Buying house with tenant in situ

Ripper · 16 Apr 2021 at 17:29

Anyone had any experience of this?

Looking to purchase a property to let out (my first). It’s being sold with tenants already in.

Are there any additional legal costs I need to factor in? Any major reasons not to go down this route?

I’m going to do a heap of googling tonight but I always value people’s views on here, particularly those that have been through this!

BUDFORCE · 16 Apr 2021 at 18:11

Do you need a mortgage?

Most mortgage lenders will check the tenancy agreements, well, theyll get the solicitors to check the tenancy agreements fall within a lenders criteria, but unless there is something weird and wonderful, it'll probably only protect you if anything.

And example of where you may get stuck for example is I'd the existing tenancy agreement is with say the local council to house mentally disabled people on a long term basis or something like that.

john_smith · 16 Apr 2021 at 18:19

I did, bought a place 4 years ago with tenants in. No issues at all. They actually moved out last month and found me a new tenant who moved in the next day. I'm aware i'm probably quite lucky.

Ripper · 16 Apr 2021 at 18:45

john_smith said:
I did, bought a place 4 years ago with tenants in. No issues at all. They actually moved out last month and found me a new tenant who moved in the next day. I'm aware i'm probably quite lucky.

Did you find there were any additional costs or additional loopholes you had to jump through? I would be buying with a mortgage.

john_smith · 16 Apr 2021 at 18:46

No, I bought with a BTL mortgage via a broker. It was the same as any other purchase.

For me it was a less risky investment. I knew I’d be getting a return from day 1.

wesimmo · 16 Apr 2021 at 19:11

john_smith said:
For me it was a less risky investment. I knew I’d be getting a return from day 1.

I'd imagine this, if you can present evidence of income and its sufficient to cover the costs it would be looked on more favourably than a guesstimate of the potential income.

dowie · 17 Apr 2021 at 12:29

BUDFORCE said:
And example of where you may get stuck for example is I'd the existing tenancy agreement is with say the local council to house mentally disabled people on a long term basis or something like that.

Why is that an issue out of interest?

Surely a long-term tenant like a local council ought to be ideal in terms of risk no?

BUDFORCE · 17 Apr 2021 at 13:45

dowie said:
Why is that an issue out of interest?

Surely a long-term tenant like a local council ought to be ideal in terms of risk no?

If you have to repocess.

Because you can just see the headlines: Mortgage lender evicts mentally ill and make them homeless.

dowie · 17 Apr 2021 at 14:01

BUDFORCE said:
If you have to repocess.

Because you can just see the headlines: Mortgage lender evicts mentally ill and make them homeless.

What are you basing this on though? Is this just something you've come up with yourself? Surely you'd be much less likely to evict a local authority tenant?

BUDFORCE · 17 Apr 2021 at 16:18

dowie said:
What are you basing this on though? Is this just something you've come up with yourself? Surely you'd be much less likely to evict a local authority tenant?

I work for a buy to let mortgage lender.......

Cooler running · 17 Apr 2021 at 18:47

Ripper said:
Anyone had any experience of this?

Looking to purchase a property to let out (my first). It’s being sold with tenants already in.

It's the normal for buy-to-let. Am currently considering one.

Ripper said:
Are there any additional legal costs I need to factor in? Any major reasons not to go down this route?

It's generally preferred for buy to let investors as you can accurately project costs and ROI. From what I understand how much work needs to be done is dependent on how you're buying the building. If you're buying a property freehold then usually there is just a small clause in the contract that states that new buyer X is now the beneficiary of the lease, it only involves separate work if the situation is extremely complex. Generally speaking the main cost associated with this is if there is a letting agency is involved, as they might change an admin fee.