Danielle Clements, property litigation solicitor from Gorvins Solicitors, explains what rights landlords have if they purchase a buy-to-let property with an existing tenant.
Buy-to-let is certainly a popular news topic at the minute with the legislative changes announced in the Spring Budget and a surge in activity in the buy-to-let market.
Since 1 April, all second residential homes and buy-to-let properties have been subject to a 3% stamp duty hike. For this reason, investors have been snapping up property at a record rate to beat the changes. January 2016 saw a 22% in buy-to-let mortgages in comparison to the year before and overall activity has been higher than any point since 2009.
When buy-to-let properties change hands there is usually a tenant already in the property – what happens to the tenancy is the property is sold to a new landlord? Do the tenants have the same rights they had before? Can the new landlord just get someone new in?
Tenancy Rights
We have received a number of calls from both tenants and landlords enquiring about the rights surrounding a tenancy. A tenancy is a legal document which means the tenant has a legal interest in the property for the length of the agreement; this cannot be destroyed with a change in the landlord. A new landlord takes up the same position as the previous landlord and does not have any magical new rights or powers to evict or deal with the tenant.
What Can a New Landlord do?
The most common form of tenancy is what is known as an Assured Shorthold Tenancy (AST), which is the default type for almost all new tenancies.
An AST gives tenants certain stipulations that they need to abide by and also certain rights to protect them, such as you can’t get evicted with no notice.
The AST agreement means the tenant has a legal interest in the property and that the landlord has given up certain powers on their property, for example, they can’t just turn up unannounced and demand to enter the property, this has to be agreed with the tenant.
A landlord will also have a difficult time in evicting the tenant during the length of the agreement if they have an assured tenancy. A new landlord would only be able to serve a Section 8 notice of seeking possession if the tenant has broken a clause of the AST, such as falling behind with their rental payments. Fixed-term tenants can’t be evicted until their tenancy ends.
It is possible for a new landlord to increase the rent that a tenant pays, but they still must follow the proper procedures. If the AST sets out the process for increasing the rent, for example only at the end of the fixed-term contract, the landlord must stick to this.
This can be altered and the landlord can increase the rent before this time if the tenant agrees to it (the early increase proposal may be less than the increase proposed at the end of the contract). If there is no agreement then the landlord will have to wait to the end of the tenancy.
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