Investing in a property with a tenant in situ means buyers can be earning their rental income from day one, and sellers can keep making a profit right up to completion.
Properties that already house tenants can either be sold with vacant possession on completion – meaning that the tenant must have agreed to a termination of the tenancy agreement by the date the transaction completes – or sold subject to an ongoing tenancy, in which case the tenancy will be handed over to the new owner on the day they get the keys.
There are pros and cons to both scenarios for buy-to-let landlords. If the tenant remains in the property, the new owner does not have to go through the process of finding a new one. It also means the new owner will receive rent from the tenant from their first day of ownership, meaning they can budget more accurately with the safety of the income, and the new landlord will also have access to the tenant’s full rental history before the sale goes through.
Gaining such a property isn’t without its pitfalls though, and a specialist conveyancing solicitor might be recommended to ensure the process runs smoothly. The new owner will need to be approved for a buy-to-let mortgage on the property – as opposed to if it was being sold as empty – and extra information on the tenants and tenancy agreement would need to be obtained.
A new option
New online marketplace Vesta claims to be the first of its kind to offer a platform for such property sales. It says that there are as many as 40,000 tenant evictions every year, many of which could be avoided if tenants were allowed to stay in situ when a property is sold.
Russell Gould, Vesta’s chief executive and a fintech entrepreneur, said: “The unique Vesta online marketplace is designed to provide buyers and sellers with more choice and a faster, simpler and assured process while reducing the chances of gazumping. Buyers can make offers or choose to buy at a guaranteed price with due diligence complete and tenants in place – a refreshing change to the current outdated system.”
Gould believes Vesta creates a new set of opportunities for the private rental sector, which is a market that is continuing to grow in the UK as more people are choosing to rent rather than buy properties as a lifestyle choice.
