What does 'Tenanted Property' mean when buying a property?
Find out what Tenanted Property means when you are buying a property. 'What does Tenanted Property mean?' plus over 150 other property related terms and jargon in plain English
Have you seen some property details which say the flat or house is tenanted. This can mean a lot of different things so tread carefully!
Most of the time there shouldn't be anything to concern you. The tenants will be renting the property on a 6 or 12 month contract. If you are purchasing the property as a buy-to-let you might even want to consider keeping them.
If you are buying to live there (and you are getting a mortgage) then the terms of your loan will mean they have to be out before you exchange contracts so its just a case of finding out when the vendor can serve them notice (tell them to leave).
But there are some prudent checks to make:
1) What are the exact terms of their tenancy agreement
You'll want your solicitor to go through this with a toothpick just to make sure there are no quirky terms which could throw a spanner in the works of your purchase. Terms that even the vendor may not be aware of or had forgotten about (big buy-to-let landlords might have dozens of properties and won't remember every lease).
Perhaps there are still three years to run on the tenancy agreement and the vendor can't serve them notice if they want to renew. Check everything and then check everything again.
2) Are the tenants in a dispute with the vendor
This doesn't mean they have gone to court yet but perhaps they have stopped paying their rent until a certain matter is resolved such as a damaged window which both tenants and vendor blame on each other.
You don't need to get into the argument but if there is a conflict going on the tenants can dig in and it can take months for the case to grind through the courts. You'll spend money on solicitors and surveyors only to find your purchase blocked until a judge can make space to hear the two sides. Even then the court's decision may be non-committal - asking both sides to try harder to reach an agreement and come back in 3 months if they can't.
Tenanted properties where the tenants are in dispute with the vendor are just a no go area. Move on.
3) Are these "Sitting Tenants"
"Sitting Tenants" have bundles or rights over and above tenants on standard 6 or 12 month tenancy agreements.
Very often you cannot serve notice on them (ask them to move out). Only they can ever decide this. The rent they pay and any increases in rent might be defined in the tenancy agreement and could be well below the market rate.
The rights the tenants have could be passed on to their children which means they or their off spring might be living there long after you and I are around.
To any trained solicitor "Sitting Tenants" will be immediately obvious and it is their duty to flag this up to you. I would only go near such properties if I was a very experienced developer. I'm not and if you aren't either I'd give properties with Sitting Tenants a miss.
To find out everything you need to know to purchase a property the smart way pick up a copy of my ebook How to Really Buy a Property.