Tenant in Situ Rent increase approach


I am about to exchange for a tenant in situ property (3 years old) in 2 weeks time and I am thinking of doing below provided all the checks are satisfactory. Please let me know if i missed anything cheers!

  • I will first speak to the tenant as i want to increase the rent, i will tell the tenant how much the new monthly payment will be and assume they accept.

  • As the price is different, for simplicity I will ask the tenant to end the previous contract and sign a new one with me on openrent as if he is new.

  • so the deposit will be he get it from his old landlord’s agent on his own and at the same time he gives me a 5 weeks rent deposit with my openrent and following every step from openrent guidance to completely cut off any possible unforeseen issue with the old AST.

  • since the current letting agent sent me the inventory report which is a new build (3 years ago) i can use that as a base. Although there are damages in the property already compared to that inventory but i can claim that out of his new deposits when they leave.

Is the above the best approach and was my understanding correct?

  • could there be disputes about the old letting agent takes the damages off the deposit and left me not able to claim it when the tenant leaves? if it is perfectly possible with my approach how do I avoid this?

  • the old AST is saying they need to give 2 month notice, but since i am purchasing it completing it would the old AST doesn’t apply in any case regardless of any notices?

Any suggestion helps!

The old AST remains effective after you buy unless it is ended, the tenant doesn’t need to agree to a new ast if they dont want to.

If you both agreed to start with a new ast then a new inventory would need to be created to be used as the reference point for when they move out you wouldn’t be able to use the old one. Whilst you could make deductions now i think that is just likely to alienate the tenants.

I assume you have done your own affordability check on the tenants? It’s all very well asking for an increase in rent but realistically in the current climate there are a lot of tenants who simply wont be able to afford it. This needs to be determined before you exchange…

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Hope youve done your due diligence on this purchase. Have a look at this checklist: 10 questions to ask when buying a tenanted property | Vesta Blog

so what is the easiest way to increase rent? the rent is to increase to the market level of the rents nearby.

The rent won’t be an issue we were told their salary and it is affordable. the only thing i am not so sure is currently it is with a letting agent and wanting to move over and do it myself, i just need to ensure everything is done property and then increase the rent. As far as I am aware there is a list of things if not done at the start with the old AST when you pick up you can’t legally kick the tenant out if they do not wish to move out.

You can increase the rent with a s13 notice provided it has not been increased within the last 12 months and provided you have served a s48/s3 notice.

You are not obliged to stick with the agent as their contract was with the previous landlord. However, dont expect them to be cooperative after the purchase, so youd better make sure you get copies of all documents before completion:

  • TA
  • deposit docs,
  • evidence of service of prescribed docs
  • references
    Etc. You will probably have to do this through your solicitor. Have a look at the checklist I linked earlier.

Also, I would only consider managing yourself once you have the requisite knowledge, so do some training if you need it.

Check the last E/L and gas check plus energy efficiency reports.

Has tenant always paid on time.
Last rent increase and how much
Is the rent or can it be paid direct to you
Terms of agent agreement if property sold with tenant although the contract would be with the last owner
Make sure you provide all DPS or equiv documentation again from you as the new landlord
Provide your bank details for rent payment
If new ast ensure any terms you wish to add are included

I bought a property last year with a tenant in situ. I told her at the time of the purchase that the rent would need to be increased, if she intended to stay, in line with comparable properties in the area and she agreed. I let her previous landlord sort out her deposit and started again with a new contract, deposit and inventory.
She had not looked after the property particularly well but I bought it in that condition and therefore it was up to her previous landlord to make any necessary deductions from her deposit .
I was happier to have a new contract (initially 6 months, with 2 months notice) that I was able to edit and have a new deposit. She moved out after a year and I gave her the full deposit back. You would not be entitled to any damaged that were incurred during the previous tenancy as you bought the house in its current condition. If your tenant does not agree to the price increase you can then give 2 months notice. Maybe it would have been a good idea to broach the subject with the tenant when you agreed the house purchase?