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ajfirth

Guarantor?

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Hi all, 

We have had a few great bits of advice from this site and I’m back for more. 

We’ve had an offer accepted on our first BTL and the property has existing tenants. The numbers won’t break any records, but do hold out on an 8% stress test.  We’re told that the tenants had to have a guarantor in place to get the tenancy but have been told that the EA ‘don’t believe’ there have been any arrears (1st thing we’ll double check).

They won’t let us see the paperwork at the moment due to GDPR, (fair enough) but I’ve asked them for an anonymised copy. 

Our question is this; should we accept the existing tenants or require vacant possession and source our own? VP is an option as the tenants were expecting to have to vacate on purchase anyway. Would this be seen as too high a risk for our first investment or are we being paranoid? 

Thank you for any help. 

Adam & Liam

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Hi,

There are too many variables to consider that you havent told us about.

Property value, rent pcm, how long have tenants stayed there for, condition of property etc.

To start to evict a tenant it will cost about £900 and take about 2 to 3 months depending how busy your magistrate courts are. But you must prove grounds to evict or have the AST 'rolling over' which I assume it is.

It is always a risk to take on someone else's tenants with a property. If the Agents are being evasive and not fully open about the financial history of the tenants, them you must assume the likelihood of you having problems with the tenants increasing.

It boils down to:

Can you afford not to have 4 months rent coming in and to spend nearly £1000 before you gain possession of your flat? Or do you wish to source your own tenants with a new AST and hope they pay you?

Historic proof of rent payment and the ability to afford rent are 2 of the main criteria I look for in choosing tenants. New or existing, they must meet this as a minimum.

Hope this helps a little

Find and connect to me on LinkedIn

CONRAD PATON


Conrad Paton

+44 7957 959851

conradpaton@yahoo.co.uk

https://www.linkedin.com/in/conrad-paton-424446110

 

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Thanks for reply Conrad. 
 

Really appreciate the help. The answers that I have to some of your questions are; Purchase Price £79k, Currently let at £465/month. Tenants have been there just under a year and I’m let to believe no missed payments. The house was immaculate when I went to view, though they did have a full day of viewing so could just have staged that, I suppose. 

I will go back to the estate agent and add your questions about affordability and history to the list I’m already asking. 

Thanks again
 

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Your welcome,

If the Agents cannot/will not give you the answers you want, you can always knock on the tenants door and explain the situation and ask them for 6 months bank statements showing employers money coming in and rent payments coming out.

If the Tenants cannot provide this ( bearing in mind it's in their interests to stay there) then you have your answer.

If you are buying with a BTL mortgage you must also ensure the tenants meet your lenders criteria. Some lenders dont like your tenants to be in receipt of benefits etc.

Good luck and keep pushing for the answers

CONRAD


Conrad Paton

+44 7957 959851

conradpaton@yahoo.co.uk

https://www.linkedin.com/in/conrad-paton-424446110

 

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if possible to buy 'vacant possession', go for it - if not & you still want this property, depending on 'when the lease expires' are you prepared to hang on till then, will this work for you?

if the deal doesn't work for you then don't close, walk.... there are always other opportunities.

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Hi

Even though this is your first BTL purchase, I would like to encourage you to follow your instincts somewhat. By getting to the stage you have you are more property savvy than 99% of the population.

You are fearful / doubtful about the quality of the tenant. It could well be that they haven't paid rent in months, but that being the case is it likely that they would have kept the place immaculate in the interim? Or that they would temporarily allow the landlord they are presumably in dispute with to come in and spruce it up for a days worth of viewings. I personally think that is unlikely though of course not impossible.

I also think it unlikely that if the landlord was having problems with them that they would sell to shake off the problem, unless the sale was going to be very easy and make them a significant profit. Do you know how long your sellers have owned the property? Maybe if they have inherited it some time ago they will be sitting on a good profit, but otherwise it might be more trouble than its worth to sell compared with evicting their tenant. (£3 spent with the land registry will tell you when they obtained it and how much they paid)

On the other hand there could be a hundred other reasons why they are selling, none of which relate to their unfortunate tenants.

May I suggest that you enquire as to whether the tenants would like to remain. If they do then instruct your solicitor to request the records of the credit and character referencing work that was done on the tenants when they moved in, to include all the other associated papers for example checking their right to rent and that the deposit was properly placed with a protection scheme. Your buyer should see it as a bonus that he or she is also selling you good quality sit in tenant and therefore be keen to provide all that.

If that stuff cannot be provided then seek vacant possession but by all means invite the tenants to apply to whichever agent you choose to use to let it out (make it a different one to the current one I'd suggest). If they pass the new agents referencing process then they are in the same position as any other new tenants but you have the advantage of at least knowing that on the day of their viewing it was in good order which is some intel that they may be good eggs.

I have been letting a small number of properties for about 8 years. In that time I have had no nightmare scenarios. I have had one tenant who went off the rails a bit and didn't leave the place great but it was a quick clean and repaint job, no worse than that. One of my current tenants has proved to be a bit mishap prone and this has caused me a bit of work and one significant insurance claim but on the whole even that tenant has been fairly trouble free.

Overall tenants are normal people looking for a quiet life, good agents with a through vetting process will generally have a good success rate at filtering out trouble. Every tenant is however something of a gamble, this is a part of the business you have to accept.

Good luck!

Steve

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