Buy to let novice - first of many questions!

[cabby]

Just had an offer accepted on a property that we learnt at the viewing is tenanted.  That's all fine with with me and rent is reported to be at a decent level + tenant apparently wants to stay (has been there 5 years).

I've asked agent for a copy of the tenancy agreement and evidence that rent is up to date.  Agents' response is that 'we only normally send this to your solicitor' as 'contains personal information'.  My response was that we need to know what's in the agreement and it's for us decide if we are going to pay a lawyer to advise us on this.

Is my expectation incorrect or should agent have no qualms with issuing this directly to us? 

[NewNiceMrMe]

The agent is correct.

If he told you anything 'personal' about the tenant in situ (even their name) he is in big trouble if they found out and took it further.  The contract they have is with the existing landlord and neither the agent or the landlord should release any personal information about the tenant.  

Ultimately, you have to commit to the buying process to get the information sent to your solicitor and then decide whether to proceed (and the solicitor has some form of obligation not to tell you personal stuff too - but that can be got around with 'advice' on whether to proceed or not, and a nudge and a wink).

If the agent tells you if the tenant is or isn't up to date on rent, who they are, etc - they've acted illegally.

We put an offer in on a commercial property before we bought another.  It had existing office tenants.  The only way we could find out whether it was good to proceed or not was to have an offer accepted, have the information provided to our solicitors.....and then run away from it as fast as we could when they gave us a lot of head shaking about the tenant in question.

p,s, I was similar to you in that I was a bit hacked off at having to pay to then run away.  I have a friend who owns a lot of property and some have been purchased with sitting tenants.  I asked him about it and should I really need to pay legal fees only to discover I will not be interested in proceeding!  He gave me an analogy that is quite appropriate for TSN.  He said it was a bit like paying for an inspection on a car.  You still pay even if the inspection says the car is crap.  It has cost you, yes, but probably saved you a lot more in the long run.

Edited April 6, 2017 by NewNiceMrMe

[cabby]

Thanks.  What a bonkers system ! 

Well the agent did send through the contract with personal details redacted.  Will have a proper look but confirms rent level etc. but obviously nothing to say its up to date.  What a bonkers system.  Agent has said they can ask for the tenant to be evicted if we'd prefer (which we don't).  

After a few failed recruitment efforts at work not sure I have much nice to say about 'agents' at the moment!! 

[NewNiceMrMe]

It isn't bonkers when you think about it, although I do think there could be a cost-free system or way around it.

The risk is as follows...

You rent a flat.  Someone wants information about you.  The flat is offered for sale by the landlord.  The person who wants to find out about you puts an offer in and asks for tenant information.  Now, imagine if that person was a criminal, a stalker or someone who simply wanted to know of your financial position?  

They get what they need and withdraw the offer.  That is the problem that the law is there to protect tenants from.

It is data protection and basic contract law that nobody but an individual taking over a contract can be given personal data. 

If they've paid a deposit for the rent, there's a formal process for the transfer of that to you too (and that will cost you solicitors fees).  

Edited April 7, 2017 by NewNiceMrMe

[cabby]

 

1 hour ago, NewNiceMrMe said:

You rent a flat.  Someone wants information about you.  The flat is offered for sale by the landlord.  The person who wants to find out about you puts an offer in and asks for tenant information.  Now, imagine if that person was a criminal, a stalker or someone who simply wanted to know of your financial position?  
 

 

But the odds of that series of events occurring must be ridiculously long + if you were that way inclined there are no doubt much easier ways to find out that sort of information.  

Not surprisingly I'm more focused on the risks to me.  

The way I see it is that you view a property, like it and make an offer that's accepted.  Through the process you learn the property is tenanted and realise that you will effectively inherit the terms of that arrangement and the tenant.  However, terms of said agreement remain unknown, potentially until after you have completed the purchase as does the ability to vet the tenant.  If you were installing a new tenant, all of these are in the landlords control to some extent. 

The agent's response to my concern about not knowing what the current agreement is, is rent up to date etc. was to suggest that she ask the current landlord to evict the tenant! That's the bit I think is bonkers + I don't think its anywhere near as easy as she has implied + not what we want to do in any event.  

[NewNiceMrMe]

They might be long odds from the criminal perspective, but it still isn't right if an individual has their privacy intruded upon illegally.

What's to say that someone gets the information and just happens to mention it to a friend and that friend mentions it to one of their other friends?  Before you know it, you've got the very reason that data protection law is in place, be it in contract form or not.

I must admit I am in favour of the law from the point of view that it protects an individual's privacy.  Unfortunately there are people out there with loose tongues, many of which will spread gossip like wildfire, be it right or wrong. 

 

[Tipex]

One thing you learn pretty quickly as a landlord is that tenants are protected much more than your investment is.

