Landlords And Sitting Tenants
Most landlords will own properties that are occupied by assured shorthold tenants but spare a thought for those that have purchased a property only to find out that the tenancy is in fact a protected tenancy. This is not as uncommon as you may think. The difference is that a protected tenant has the right to say in their home until they die and the landlord has very little prospect of the house becoming vacant anytime soon.
A protected tenant gains that status because they were not given the correct documentation when they moved into their property. The landlord or his agent only had to serve the incorrect documentation on the tenant when the tenancy commenced for this tenancy to be created. The law was changed in in the housing act of 1996 to shut this loophole, but not before ten of thousands of these protected tenancies were created. Nowadays any tenant that moves into a property can’t claim protected tenant status.
If your tenant moved into their property before 1989 then it is more than likely to be a regulated tenancy, which is basically similar to an assured tenant but there rent will not be as high as that of an assured tenant.
Many of these tenancies are still in the hands of private individual landlords. Some of these tenancies date back 50 years and have been passed down through family inheritances. In many instances the property will be occupied by friend or family of the original landlords. Going back 25 years a lot of these tenancies were verbal agreements between the landlord and the tenant, but problems arose when the landlord either tried to gain vacant possession or asked for an increase in the rent.
A property that is occupied by a regulated tenant is still considered to be a good investment provided of course property prices continue to rise. These properties are normally sold for between 50-60% of it’s vacant possession value, so if a house with vacant possession is worth £100,000, an investor would expect to pay a figure of between £50,000 – £60,000. The price will vary depending on the age of your tenant. The older the tenant, the more money somebody will want to pay for it. Obviously a lot will depend on the condition of your property. Because the rent being paid by the tenant doesn’t amount to very much many of these properties fall into a state of disrepair. There is still a market for these tenancies albeit a limited one.