I know for most landlord this is a no no, but I would like to discuss what to do if you are purchasing a property with tenants in.
Currently, a sale agent of a property with tenant in is also acting as a letting agent for the seller.
I have absolutely no idea how it works, it will be greatly appreciated if I can have some guidance from someone experienced this in this community for the main questions that I have outlined below:
How does the transfer work throughout the purchasing process and at what stage I need to do something different to a “normal” vacant possession purchase.
It is currently with the letting agent and how to get rid of them when it is completely handed over to me in the nicest way possible?
Is there any key things I need to be aware of before picking those tenants up and not to have any extra risks. E.g. is it possible to ensure the risk level to be the same like as if you are getting a new tenant through openrent.
All your support will be much appreciated. Thanks.
If you are buying a tenanted property you need to do full due dlligence to make sure both the property and the tenancy are as you would expect.
Start with a look at this list: 10 questions to ask when buying a tenanted property | Vesta Blog
I bought a property with tenants in situ, and also transferred letting agents at the same time. I transferred the letting to the agents handling the property sale, so they dealt with ending the relationship with the previous agent.
To be honest, they made a poor job of it. First, rent ended up still being paid to the old agent - it was recovered but still a worry. Second, when the tenants eventually left, I found their deposit had not been transferred to the new agent and this was quite awkward to sort out, the new agent washed their hands of it, and I had to resolve it myself.
So don’t forget about the deposit. Transfer of tenant’s deposit is not done by solicitors, and if you’re not using an agent going forward, you’ll have to initiate the transfer yourself with the old agent.
I got the tenants re-referenced, which came back OK, and they were absolutely fine.
So… the learning from your experience is just close the old one completely and then get the new one so you can be in control as if it is a new tenant so you will be worry free?
I would say the lessons learned are:
- Re-reference the tenants to see if you want to keep them on.
- Make sure their deposit is transferred so it’s either in your name or your agent’s name.
- Make sure tenants know to change their standing order and from when.
- Don’t rely on anyone else to do these things for you.
- Get all paperwork from the outgoing agent e.g. AST, inventory, etc. - my solicitor actually did do this.
That’s just my experience, but I’m sure there’s more.
Thanks Mark it is really helpful as we don’t get that many post relating to those situations.
When you say outgoing agent do you mean the letting agent who is currently managing the letting but soon will be passing to you?
So does it mean on that end I save myself some inventory cost and AST creation cost? e.g. I just do that offline and don’t need to pay anyone to get it handed over?
Do you think it is worth to get a rent guarantee insurance? and if so do you have any recommended ones?
Yes, by outgoing agent I mean the existing agent, who I think you said you’d be looking to dispense with.
In my situation the tenants had already been in situ 7 years when I bought the property and were already on a rolling month to month arrangement. The new agent did draw up a new AST for them. I think legally if you don’t draw a new AST you would still be deemed to have one, but probably not the best way to proceed.
Inventory was something my new agent never bothered about either, and when the tenants moved out I was told there never had been one. So I just had to trust them to take what was theirs.
So mistakes all round, including many on my part sadly. But you live and learn.