor who has taken the unprecedented actions of actually renting out the vacant flat with selling negotiations underway.

Only time will tell.............keep us all posted Hitman on the outcome of this situation.

Oh! Yes! If this had happened to me I would have pulled out.

Mel.

[tony_ mort]

You need to liaise closely with your solicitor as to your options, but it may be worth asking whether you can exchange contracts but only complete with vacant posession. Unless you are really happy with the tenants leave them as someone else's problem.