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answered by Mark Peggie
of www.mhdlaw.co.uk
What should I look out
for when buying a property with sitting tenants?
Scots Law
Ideally you will want any sitting tenants to be "Short
Assured Tenants", because then you will be able to evict
them if the appropriate notices have been served and procedures
followed, if you want to. You will need to check therefore
the status of all tenants in occupation. To do this, find
out the date of the tenants' tenancy agreement with the landlord
(i.e. not just the date of the last time the tenants were
given a new written agreement).
If the agreement was made before 2nd January 1989 then the
tenants will be 'regulated' tenants and not only will it be
almost impossible for you to evict them (unless you provide
them with 'suitable alternative accomodation' or they break
the tenancy agreement), but you will also be unable to charge
them a market rent, only the 'fair rent' set by the Rent Assessment
Committee.
If the agreement was made on or after 2nd January 1989, it
will probably be an assured tenancy, unless an AT5 notice
(also called a "Section 32 notice") was served on
the tenants before the start of the tenancy; if this happened,
the tenancy will probably be a Short Assured Tenancy. Again,
if the tenancy is an assured tenancy, you will usually be
unable to evict them unless you provide them with alternative
accomodation or they breach the terms of the tenancy agreement.
These are perhaps the main legal problems you might encounter,
however every property is different and can have different
problems. Find out all you can about the tenants, particularly
their payment record and whether their behaviour is good.
Check also whether they have paid a damage deposit and ensure
that this is passed over to you on completion.
Note - these notes are for guidance only.
In all cases you should get further advice from your solicitor
relating to the particular property you are buying.
What documents do I
need to get from the seller when buying a property with sitting
tenants?
Scots Law
You will need to get all the documentation
held by the owner in connection with all the tenancies in
the property. In particular you will need:
- A copy of the first tenancy agreement and
the current tenancy agreement (if there is more than one)
- A copy of the rent register for any regulated
tenants (this will tell you the current rent and when you
can apply to have it increased)
- Copy of the AT5 notice served on tenants
whose tenancy started after 1st January 1989, with proof
of service (or better still a receipted copy of the AT5
Notice)
- Copies of any notices to quit or notices
of proceedings for possesion that have been served on tenants,
again with proof of service
Failing these you should satisfy yourself
of the type of tenancy and the notices which have been served.
Remember you may need to prove these matters in court, and
once the property is sold to you, the owner may be unavailable
or unwilling to assist you.
Note - these notes are for guidance
only. In all cases you should get further advice from your
solicitor relating to the particular property you are buying.
Can I evict sitting
tenants once I have bought the property?
Scots Law
First of all, be aware that you can only ever
evict a residential tenant through the courts. If you evict
them without a court order you will be committing a criminal
offence and will also be liable for (potentially substantial)
damages.
If the tenants are regulated tenants, i.e.
if their tenancy started before 2nd January 1989, you will
normally only be able to evict them if you are able to provide
suitable alternative accommodation or they break their tenancy
agreement. However if the tenants do not want to move (particularly
if the property has sentimental meaning for them) note that
a court may be unwilling to find that the property you have
selected is in fact 'suitable'. You should therefore only
ever purchase a property with regulated tenants if you are
willing for them to remain indefinitely.
- If the tenancy started after 2nd January
1989, then you will need to be able to prove that an AT5
notice was served on the tenants before the tenancy was
entered into (i.e. at least one day before the start of
the tenancy). If this cannot be provided the tenants will
be assured tenants. In which case, unless the tenants are
in breach of their tenancy agreement, or unless you have
suitbale alternative accomodation available, you will almost
certainly not be able to evict them. Again, think carefully
before taking on a property with assured tenants.
- If you can prove that an AT5 notice was
served on the tenants prior to the tenancy, they will usually
be short assured tenants, and you will be able to evict
them after their fixed term has expired, provided a Notice
to Quit in the proper form has been served on them at least
two months in advance. If a notice has already been served
by the current landlord, your solicitor should check to
see that it complies with the legal requirements and that
you have proof of service.
- If the tenants are 'common law' tenants
then they will not beprotected under the various statutory
codes and you should be able to evict them at the end of
any fixed term provided a Notice to Quit in the proper form
has been served on them.
These are the basic rules for the main types of tenancy
you are likely to encounter.
Note - these notes are for guidance
only. In all cases you should get further advice from your
solicitor relating to the particular property you are buying.
What can the landlord
do if the tenant is not looking after the property properly?
Scots Law
A landlord has little control over the conduct
of his tenants once they are in occupation of the property.
This is why it is so important to be careful when choosing
your tenants. If the tenant is causing major damage to the
property, you may be able to obtain a decree for recovery
of possession from court after serving a two-week notice.
However as you will be claiming possession under one of the
discretionary 'grounds' your tenant may be able to obtain
legal aid to defend the proceedings. You should seek legal
advice from a specialist-housing solicitor before taking any
action. Otherwise the best course of action is to threaten
to evict the tenant at the end of the fixed term, if they
do not improve their behaviour (note, this is assuming
that the tenancy is a Short Assured Tenancy). You
should also serve the proper form of Notice to Quit on the
tenant, which must give the tenants a notice period of at
least two months and must state the date of the end of the
tenancy as the leaving date. On expiry of this Notice, you
will be able to obtain a decree for recovery of possession
more or less automatically.
How can the landlord
increase the rent?
Scots Law
If the tenancy is an assured or a Short Assured
Tenancy, rent can only be increased by one of the following
methods:
- By agreement with the tenant, e.g. by the
tenant signing a new tenancy agreement with the new rent
or providing written confirmation that the new rent is agreed.
This is the best way to increase the rent.
- By serving the proper form of notice of
rent increase on the tenant. This can only be done one year
after the fixed term has expired and a Notice to Quit has
been correctly served, and the tenant has the right to refer
the rent to the Rent Assessment Committee, if they feel
that the rent is too high. For this reason increasing rent
by this method is best avoided.
- Following a rent review clause in the tenancy
agreement
What should the landlord
do if the tenant refuses to grant access for inspections?
Scots Law
If this happens landlord should try to talk
to the tenant to find out what the problem is. They should
explain that the inspections are for the tenant's benefit
to check the condition of the property so any necessary repairs
can be done, or to carry out the annual gas check. They should
explain that the tenant has a statutory duty to allow reasonable
access for repairs, and that there duty to take reasonable
care of the property includes allowing inspection and repairs.
If the tenant still refuses to allow the landlord access,
the landlord will have to abide by this. It is important that
the landlord does not just use his keys to gain access when
the tenant is out. This will be deemed harassment and is a
criminal offence. It is also breach of contract and could
lead to the tenant taking legal action.
So far as the gas regulations are concerned, non-compliance
with these is normally a criminal offence, however the landlord
will not be prosecuted if he has made reasonable attempts
to get the annual check done. To protect his position though,
it is a good idea for the landlord to contact the local Health
and Safety Executive (who police the regulations) and inform
them of the situation.
So far as the landlords’ general repairing obligations
are concerned, the landlord cannot be held liable for breach
of these, if he has not been allowed access by the tenant
to carry out an inspection and do repairs. However the landlord
will want to carry out regular inspections, as he will not
want his property, which is a substantial financial investment,
to deteriorate. Further, any losses to the tenant due to repairs
or inspections (for instance, moving to temporary accomodation)
should be payable by the landlord. In these circumstances
he should therefore consider taking steps to evict the tenant,
and should take legal advice regarding this if necessary.
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