Buy-to-Let Landlords have recently been selling their rental properties for various reasons, creating a boon for First Time Buyers. This surge in availability means more options in your price range and less competition from landlords. A win for you!
It is very likely that some of the properties listed in your chosen location are being sold by a landlord. So if you are going to consider buying one, here are a few things you should know:
Benefits:
- Safety Certificates: Landlords are legally required to obtain Gas Safety Certificates (GSC) annually for properties with gas appliances. If you have had an offer accepted on an ex-rental property, you can request the seller for the latest certificate to include as part of your assessment the property's overall condition. Now, a GSC is not going to be a substitute for regular servicing of the boiler, but, it does mean that a trained engineer has inspected the appliances at least once every hear that the property has been rented for.
- Electrical Reports: Landlords must commission an Electrical Installation Condition Report (EICR) every five years. This assesses the property's wiring for faults. Again, you could ask to see a copy of this report, saving you time and money getting your own commissioned and help giving you insight into the condition of the home's electrics.
- Consumer Unit: A consumer unit, also known as a fuse box or electricity panel, is a crucial component of an electrical system in a property. Its primary function is to distribute electricity safely through the electrical wires in a property (think light circuits and plug circuits). In rented properties, it is expected that the consumer unit be a Residual Current Device (RCD) unit in a metal casing for enhanced safety. An RCD protects people from getting an electric shock and/or prevents electrical fires caused by faulty wiring or appliances. These are newer types of consumer units which wouldn't be present in older properties, especially ones which are still lived in by the sellers. Its not a legal requirement for homeowners to upgrade these units when they live in the property themselves.
- Potentially Better EPC Rating: Properties previously rented may have a better Energy Performance Certificate (EPC) rating, potentially leading to lower energy bills. Since April 2018, it has been illegal from Landlords to rent out homes which have an EPC rating of lower than E. It is still possible to sell a home which has a lower rating, meaning it will cost a bomb to keep the home warm in winter. If the home of your dreams has a very poor EPC rating, then you should consider what upgrades are possible to make the home more energy efficient.
Drawbacks:
- Vacant Possession: The biggest drawback of buying a rented property is the potential for delays in getting Vacant Possession. What is Vacant Possession and why is it important, I hear you ask? Simply, it is an important legal status, because if you want to live in the property once you have bought it, you require the property to be sold with Vacant Possession. In English law, this means the property must be empty of occupants and possessions and free of any rights for anyone to live there. And this can sometimes be tricky when a property is still occupied by tenants. ....Let's explain further.... Even if a landlord tells their tenants that they need to sell property they are are currently renting and asks them to move out of the property so that it can be sold with Vacant Possession, legally only the tenants or courts have the rights to officially end a tenancy. So, if the tenants can't or won't move out of the property, the landlord has to apply to the courts to seek an ending of the tenancy. This delay will affect your completion date as it can take months to go through the full court process to get Vacant Possession. You can't do anything to speed up the process or even consider buying the property with the tenants in place. Your mortgage lender won't permit you complete without Vacant Possession (letting the existing occupiers stay in the property will breach the terms of your mortgage agreement and it will also become your problem to get the occupants out). The issues around vacant possession can be a tricky and drawn out process if tenants are still living in the property.
- Décor: Some landlords like to keep their properties in very good decorative order because this helps them get higher rental income. Many other landlords ensure their properties are in a satisfactory state of repair and they may also look tired and dated. Home owners usually take better care of their homes and spend more on decorating, after all, they live in them. A dated property is an opportunity to redecorate in your own style, but at a cost of time and money to you while a nicely decorated property means you may not have to touch up anything for a while.
Opportunities:
A landlord is not likely to sell a property unless they have a good reason to so their motivation for selling is usually quite high. This may provide an opportunity for greater negotiation on the price.
Additionally, if the property being sold still has tenants living in it, that could also provide you with a stronger negotiation opportunity since you know that it might take months to get Vacant Possession. Other potential buyers could get frustrated with the delays in getting vacant possession and pull out of the purchase. If you are prepared and able to wait out the whole process, you may get yourself a good deal.
Remember, knowledge is power. The more you understand the nuances of buying your first home, the better equipped you are to find the best opportunities.
Here to empower you with knowledge about one type of seller at a time.