Buying a tenanted property
Buying a tenanted property
It is essential to carry out thorough investigations before entering into a contract to buy any property, but particularly so where there is a tenant in occupation. The buyer will be relying on the tenancy to provide a source of income so he needs to make sure that the lease documentation is watertight and the tenant is a good payer. If the seller has made or received any complaints about the tenant the buyer needs to know as he will inherit these problems after completion of the purchase.
Financial matters
Immediately after completion of the purchase the new landlord will need to deal with certain financial matters. The first is to insure the property in accordance with the landlord’s insurance covenant in the lease. Another essential action is to obtain a “rent authority” letter from the seller, instructing the tenant to pay rent to the new owner. If a rent deposit has been transferred to the new owner it will need to be deposited in a bank account.
Management records
Make sure the seller hands over all the paperwork and records relating to the property. Having possession of these records will help the new owner to manage the property more effectively and to comply with its legal obligations as landlord. This includes title deeds, financial records and health & safety files.