 

If you're lucky, you'll never have a bad tenant and it will all go well, but it only takes one bad tenant to financially ruin you.

 

There are ways to mitigate your risk of course, but they all carry different risks of their own and it's always the good landlords that get turned over, slum-lords just get away with it.

 

As mrme says, the agent is absolutely correct and could find himself in a lot of hot water for releasing personal information, that is why the information is only given to a solicitor who will then advise you on wether to go ahead with the purchase, avoid altogether, or go ahead with conditions, such as evicting the current tenants and taking possession of the property once vacant.

[Ian_C]

Ignoring the current tenant issue for a moment, my main concern with a BTL would be to make it as tax efficient as possible - even more so post April 2016

Avoiding the 3% stamp duty surcharge, avoiding/minimising capital gains when you sell in the future, avoiding/minimising income tax on the rental, avoiding/minimising inheritance tax if you have children etc

[Booster]

Residential buy to let is a nightmare. 

You never know who you are going to get and references aren't worth the paper they are written on. 

The tax changes just make worse. Add in the fact that you have to insure the property, reinstate it after they leave as you can bet that the deposit won't cover the damage. You might have a new tenant every six months or massive void periods with no tenant at all and it is a thing to be avoided. 

If you want to invest, go for a commercial property on a full repairing and insuring basis. 

You insure it and invoice the tenant. They are fully responsible for the condition of the building internally and externally and the minimum term will be three years. 

You can check out the tenant far more easily as commercial credit checks are largely exempt from the restrictions of personal ones. 

Unfortunately buying the bloody things is hard work as everyone that has a few quid already knows this. We have 11 units and I would buy more but they never come up for sale as the yield is so good. 

[NewNiceMrMe]

^ That.  Spot on.

However, I'll add one more tip...

When you buy a commercial property, don't buy it with the intention of working with the local council to restore a Grade II listed building to its former glory before you rent it out on a full repair and insured basis.  You will, I assure you, discover that the council is a bunch of w*nkers who should all be fired and made to work 4 hours a week to quadruple their present working week time.  Twats, total twats.  

Do NOT buy a listed building.

*unless you want to buy ours, because it is for sale and, to coin a phrase, "I do you deal, special deal".  

[Andrew]

On the flip side, and perhaps we have been lucky, we have two residential rentals and both have never been empty. They are both in good locations which helps and the agencies we use do their best to vet tenants which, so far, seems to be working well. 

Commercial rental is interesting. Perhaps if I'm in a position with equity to invest again I'd look at that. Main priority now is a bigger house to live in. 

[Tipex]

This is true, I see the worst of it because of the family business, however personally, I've never had an issue with any of my tenants in my BTL properties.

 

I am very strict on the vetting however, I simply won't touch anyone on any kind of benefits whatsoever, this means it occasionally takes a little longer to find new tenants, but once they are in they tend to stay long term.

[NewNiceMrMe]

I recommend that anyone considering letting a property watches "Can't Pay, We'll Take it Away" on Channel 5.

Seasons 3-6 are available to stream on their app and it is an excellent programme.  However, some of the properties they evict people from and what they find...ummmm.  Just watch it (but you'll never let a single property out again!).

[Booster]

Good programme. 

As you say, some of the places that they evict people from are disgusting!

I like how calm Paul and the other older chap remain despite what is going on around them.

[Chick]

My first buy to let was a London flat on the 7th floor ..... was partially furnished & tenants always paid on time.  About 6 months in I received several complaints about dogs barking!!  I turned up with the agent to find the tenants had 2 dalmations, they used the balcony to house them when they were at work and they had obviously been sleeping on my sofas.   They didn't get any deposit back and the flat needed a good scrub     

I still have no idea what made them think they would get away with housing such big barky dogs without getting found out 

[NewNiceMrMe]

On 22/04/2017 at 10:19 AM, Booster said:

Good programme. 

As you say, some of the places that they evict people from are disgusting!

I like how calm Paul and the other older chap remain despite what is going on around them.

 

That bloke (Paul Bohill) is incredible, as is Steve Pinner (the other you refer to).  It is also revealing how appallingly badly some councils treat people, particularly single males.

He just keeps as cool as a cucumber in some situations where others would feel both scared and tempted to bite back.  I'm not too keen on Stewart McCracken, he's a real fecker when it comes to it and I find him quite distant compared to the others.  Delroy Anglin is possibly my favourite.  He has a way with words that is both funny and charming with some people.

Some of the exploits of the debtors is staggering, particularly the business owners.  There was one where they confronted an old bloke for some dog equipment company and he called McCracken a thug and a twat but was clearly doing his best to goad him.  I'm also surprised how clueless the police seem in some circumstances.

[Tipex]

We watch this regularly, it's surprisingly good TV and a real eye opener, not because it's just full of scumbags who don't want to pay their due (although there are a few of them), but for the stories behind a lot of the cases.

