Looking into buying a property with tenants in situ could be a potential minefield. There are four key questions you need answers to before you should consider buying a tenanted property in the UK.
What Type Of Tenancy Agreement Is In Place?
One of the first things you need to know is the type of tenancy agreement in place when you take on the property. There are a variety of different types of tenancies that you should be aware of.
The most common kind of tenancy is an Assured Shorthold Tenancy (AST); however, there are others which may have been formed before AST was introduced or regulated tenancies. Be wary of these as they could potentially pose a risk to investors.
Make sure you read the tenancy agreement and to avoid facing any problems, take legal advice if you aren’t sure about any of the clauses.
Are There Any Added Repair Or Maintenance Issues?
It’s possible that some tenants won’t always report all the issues in a property. As a prospective landlord, this is important to take note of as you’d have to report them yourself and the addition of any extra costs could affect a potential purchase.
To minimise the risk of any potential problems, view the property yourself, talk to the tenants in person, if possible, and have a survey carried out by an expert.
Nevertheless, you will still need to factor contingency costs into your plans when negotiating a price with the seller.
What Would Be Included In The Sale?
You don’t want to find yourself receiving less than you bargained for, so make sure you know the exact items the previous landlord would be intending to take with them after the sale so you’re in a good position to negotiate a suitable price.
Is The Rent Paid On Time?
If you’re planning to allow the tenants to remain in the property and take on the role of landlord, then you will need to know whether rent has previously been paid fully and on-time. You don’t want to invest in a property with tenants in situ if they have a prior record of being difficult or even have any rental arrears.
There’s a lot to think about when investing in tenanted properties, but it doesn’t have to be overwhelming. At each stage of the conveyancing process, Bowsers Solicitors are more than happy to guide you through these issues.
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