Buying a tenanted residential property

Purchasing a tenanted residential property

You’ve decided to purchase a residential property with a tenant in situ. ‘Fantastic’, you think, there will be less work in marketing it after completion and you’ll have a ready-made tenant – but, is

it that straightforward? WORDS BY MANAGING ASSOCIATE KIRSTY ADAMS

If you are looking to become a landlord or extend your property portfolio as a landlord, there are distinct differences between buying an empty property or buying one with a tenant already living there – things can be slightly more complicated.

It is important to remember when purchasing a property with a tenant in situ, that you are purchasing the property subject to their existing tenancy agreement, more than likely an Assured Shorthold Tenancy (AST). During part of the conveyancing process, enquiries are raised with the seller’s solicitor on legal and practical points and some of those enquiries will be centered around the existing tenancy agreement.

You’ll no doubt want to know of any informal arrangements with the tenant, what the tenant currently pays by way of rent and whether they are in arrears (for obvious reasons). You’ll also need to know whether there have been any complaints made against the tenant or whether the tenant has indicated they want to leave the property, otherwise you could be left with a vacant property if they do.

It’s not that you will be buying into a troublesome scenario specifically, but it is important to know exactly what already exists and what you need to put in place to protect yourself.

It is also important to familiarise yourself with the legal requirements when it comes to ASTs; such requirements include a valid Energy Performance Certificate being available along with copies of gas and electrical safety certificates. Non-compliance on some of these requirements relating to ASTs can affect the validity of the tenancy, which could result in difficulty evicting a tenant in the event eviction is needed.

In a nutshell, buying a property with tenants isn’t entirely straightforward. It doesn’t have to be overly complicated, but calling in some expert advice is wise, just so that you know exactly where the land lies and what you are dealing with.

Find a property law specialist who can guide you through purchasing a property with a tenant in situ, and advise you on our findings during the conveyancing process and what this means for you as the new landlord.

Readers can call Kirsty on 0116 319 1110 or email kirsty@ pattersonscommerciallaw.com for more advice and guidance.

YOU’LL NEED TO KNOW WHETHER THERE HAVE BEEN ANY COMPLAINTS MADE AGAINST THE TENANT