Here is a question to the blog clinic from Steven (not his real name) who is a tenant.
We are buying a leasehold flat with a tenant family in situ. The current owner has been lax (or kind) and never put the rent up since they moved in in June 2007, and the family are paying around £1000 per month.
The market rent is now £1700 per month. The current owner could not face evicting the tenants and so we had to say we would purchase the property as seen.
We have reason to believe that the current tenant cannot afford any more rent. We would like to evict them so that we can get a new tenant who will pay market rent.
Do we have the right to serve them notice as soon as we complete on the property? What are our rights and what are theirs?
Answer
A bit of an emotive issue this, but landlord phobes need to take on board that a landlord is a private individual and cannot really be expected to subsidise their tenants.
When you buy a property with a tenant ‘in situ’ basically you are just substituted for the existing landlord – the phrase generally used is that you ‘stand in the shoes’ of the original landlord.
There are a few exceptions. For example a landlord by purchase cannot use the mandatory ground 6 (based on major building works) to evict tenants. But on the whole, your rights are those of the previous landlord.
The tenants’ rights also remain the same – the only difference is that the identity of their landlord has changed.
As these tenants moved into the property in 2007 they will have an assured shorthold tenancy – I assume there is no dispute over this.
In which case, you will be able to serve your section 21 notice and then evict the tenants in the normal way after the notice period has expired.
Note that the only time I was ever in this situation when I did eviction work, the Judge set the case down for a hearing after seeing that the landlords had changed, but we got our order for possession at the hearing.
First though you will need to serve a notice on the tenants notifying them of the change of landlord and giving any new instructions for the payment of rent. Then get your section 21 notice served afterwards.
There is no mention of an existing current contract of tenancy that will have a bearing on the date of expiry of a notice and it’s duration.
These are matters that the lawyer acting for a purchaser should have given advice unless of course it was an auction sale.
Yes, these are all things which need to be asked about during the conveyancing process, probably in enquiries before contract.
The landlord should also get a copy of the tenancy agreement and confirmation that it is the first and only one (or have copies of earlier agreements).
But that wasn’t the question!
I fear you got the answer that you wanted. How easy it is still, to just have them gone.
Of course, the kind and humane thing to do wd be to try talking to these tenants, at the very least, on completion of your sale. (I know speculation is your thing, but..) You cd try having a conversation and asking them what they can afford? They have lived there for 6 years after all. It’s their home.
But I fear you wd rather pull out of the sale, than do so. Or just boot them out, without a “hello” even. If only we had laws which gave tenants first refusal on such a sale. You know, like all those new-age landlords that had, and still have, the Right to Buy.
I agree JS. Talking and negotiating has got to be the first course of action.
Not that I’d attempt to claim to you that landlords have any shred of human kindness but because it makes sound business sense to do so.
In practise, the first refusal you suggest does nearly always happen if there is any chance of the tenant buying. Although most times the tenant just can’t afford it or doesn’t want to be tied down- which is why they are renting in the first place.
Offering first refusal isn’t necessarily because landlords maybe do care a little bit but simply because it would save them quite a few grand (Auction fees/estate agent/ council tax/ solicitors/ vacant possession etc).
A friend and neighbour is going through this at the moment. No chance of him affording to buy although he was offered it first.
I would be tempted to serve notice of the rent going up as well, so the tenant has every reason to move quickly. Assuming that your assessment of the market rent is correct.
And where will this ‘poor’ family go I wonder? Rent another place? Not if they can’t afford the market rents. Buy their own place? No because all the buy-to-let landlords are scrambling to snap up any bargains, pushing prices up. Social housing – sure if they want to wait an average of however many years in some B&B miles away from their work and the children’s schools.
This article does encourage a certain amount of ‘landlord phobe’ comments I’m afraid but at the end of it, really it only highlights what everyone already knows – that is there is a severe housing shortage and in particular there’s not enough ‘affordable’ housing to go around…
“And where will this ‘poor’ family go I wonder?”
For £1000 pcm in England?
They could rough it up North here;
http://www.rightmove.co.uk/property-to-rent/property-46737469.html
East England here;
http://www.rightmove.co.uk/property-to-rent/property-48388541.html?premiumA=true
Slum it down south;
http://www.rightmove.co.uk/property-to-rent/property-32984550.html
Or go West;
http://www.rightmove.co.uk/property-to-rent/property-49214435.html
An emotive issue indeed and the very question has got me fuming.
It sets out as a stark example the heart of the system. Landlord wants another £700 a month so the tenant is merely an inconvenience and their home of the last few years is about to be taken away through no fault of their own.
Of course I understand all the practical arguments but I am becoming increasingly irked as I get older as people’s homes become just trade-able assets, like Sovereign rings
We are I suppose gradually moving back to the conditions of over 100 years ago when the majority of the population lived in rented accommodation with very little long term security of tenure.
The only real solution I can think of is more social housing. But that does not look likely to happen.
Ben,
I think it is more a sign that the cost of everything has been going up over the last few years, but wages have not. Most people have had to work more or cut back on something, I do not expect this trend to change any time soon. We cannot forever expect China to provide our every need on under $1 an hour.
The tenant that has not seen the rent increase for 7 years, so is now getting it hit with it in one go, therefore they have not had time to adjust.
We do not expect the super markets to charge someone less just because the person’s wages have not gone up…. Yes shoppers have moved to more basic supermarkets and I expect the same will happen with housing.
