Q. I am in the market for buying a property for investment for the first time and have found a property that seems to be ticking all my boxes but it already has tenants in occupation that seem perfect and they are looking after the place well. I have two questions for you, first of all is it safe to buy a property and keep the tenants in occupation and secondly, having moved in two years ago they are on a very low rent compared to today’s healthy rental market, so would I be able to put the rent up in line with the current market value?
A. Taking the leap and buying for investment for the first time can be scary if you don’t know what you are doing. First and foremost you need to get yourself a great Lawyer as they will make sure you are protected especially if you are considering purchasing with the tenants in occupation. This is more common than you might think given that you can see them living in the property and have a privileged insight into how they are looking after the place I would always run with keeping the tenants if they have been looking after the place and the seller can recommend them rather than serving them notice and having to find yourself new tenants, which you will have no idea what they are going to be like and secondly you will have costly agency fees to pay to find the new ones and get them moved in. With regards to the rent, you will need to find out when their current tenancy agreement expires with the seller, if it is another six months or a year you will have an issue as they have a contract in place with the rent agreed at their current rate and you will not be able to increase the rent at all as that contract must be honoured. Once that contract expires you will then be free to issue a brand new tenancy and agree a rent increase to bring it in line with the current market. It’s worth asking the agent if you can sit down with the tenants to discuss your intentions. It may be that they simply would not be happy to continue knowing that your intention is to increase the rent; they may not be able to afford it even. If they are aware of your future plans they may even decide to end the contract and leave on completion. If they decided to go down that route then at least you could have your rent increase from the moment you complete. All things considered if a tenant is happy in their home and an investor like yourself is looking to rent anyway I would always advise that you take the property with the tenants in occupations as it means you start collecting rent immediately – what’s not to love?! Just make sure that your solicitor has a copy of the rental agreement and organises the transfer of the security deposit over prior to completion.