What does 'Sitting Tenants' mean when buying a property?
Find out what Sitting Tenants means when you are buying a property. 'What does Sitting Tenants mean?' plus over 150 other property related terms and jargon in plain English
Sitting Tenants
These are tenants who have the right to remain in a property, often for long periods or even until they decide to leave - you have no rights to evict them.
Its even possible that they can pass their rights on to their offspring
Some have their rent fixed or rent rises capped at a certain amount or certain percentage. Both the rent they are paying and rent rises are often well below market value.
It is perfectly possible to buy a property with sitting tenants but you should check their rights carefully and note that not all banks will approve a mortgage when this is the situation.
To find out everything you need to know when purchasing a property pick up a copy of my ebook How to Really Buy a Property.
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How to Really Buy a Property
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Chapter 1:
The First Questions Are For You
"... property is a big step and making money from it is not always as straight forward as the media or some authors might sometimes suggest. Generally speaking almost any real estate investment makes money in the long term. If you buy somewhere that you can rent out and the tenants pay off your mortgage then after twenty years you will have a very nice nest egg. If you are hoping the flat you buy will go up one hundred percent in the next twelve months so you can quit your job - good luck - it does happen. Overall however the most sound piece of advice anyone can give you is to treat property as a ten year investment, not a get rich quick..."
Chapter 2:
The Media and Property Prices
"... property needs some maintenance as the hot water and heating do not work properly but Mr Y cannot afford to do it
The tenants who moved in won't pay the rent until the work is done
This can be re-written:
"Mr Y, a self employed tiler from London, decided to purchase a buy to let investment..."
Chapter 8:
Buying to Let / For an Investment
"... that tend to offer the best yields are those not popular with private buyers. They are the ones that front on to busy roads, back on to railways, sit above commercial premises, are ex local authority, etc. The yield is good because the purchase price is lower for one or more reasons which has removed a large sector of private buyers as likely contenders. tenants, however, only see a property as temporary and so are more relaxed about taking a view on living in a property that has a negative..."
"... a house where the mortgage payments will be £1,000 but the rental will be £1,700 and assume it will be tenanted for 11 months out of 12 every year. The profit is £8,400 per year. Now in year three the roof needs to be replaced at a cost of £25,000. This has instantly wiped out all the profit since the purchase. Period properties also need periodic work on the bricks, windows and possibly the damp proofing so it is extremely easy to start loosing money instead of making..."
"... this may mean that your flat is completed while there is still scaffolding up, communal gardens are a sea of mud, JCBs are lurching around and builders kick off at seven in the morning with pneumatic drills. It's not the environment many tenants will go for and so your property could sit empty for weeks, or even..."
"... large number of unsold properties also meant that the developer decided to rent out unsold properties as they were finished which lead to dozens of apartments being available at the same time. Private buyers found it difficult to find tenants who were prepared to pay the rent needed cover the buy-to-let mortgages. So extreme was the situation that several buyers seriously contemplated failing to complete and loosing their £30,000+ exchange deposits as a better alternative to completing and selling for far..."
"... is essential, when buying through a property investment company, to double check all their figures to your own satisfaction and this is something that can be done, in most cases, over the internet. First look at property prices and rentals in the immediate area. Next call local agents to see what actual values are being achieved. For example, is it the norm at the point that you are buying for property to be selling at 10% below the asking price and for tenants to be negotiating 5% off the rental values. These are the real market..."
"... that the best a property investment company can offer you is a discount because you are buying in bulk along with others. Avoid gimmicks such as 'guaranteed rent for the first x months' as these suggest finding tenants will actually be difficult and this short term comfort zone will have been factored in to the sale..."
"... they bought large volumes from this builder'.
The rental figures on paper offered a 10% yield and there was plenty of blurb to explain why tenants would snap up such flats and why the capital gain would be excellent over the coming years.
They would organise the mortgage and even work..."
"... and why the capital gain would be excellent over the coming years.
They would organise the mortgage and even work with a local lettings agent to get the tenants in so Anthony would never have to leave his armchair.
This was property investment the way he wanted it - easy and seemingly..."
"... the event the values, both sale price and rental, were at the absolute top end of the market and the builders finish was poor which meant a number of items would need to be replaced in the near future. But Anthony had stretched himself financially and had no way to cover the mortgage payments as the properties lay vacant or to subsidise them when tenants moved..."
Chapter 9:
Getting on the Property Ladder
"... out of town option has become more attractive because for Buy-to-Let mortgages you will need a 15%+ deposit and this is more affordable with cheaper properties in towns, rather than cities. The downside is that a property three hours drive away is difficult to manage or find tenants for and so you will probably have to pay agents to carry out most of the work for..."
Chapter 14:
Viewing Properties and Making Offers
"... you, in other words they generally assume you know them.
The most frequently used are:
First Time Buyer
Chain Free and Vacant Possession
tenanted
Cash Purchasers Only
Repossession
Leasehold
Share of Freehold
Freehold
- First Time Buyer -
Originally this term arose to mean..."
"... properties. Just because a property is empty it does not necessarily follow that it is being offered chain free so always double check.
- tenanted -
It is possible to buy a property which is currently rented out. A landlord, for example, may want to sell his property but the tenants are..."
"... is possible to buy a property which is currently rented out. A landlord, for example, may want to sell his property but the tenants are only halfway through their twelve month lease. Many investors do buy tenanted properties, it saves having to find tenants themselves! It's possible but its not easy and both the lender and solicitors will need some badgering to make it..."
"... and solicitors will need some badgering to make it happen.
If a property is advertised as tenanted and you want to buy it that way it is always worth checking what references the tenants provided and what deposit they have lodged.
- Cash Purchase Only -
These are few and far between and..."
Chapter 18:
The Balance of Power
"... Story - Chipping the price at Swan YardMelissa had made an offer on a one bedroom flat within sixty seconds of an underground station. It was a safe location and the property had been decked out loft style. The owner had been renting the flat but the tenants were shortly due to move out. Concerned at the prospect of paying two mortgages he reduced the price from £220 to..."
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