I recall reading an article of yours (I think on property118) some time ago that said one of the problems with rent increases is when the landlord does not put the rent up for many years – that article changed my policy and I now try to put rent up “little and often” as the market rent increases.
It’s very rarely mentioned that many landlords are not currently charging market rent because they are happy to have good tenants living in their properties and this is often worth more than monetary value.
Landlords are not pushing prices up. It’s demand that leads to rent increases. There is not enough social housing and our population is increasing every year. Landlords can’t just pluck a figure out of the air and expect to achieve it, the rent is driven by local market rates and until some balance is achieved and there is more housing available rents are unlikely to go down.
I expect if all landlords (including social housing providers) charged market rent that market rents would go down.
I calculated that I would need an increase rent of over 10% to make it worth my while replacing a good long term tenant, but please don’t tell my tenants that….
(If Labour has its way a lot more landlords will be putting up rents every time market rents increase as they will not be allowed to delay a rent increase without losing the option to increase the rent later.)
Thats very true Ian, under the Labour proposal rents will increase more quickly. Also, from next year a lot of local councils are introducing landlord licensing and charging landlords a 5 yearly fee. This will inevitably filter down to an increase in rents where possible.
Ian you listened to one of my articles??????????????? Are you mad????? haha.
My point is not so much the rent rises per se but the notion, that I’ve written about elsewhere that homes have become items to trade. In a sense there has always been that element but now it is the main driving force. This is what saddens and depresses me.
In London I do firmly believe that rents often get pushed artificially high by letting agents (back off everyone, I can only fight you one at a time)
I know this because I work closely with landlords who tell me that their agents encourage them to increase the rent, simply because they can.
My own landlords didnt raise the rent last year probably for the reason stated here that they like to keep good, reliable tenants but I live in a converted Victorian House divided into two flats – we have one bedroom and a patio garden for £1,250 per month.
The flat upstairs has 2 bedrooms, no garden and was recently on the market for £1,750 per month. Now occupied by students sleeping two to a room, including the living room.
Market forces? Sign of the times? or just taking the piss?
In that case Ben, taking the piss! There shouldn’t be that many people sharing a 2 bed flat and in fact this is one of the issues that councils are trying to eliminate by introducing licensing. I don’t agree with licensing, but one of the sensible regulations will be that living rooms are not to be used as sleeping accommodation. Don’t know how they are going to police it though.
Lee,
It cannot be policed, if two tenants decide to jointly rent a two bed flat, and then allow their friends to sleep there, there is very little the landlord or council can do. By the time action has been taken, the students will have left university. (Unless we are going to jail students for doing that sort of thing, we can’t fine them as they have no money.)
Anyway what is the point of the living room, when the student has a bar to spend their time in….
In the 1950s my Mother worked in London and most people starting out in life lived in hotels with 4 to a room in bunk beds, as the wages would not pay for anything more in the first few years of employment. We are seeing nothing new now, just the power of London to pull in more people that there is housing for.
Ben,
What if the long term funding for London universities was reduced a lot and the funding for some universities in areas with excess housing was increased, so we did not have the madness of so many students completing for housing in London?
PS, I agree that some agents do push up rents, as they don’t have to pay the cost of repainting etc themselves between the tenants if they price out the current tenants. But I expect that in the long term it is all just down to supply and the illogically high demand there is in London.
“We do not expect the super markets to charge someone less j
just because the person’s wages have not gone up…. ”
Actually, we do. That’s why Lidl and Aldi are raking it in.
“In the 1950s my Mother worked in London and most people starting out in life lived in hotels with 4 to a room in bunk beds … We are seeing nothing new now, just the power of London to pull in more people that there is housing for.”
I do laugh when folk recite the past as the barometer of the future.
But the solutions are complicated; production (supply), allocation, quality and affordability all factor. In the meantime, landlords will rake it in, deny their moral conscience and blame the market. Just like drivers blame all the cars on the road.
“In the 1950s my Mother worked in London and most people starting out in life lived in hotels with 4 to a room in bunk beds, as the wages would not pay for anything more in the first few years of employment. We are seeing nothing new now, just the power of London to pull in more people that there is housing for”
I’m sure you are right there Ian but at the same time, shouldnt things have progressed since the 1950S? And also we arent now talking about people starting out in life as tenants but working people stuck there.
When I was 18 I lived in daft conditions and didnt care…..as you say there was always a bar to prop up.
Our upstairs landlords were very lucky as the property was marketed for three months and even a week before the outgoings tenants left the agents still hadnt found replacements so the landlord could have ended up with an expensive void period. My guess is the price was dropped.
Finally, yeah London is a pull and probably always will be, hence the prices but for me it’s different in that I’m London born and bred so it’s my home, not a simple financial choice.
Plus my Mother in Law is elderly and disabled, so although moving to Worcester would get us somewhere larger and cheaper she would lose contact with her dwindling band of friends and support, in addition she is West Indian so feels more at home in a multi ethnic community.
I’m not making my personal circumstances out to be a special case but just pointing out that choices of places to live arent always merely down to cost
Landlords are not raking it in. It is not easy being a landlord – a good one anyway. You need many skills to be a good landlord and it is not a job that suits everybody. It takes a lot of time and patience.
I also hope we are not heading back to the housing standards of the 50’s.