Tips for buying a property with a tenant

Tips for buying a property with a tenant

There are quite a few obvious advantages to buying a property that already has a tenant in place, namely the immediate cash flow. In terms of the UK buy to let market, a property with a reliable tenant in place ranks as one of the best things you can have.

As buy to let property continues to increase in popularity there is a lot to be said for buying an income-generating investment in a market where rental yields and property prices all quietly but reliably rising.

Purchasing a buy to let property with a tenant already in place is the perfect way to either start or expand a portfolio – here is some advice from us to get you started.

The tenants

Whilst having existing tenants is absolutely a good thing you should strive to ask as many questions as possible about the tenants. How long have they been in the property for? If the current tenants have only moved in recently, how many others have been in the property over the past five years?

It is worth knowing this information; if there have been many tenants over five years then you’ll want to know why tenants don’t tend to stay very long, or whether that means there is a greater than usual amount of maintenance to consider.

Similarly, you’ll want to know if the tenants had any arrears recently so you’re aware of any potential issues in the future, avoiding potential protracted battles over rent payments. Furthermore you’ll need to know which deposit scheme the tenant’s deposit is protected by (it should be the Deposit Protection Service, the Tenancy Deposit Scheme or mydeposits).

Health and safety and management

Another notable benefit of buying a tenanted buy to let property is that it should be up to scratch for all health and safety laws such as working smoke and carbon monoxide alarms, and gas and electricity safety certificates.

Property management arrangements should already be set and the existing landlord should be able to provide the contact details of the electricians, plumbers and other tradesmen they use.

The property should be in a good state of repair and shouldn’t really need any extensive work. Properties that have people living in them are generally in a good state of repair and the likelihood of not having to invest a substantial sum to bring it up to scratch is a big positive.

You may well want to spend a little bit of money on the smaller aspects of the property, but overall this should not be a big cost when purchasing a tenanted buy to let property.

Freehold vs Leasehold

It is worth finding out whether the property you’re buying is leasehold or freehold (as it would be with any property purchase) so that you’re aware if there’s any ground rent due, when it’s due and how much it is.

Whilst ground rent tends to be reasonable and isn’t normally subject to huge inflation you should look to see how much the ground rent has changed in the past five years just to be on the safe side.

Are you looking to purchase a tenanted buy to let property? Have a look at our available investment opportunities here and get in touch today!

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