UK Landlord Forum / Life

Hi Everyone,

I am about to buy my first rental property and become a first time landlady. It's something I have always wanted to do but at the same time I am nervous :-).

After months of searching, I think I have found a suitable 2 bedroom flat which I have made an offer on and had accepted. The flat has tenants in already who appear pretty settled, so I think I would be happy to keep them on? They definitely wish to stay. The agent has made it clear that the vendor is happy to sell with the tenants in place or vacant (if this makes sense). It's an assured shorthold tenancy.

Please could I have your views on whether buying with tenants in place is a good thing? Are there lots of pitfalls to this? What sort of things should I look out for? Or would it be easier to buy the place with the tenants gone as I am a complete beginner? Sorry if these appear really dumb questions :-(. I am a complete novice. The agent who I am buying the flat off is the one who the vendor rents it out with if that makes sense? They are a huge national chain. What sort of things should I look out for here? Is it practical to change to a different agency? I would be looking at paying for a managed service at first just whilst I get into the swing of things then maybe trying to manage it myself?

Thank you everybody. I would really appreciate anyone's experiences/views.

Kind regards,
Laura

With rare exceptions, almost all lettings agents are total and utter wastes of oxygen who do very, very little to justify their steep fees.  Manage the property yourself right from the start.

Before you decide whether to keep the tenants on, go and meet them and have a cup of tea with them.  Form a judgment in your own mind about whether you like them and you're happy to deal with them long term.

It's really important that you don't attempt to manage the property on the basis of someone else's paperwork.  If you want to keep the tenants on, then instruct your solicitor to ensure that the "vendor" (person who's selling the property) terminates their existing tenancy and refunds their deposit on the day of completion.  Offer them a fresh assured shorthold tenancy that's compliant with the Tenant Fees Act -- you can ask the solicitor who's doing your conveyancing to provide one if necessary.  On the day of completion, visit the tenants, sign up the tenancy agreement with them, and do a thorough inventory on the day of completion.  Then take the tenants' deposit, and immediately lodge it with MyDeposits.  Send the tenants the evidence that you've done this.

Soooooo...

So many thoughts...

First question is - why on earth (really, why on earth?) have you always wanted to be a Landlord? I can imagine you wanting to be a Pilot or a Fireman or, even, a Pub Landlord / Landlady... but why on earth do you want to be a Landlord / Landlady? Are you insane? Haven't you done your research? It's not like it used to be, y'know? The G-Men are all over us now. Regulations a-plenty, more coming down the line, minefield after minefield strewn in front of us... plus more tax... more tax and more tax.

Buying Tenanted... at first it probably seems like an easy life. I bet it does. It's not that it can't work... I bet there are Landlords out there who seek out these opportunities and make it work. I have never been one. I have always insisted on vacant possession and I have decided to start again myself. I am somewhat hands-on and I like to do the preparation of the property (tidying, refreshing, plus upgrades if it needs it), then the advertising (Upad) and the viewings... and decide who my Tenants are for myself.

When you take on a Tenanted property you effectively step into the shoes of the outgoing Landlord... you must serve proper notice on the Tenants or no rent is due... it isn't possible to force them to sign a new agreement with you... their existing agreement is live... so whatever the old chappie agreed to is something you may have to live with (for a while)... they might have ran rings around the outgoing Landlord and he's thrown his hands into the air and is just looking for some mug to take it off his hands... enter Lauralondon stage left... 

You're gonna be locked-in to that Agent for some time... and because you're green you probably won't be far off the mark if you expect the Agent to run rings around you too... I mean, you're just another mark to the Agent... please don't think that because the Agent supposedly works for you that they will have your best interests at heart. You are a very small player. You are there to line their pockets... don't think anything else and you might survive this.

The big one is Deposit... because it's the most cumbersome to you if it's not done properly... I wonder if your Conveyancer will charge you more because it's let out?

I would not do it. I have thought about it off and on... I know I would start afresh. Because I self-manage from the start I never have an Agent, so I need to know how all aspects of the properties I let out work... I don't just hand them over to Tenants and wish them luck... I know how the boiler reset procedure works, where the stop tap is, how to read the gas meter ("press A until index is shown"), what the Council Tax band is (without looking it up, I mean)... what kind of broadband speeds you can be expecting... when you buy a new property and work in there for a while you have the chance to get to know this... when you're buying a property where someone is living - no, you can't really... so that brings me full circle...

If you're gonna be effectively a totally hands-off Landlord, and you're even taking on the existing Agent's fully managed service... and you're not even going to choose your own Tenants... why on earth have you always wanted to be a Landlord?

Because that's not being a Landlord, really... that's something else... like a remote property investor or summat... there's other offerings in the marketplace for that.

P.S. - please note, I did say it's not that it can't work... it's just you asked about pitfalls... I gave you some, plus some judg-y stuff on top (that's for free).

