Tenants Not Affected (residential)

cormie

Hi, my friend was interested in 2 houses on Daft and both are currently occupied by tenants and being sold as "investment" properties. She was told that if she bought them, she wouldn't be able to live there. Is this true? I thought it was the case for businesses who may have leases of several years on commercial properties, but I thought for residential, the max contract someone could have would be a year and then if the landlord wants to sell or have a family member move in instead, then the tenants have to move out?

She could wait a year for any contracts to be up if she got the right place probably. Any feedback on how this works would be appreciated

c montgomery

cormie wrote: »

Hi, my friend was interested in 2 houses on Daft and both are currently occupied by tenants and being sold as "investment" properties. She was told that if she bought them, she wouldn't be able to live there. Is this true? I thought it was the case for businesses who may have leases of several years on commercial properties, but I thought for residential, the max contract someone could have would be a year and then if the landlord wants to sell or have a family member move in instead, then the tenants have to move out?

She could wait a year for any contracts to be up if she got the right place probably. Any feedback on how this works would be appreciated

No way I would buy somewhere with sitting tenants. What if they wouldn't pay you rent?
I don't think banks lend for residential mortgages when there's sitting tenants.

Michael D Not Higgins

Normally vacant possession is required for a bank to give mortgage drawdown. The vendor doesn't want to do this and wants to sell with the tenants in situ. Their reasons for doing so could be numerous, most likely for a cash sale, but I'd walk away.

Gumbo

Tennant ma probably have a lease that's not up yet.

Graham

It's possible the current tenants have a lease that grants them more than the statutory Part 4 rights they would otherwise have. Generally such leases would be annual so your estimate of a year may be correct. At the end of the lease (or just before the end), the landlord can give the required notice to terminate a Part 4 tenancy on one of the allowable ground which would be a minimum of 90 days notice depending on the length of the existing tenancy.

I'd consider what would happen if the tenant subsequently refused to move and stopped paying rent. It's not unusual to see PRTB proceedings take up-to 2 years before enforcement. I would question why the properties aren't being sold with vacant possession.

I have seen a couple of under market price properties where lifetime leases were given years ago and you would essentially be waiting for them to die.

seamus

cormie wrote: »

I thought for residential, the max contract someone could have would be a year and then if the landlord wants to sell or have a family member move in instead, then the tenants have to move out?

No. There's no upper limit on the length of a residential lease. 1 year is typical, but not the maximum.

While subject to a lease, the landlord cannot move anyone in unless that scenario is covered by the lease.

Statutory rights kick in after 6 months of renting, whether you have a lease or not. Statutory rights allow the landlord to give notice to vacate if they want to sell or move a family member in. But that's only where there's no lease in effect.

In the case of the properties your friend has seen, they may be subject to five or ten year leases. In that case the sale will include the requirement that the new landlord acquires and honours the leases in place.
Or it may be the case that they have no interest in getting bogged down in evictions and are selling the property with a sitting tenant.

In which case your friend could buy one and then evict the tenant. But it's very unlikely the bank will give a private residential mortgage for non-vacant possession.

She'd need to query with the estate agent as to the status of the lease(s) in effect on the properties.

cormie

Wow, all these replies and useful info within an hour of a post at 07:21? Thanks a lot everyone Sounds like it's not worth getting involved in alright, unless it was the absolute perfect property and she was willing to wait even years to eventually be able to live there!

Graham

It's worth pointing out that although this type of purchase carries a much increased risk element, this risk is often reflected in the price (it should certainly be reflected in any offers). If the purchaser is a cash buyer with no immediate need for the property or rental income it may still be worth considering.

Being positive, the purchaser may be lucky and end-up buying at a discount and getting possession 90 days after the transaction completes. Being negative the purchaser may find they own a property for 2 years during which they receive no rental income and have a draining legal battle before they get possession of the property which may not be handed-over in the condition they would hope.

The_Conductor

If the seller can show a history indicating there have been no issues with non-payment of rent or other issues with the tenants (anti-social behaviour etc) and sign a bond against any issues (normally for either a 3 or 5 year period) post sale- and there is a requisite reduction in the sale price to reflect the issues involved in residential property with tenant rights significantly above the rights a commercial tenant might have- then go for it.........

I.e. insurance for the prospective purchaser against any mishaps involving the sitting tenants.

cormie

Thanks again folks!!

Mrs OBumble

There's another possible scenario: there are some student complexes in which units are owned by individual investors, but the rental management is done by the company which built the complex. They are required (I think for tax purposes) to be available for student letting for a certain number of years - maybe forever.