Regulated tenancy – worth buying?
THE QUESTION
I’ve been offered a house well under market value, but it has a tenant who has lived there since 1992 on a regulated tenancy. She is only paying £225 rent per month, if I bought the property would I be able to evict her or not?
THE ANSWER
The regulated tenancy could not have started in 1992 because the last date for legally commencing such a tenancy was 31st December 1988. ASTs superseded them from that date onwards, which means that either:
- you have been mis-informed on the date of commencement
- in 1992 the current tenant inherited the tenancy from their parent.
If this is a regulated tenant:
- The rent is controlled and you cannot force it up. It can only be increased bi-annually and that increase is set by a Rent Control Officer, whose only interest is the tenant’s welfare. You might get £1 a week increase each time, or something in that ballpark.
- In the near 30 years of occupying the property the tenant will have encountered every type of shysters’ ruses to get them to vacate the property. Expect the tenant to be acutely aware of their rights and prepared to slap a harassment charge on anyone trying to infringe them.
- At the tenants advanced age, they are impervious to enticements of large sums of cash to quit. £500k sums (in Chelsea) have been declined
These properties have been regularly bought and sold over the last 20+ years, mostly at auction - and the going rate is no more than 50% of the true market value of similar properties without the tenant restriction
The buyers of such properties are cash rich and intend to play the long game, using the property as an alternative place to park some of their cash. They are fully prepared to wait until the tenant dies, or goes into care, to realise their profit
No mortgage lender will touch these properties with a barge pole. This is strictly cash buyer only territory.
If you plan to go ahead and buy then you should also check that there is not someone who will inherit the tenancy too.
You can learn more here:
- Contact Kevin Wright over on his Facebook page.
- Browse the Recycle Your Cash online training library by clicking here.
- Attend an upcoming 1-Day Property Finance Masterclass event - Book in here.