Hi Mortimer,

Thank you so much for your reply. I really appreciate it. I kind of guessed that all letting agents might be a waste of space.  Thank you for confirming :-).

Regarding the tenants, I have met them twice now at viewings and I do really like them. They are looking after the place from what I saw (been there for 3 years now) and appear to want to stay for a good few more years. They have their young child in a nearby school. Of course, I could be really wrong about this. Hence I felt inclined to want to buy the property with them in rather than vacant. I have the option to choose either.

Thanks for all the advice with regards to what to do on the day of completion and a fresh assured shorthold tenancy. I am about to instruct a solicitor and was planning on telling them that the purchase will be subject to the existing tenancy. My understanding so far is that my solicitor would need to obtain details of the tenancy and to see a copy of the tenancy agreement (and me too of course)? Other information about the tenancy and the tenant would also be requested? The property is being managed by a large national letting agent, so I thought it likely they will be able to supply it? I know that I would also need confirmation that rent payments are up-to-date, together with information about any deposit paid by the tenant when the tenancy was granted and who is holding this deposit? People actually occupying the property, in case any adults other than the tenants named in the agreement are in occupation etc? Am I completely mad to be considering this route? It sounds like I am as a beginner and I should be going for vacant possession?

Thanks again for your opinion. Really appreciate it.

You're certainly not mad to buy a property that comes with tenants who you like and who want to remain in the property.  :-)  That's a sensible decision.  Good tenants are worth keeping happy.

As for the rest of it... well, I'd invite you to spend a few minutes reading other threads in this forum.  After you've read them, reflect on how many of them were started by landlords who've got a great big problem because of paperwork errors that were originally made by someone else.

The law in respect of assured shorthold tenancy agreements has moved rapidly in the past few years, and notably the Tenant Fees Act prohibits several things that used to be standard practice.  I can't use the documents I was using six months ago.  Make a fresh tenancy agreement that's compliant with the law as it is now, and which you've personally gone over with a fine tooth comb to make sure you understand every clause.

At the end of the tenancy, you'll need to check the inventory with a tenant who's motivated to get their deposit back.  They may say things like, "Oh, this damage was here when we moved in but the previous bloke didn't write it on the inventory ---- he said it wouldn't be a problem."  How would you counter that?  And what if the previous landlord didn't register the deposit correctly or in good time?

I really do suggest starting the paperwork afresh on the day of completion, taking their deposit yourself and registering it properly.  And check that these tenants really have paid their rent on time; get the lettings agent to send you a full statement (you may need tenant's consent to this).

Thanks Mortimer. Very helpful indeed. I definitely will do.

I guess the mistake I have been making is assuming that because the vendor is paying for the property to be managed by a large letting agent, everything would have been set up properly back in 2016/2017 and be running smoothly. It's good for me. I would then inherit this if that makes sense. It appears from what you are saying that this isn't necessarily the case?

Hi Hippogriff,

Thank you very much for your message. I really appreciate it. It has given me a lot to think about.

You are completely right. My conveyanver will charge more as it's currently let out :-(. It's not a great deal more though, but more none the less.

I am buying the property in an area local to me, an area I know well, so there is absolutely no reason why I can't be hands on with it like you describe. Like I said to Mortimer, I think I have been a bit naive here in assuming that because the current vendor is paying for the property to be fully managed by a large letting agent, everything would have been set up properly back in 2016/2017 (including the deposit?) and be running smoothly. I am getting the impression that this isn't necessarily the case :-(. Am I right? Don't these agents need to ensure that the landlord is compliant in all areas? Isn't that the purpose of paying them? Or do most of them just not do their job properly.

Thank you so much again for your time.

Well... again, if the Landlord is not ensuring their own compliance in all areas they're not doing Landlording (Landlordism?)... my question is still a valid one as to "why have you always wanted to do it?"... it's fraught with challenges, the risks are high, the rewards are modest... you need a thick skin and resilience in spades... if you're looking for what you think is a passive income, then being a Landlord loses-out to other options... it's not all about rocking-up in your Rolls-Royce once a month to collect a bunch of well-used twenties and pat your tame pet Tenant on the head.

For me, I answered that question specifically before I started... I wanted a medium-term exit strategy from paid employment, I wanted to gain experience in many DIY aspects, I wanted something beyond a hobby to keep me busy after retirement and, finally, this is true - I wanted to provide excellent products (homes) at a good price.

When you're a hands-on Landlord it's not about bricks and mortar... it's a people business, and people are [can be] tricky. If you're hands-off then you're dealing with an Agent and Agents are tricky. So... why this as your investment strategy?

Quote from: Lauralondon on May 28, 2019, 12:31:37 AMI guess the mistake I have been making is assuming that because the vendor is paying for the property to be managed by a large letting agent, everything would have been set up properly back in 2016/2017 and be running smoothly. It's good for me. I would then inherit this if that makes sense. It appears from what you are saying that this isn't necessarily the case?

