Sometimes you may see a buy-to-let property available to buy with tenants already in place.
If you aren’t planning on doing any refurbishments to the property this can often be an advantage as you can start generating an income from your investment immediately without having to search and secure tenants.
This can save time and associated costs.
What you need to check with investing in a tenanted property
When selling a property with a tenant in occupation the most common tenancy agreement is an assured shorthold tenancy, which often lasts for just six months.
If you are purchasing a tenanted property with as shorthand tenancy then make sure your solicitor is aware so that they can investigate the terms and length of the existing tenancy and the tenant’s security of tenure.
The things that will need checking include:-
Check that there are no rent arrears; you don’t want to be investing in a debt or difficult tenant.
- Whether rent would be paid to you directly or to letting agents (and if it’s the latter is there a management fee to be factored into your figures.
- If there is deposit protected under a tenancy deposit scheme
- If all the required information has been provided to the tenant
- Ensure the contract allows for the property to be sold subject to the existing tenancy and a copy of the assured shorthold tenancy agreement is attached to the contract
- If the property is furnished, then an inventory should be prepared and also attached to the contract
When you complete the sale, the vendor’s solicitor will pass on the original tenancy agreement together with an authority signed by the seller addressed to the tenant requiring them to pay the rent directly to you as the new landlord from the completion date (or to your letting agent if you have one).
Buying an already tented property that is fully managed can be a great way to generate an immediate passive income.