Since 2008, the number of properties sold with sitting tenants has quadrupled, and that figure accounts for about 11 percent of all rental properties. So what does this mean? And if you are thinking of buying a rental property with sitting tenants, what should you be considering? Read on to find out more.
A Property With Sitting Tenants Is Good News All Round
The first thing to take note of is that this is a good thing all round. If a property with sitting tenants is bought by a landlord, that means the tenants can remain in their home, and the landlord doesn’t have to spend any time or money searching for new tenants for the property. Everyone wins.
That doesn’t mean, though, that there aren’t some important things to consider when you are buying a property with sitting tenants. It might be the easiest option of all when it comes to starting your landlord journey – or adding to your portfolio – but in order for the entire thing to go smoothly, you need to do your research too. Don’t just assume that all is well.
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Inventory
When you are buying a property with sitting tenants you’ll want to see the inventory that was carried out when they moved in. 25 percent of all tenants sign a lease that lasts for two or more years, and the longer tenants are in a property, the more potential there is for damage to have occurred.
The inventory is the ideal tool to make sure that, when you inspect the property before buying it, it is all how it is meant to be, bearing in mind how wear and tear will affect the look of a property too. This will give you a good idea about how the tenants are treating the property and how much you might have to spend when the tenancy is up. If that cost is going to outweigh the cost of buying an empty property and finding a new tenant, it’s not worth the risk.
And make sure to see any copies of the mid-term inspections that should have been carried out. Again, you’ll be able to see exactly what’s happening and have all the information this way to allow you to make an informed decision.
Referencing
It might surprise you to know that, as a new landlord, you have the right to run checks on the sitting tenant of the property you buy. You can’t charge them for the work, of course, but it’s worth doing a check for your own peace of mind. You’ll want to know that they are exactly who they say they are and that they have the right to reside in the UK. This is crucial since you’ll need to comply with the immigration right to rent legislation.
Anything could have changed between the original tenancy starting and you taking over, and since you’ll be responsible for ensuring that your tenants are living here legally, you must check this out.
Deposit Protection
Make sure you have proof that this has been carried out correctly by the previous landlord, including serving the paperwork to the tenant. It wouldn’t hurt to have written confirmation that this has been carried out too directly from the tenant, as an extra safety net.
Rent Guarantee Insurance
Because you haven’t hand-picked this tenant from the start you have no idea whether they are a good tenant or not, so obtaining rent guarantee insurance would be a good idea.