Well, you're asking for opinions, and my opinion is that landlords shouldn't trust other people to get the paperwork right on their behalf.  Not other landlords, and not lettings agents.  There's one way to be sure and that's to do it yourself.

The paperwork may well have been set up properly back in 2016/17.  The law has changed since then.  The person who set it up may or may not still be working for that agency at the end of the tenancy when you need to raise a query.  The inventory may or may not be complete and accurate.  The EPC probably is current and valid, as you're buying it.  The electrical safety certificate probably is still in date.  It's likely that the deposit has been registered with MyDeposits or one of the also-rans, although it won't be in your name.

But you have the opportunity to guarantee those things right from the start of the tenancy.

From what you've said, you want to start doing these things yourself at some point.  No time like the present!

Thank you again, Mortimer. :-). Much appreciated.

I will let you know what decision I take. Highly likely I might go for vacant possession so I can start again.

Kind regards,
Laura

Hi Hippogriff,

Thanks very much for your message. I think I have given the wrong impression about what I am looking to do here by buying this property. I think by me writing "first rental property and landlady" :-). Very misleading! It will actually be my first and only rental property. (unless something drastically changes of course). We would be looking to actually go and live in this property in future ourselves and possibly even my parents for a short while when they initially return from living overseas. Long story! I guess what I am trying to say is that it's a property that we intend to keep in the family for years to come and utilse in someway. Of course, this will mean legally getting rid of tenants and ensuring it is vacant for when we do one day need it etc. However, in the meantime I am hoping to rent it out and take a small income from it (I love the way I write small - I am very aware with the amount of overheads now, some people are lucky to break even). I guess managing it myself might certainly help in that regard.

Thank you very much again. I will let you know how I get on.  Highly likely I might go for vacant possession so I can start again.

Speak soon.

Kind regards,
Laura

Yes, you'd given me the impression that this was the start of something big and it was you fulfilling a life's ambition... hence my question - why?

If you take it with vacant possession then you can assess it in the cold light of day... what needs doing to it in preparation for the future... then you might decide to accelerate some of those things, in preparation, but also to potentially increase the rent achievable right now... offsetting some incurred costs. You never know. At least thread has given you some things to ponder, and I'm sure whatever decision you make you will be able to go down that path a little more enlightened. Don't trust the Agent.

Hehe. Yes I did do that didn't I. Wrong impression. Sorry.

Thank you very much for all the advice.

I will let everyone know how I get on. I definitely won't be trusting any agents, that's for sure.

Speak soon.

Best of British, Laura.  :-)

Hippogriff ---- personally, I wanted to be a landlord for a long time.  I was variously a mortgage broker, an estate agent and a lettings agent in the 1990s and 2000s (which is, by the by, how I acquired my low opinion of lettings agents), and I saw a lot of what goes on in this industry.  I decided that I could do it better.  Then I earned a certain amount of money doing proper work that needed proper discipline and professionalism, and that put me in a financial position to start landlording last autumn.

I'm in the business of providing some nice people with some bloody good homes, and for me, it's a good feeling.  In my experience, compared to life in the dystopian world of paid employment in austerity Britain, landlording is easy and rewarding.

A Letting Agent in the 90s..? Wow, I bet that was like the Wild West, right? Did you ever shoot anyone? Did you have cause to? Be honest...

Thanks Mortimer :-)

Quote from: Hippogriff on May 29, 2019, 03:08:19 PMA Letting Agent in the 90s..? Wow, I bet that was like the Wild West, right? Did you ever shoot anyone? Did you have cause to? Be honest...

Reckon I might jest have had cause to shoot a couple folks, pardner.   

I so wish I asked this question before I bought my first property, less than a year ago. I bought it tenanted and it backfired big time. I'm not very experienced but based on what I've been through my best advise would be to do a thorough background search on the tenants.

And if you let them stay make sure that they know who's 'boss'. I was too nice, kind of respecting that the tenant had been living in the property for 1,5 years and he dominated me all through our relationship. (He's now out thank heavens but I lost a lot of money). Good luck!

We bought a flat which had a tenant who wanted to stay.  She was in her 60's so we said we would meet her at the viewing.  Actually, she would not let the estate agent in for viewings and we were the only ones who got through the door.  First red flag.  She had a big family who visited a lot (tiny flat) and the neighbours complained a lot. Speak to them too if you can.  We decided we wanted vacant possession.  She left a bit of a mess and squeezed another month on top of her Sec 20 two months.  I always choose and manage our properties.  You will have to pay a few more bills if you have an empty period but I think it's worth it.  We bought from a first time landlord - she lost money on that place, I felt sorry for her experience.  She paid too much, licensing had just come in and her agent picked a rubbish tenant.  Good luck.