 

As above, we like Paul Bohill, Steve Pinner and Delroy Anglin, Elmor Victor seems from the same mold as Steve and Paul too but some of the others just seem to make situations worse, we often find ourselves discussing how Paul and Steve would have handled it differently when the younger ones seem to just antagonise people, we aren't keen on Stewart McCracken but Mrs T positively hates Brian O'Shaughnessy, the fat one with the daft tiny goatee beard and that was before I googled him, innocent until proven guilty of course so I wouldn't hold that against him, he just doesn't seem to have the right personality for a job that requires you to enter peoples homes and discuss incredibly private details with them.

 

DCBL seem to be making the most of it all though looking at their website, can't blame them.

[Booster]

Some sad news about Delroy. He has leukaemia and needs a stem cell transplant to save his life. At the moment they can't find a match 

[S3Bangs]

On 4/22/2017 at 0:16 PM, Chick said:

My first buy to let was a London flat on the 7th floor ..... was partially furnished & tenants always paid on time.  About 6 months in I received several complaints about dogs barking!!  I turned up with the agent to find the tenants had 2 dalmations, they used the balcony to house them when they were at work and they had obviously been sleeping on my sofas.   They didn't get any deposit back and the flat needed a good scrub     

I still have no idea what made them think they would get away with housing such big barky dogs without getting found out 

Hmmm... Memories.

I remember this BTL I had up north (Grimsby to be precise). I bought it pretty cheap which is why I got it. I would've blown the money on something else so thought. Lets tie it down and see what happens. 2 B/R House for less than silly money at the time. Pretty good nick. Bought it outright.

I had this tenant for a couple of years. No problem. Paid up on time, no problems whatsoever. Then he left and another guy moved in. should have known something was up when he always paid 6 months upfront. This happened for a couple of years. After the second year, his rent was due and I rang him up. I couldn't get hold of him. I thought nothing of it. After about a month, I rang him up again as I wasn't particularly fussed. Nothing!

Decided to go up there one weekend to find him or see whats going on. Got there and the house was totally boarded up. I asked the neighbours. They were clueless. Went to B&Q to buy a crowbar and forced my way in. On taking the board off, I noticed the front door had been smashed in. I walked past the living room. totally bare except a threadbare settee. In to the kitchen at the back and I saw these sacks of fertiliser against the back door and hacked wiring from the meter all the way upstairs.

I walk upstairs and the whole top floor was covered in pots, lining, shit hanging from the ceiling. Turns out my BTL had been turned into a proper 'crude' weed growing factory. 

I called the police who then informed me what had happened and that the guy had been arrested a few months earlier. Took quite a fair bit of time getting the house back to a proper state before I sold it off at a decent profit not long afterwards. 

From that point onwards, I vowed never to have a BTL that's more than 30 minutes away from me. Oh and Northerners like weed

 

 

[S3Bangs]

By the way. 

Sad for Delroy

[Tipex]

2 hours ago, Booster said:

Some sad news about Delroy. He has leukaemia and needs a stem cell transplant to save his life. At the moment they can't find a match 

That's terrible, the speed at which things go from being a little unwell-diagnosis-hospital is frightening.

[cabby]

So, email from solicitor last week explained that vendor's solicitor had informed them that 'they would not be proceeding with our offer'.  That's the same vendor that supposedly took it off the market after we upped the offer.  

Fast-forward 24hrs and the agent we are dealing with (it's on with 2) say's there's been a mistake and they meant to convey that message to 'the other purchaser'.  Tell them to go fu*$ themselves was our general response.   There are some real feckwits about when it comes to private property deals. 

Survey was due to be done next day but managed to cancel in time so hopefully no more than a £150 out of pocket. Could have been lot more painful.

Now have vendors home name, home address and workplace (he owns a restaurant).  Oh what to do with this info. . . suggestions on a postcard please .

[NewNiceMrMe]

Very sad news about Delroy.  Easily the nicest guy on the programme and I hope they find a match for him.

On the vendor messing Cabby around, you've done the right thing and can now move on and find somewhere else.  I find it quite easy to forget people like that (after an initial rant).  The world is full of them.  Why people can't just give their word and do the right thing is beyond me.

[cabby]

Well, well, well.  Agent called today saying vendor does not think the other purchaser can proceed (via another agent) and - wait for it - would we be interested still?

My gut reaction was 'please tell the vendor to go fu@£ themselves'.  However, having given it some thought I might counter with a revised offer (reduced of course) and a request that vendor pays us say a £2k fee to insure us against them pi$$ing about again.  The £2k would be refunded upon completion.

Anyone done anything similar to the deposit thing before?

[Booster]

Did the same thing when purchasing. Was in a bidding war to get the house. I said I would deposit £10k with my solicitor that the vendor could have if we didn't complete. Got us the house!