Buying a property with a tenant already in place (“tenant in situ”) can be beneficial, but it also requires careful due diligence. Below is a concise guide to help landlords understand what to look out for before completing the purchase.
- Verify the Tenancy Agreement
- Request a full copy of the signed tenancy agreement.
- Confirm the tenancy type (usually an Assured Shorthold Tenancy — AST).
- Check the start date, rent amount, deposit, and any break clauses.
- Ensure the agreement is legally compliant and signed by all parties.
- Review Rental Payment History
- Ask for a complete rent schedule showing all payments received.
- Identify any arrears, late payments, or payment patterns.
- Confirm the method of payment and whether standing orders are in place.
- Confirm Deposit Protection Compliance
- Check which government-approved scheme holds the deposit (TDS, DPS, or MyDeposits).
- Obtain proof of:
- Deposit registration
- Prescribed information served to the tenant within the legal timeframe
- Ensure the deposit amount matches the tenancy agreement.
Non‑compliance can restrict the ability to serve Section 21 notices and create financial penalties.
- Electrical Safety Standards (EICR)
- Confirm the existence of a valid Electrical Installation Condition Report (EICR).
- Ensure it is less than 5 years old or not older than the most recent renewal requirement.
- Check that any remedial works mentioned in the report have been completed.
- Ensure the certificate is compliant with the Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020.
- Gas Safety Certificate (CP12)
- Verify that a valid gas safety certificate is in place.
- Ensure it has been carried out within the past 12 months.
- Check that copies were provided to the tenant at the start of the tenancy and before move‑in.
- Confirm any recommended works have been completed.
Gas safety compliance is essential for both legal and insurance purposes.
- Energy Performance Certificate (EPC)
- Ensure the property has a valid EPC rated E or above.
- Request a copy to verify the rating and the expiry date.
- Properties with an F or G rating generally cannot be legally let without exemptions.
- Deregulation Act Documentation
For tenancies starting after 1 October 2015 (or renewed after this date), ensure the following were served:
- How to Rent Guide (correct version at time of issue)
- Gas safety certificate
- EPC
- Deposit prescribed information
Missing documents can invalidate a Section 21 notice until rectified.
- Inventory and Schedule of Condition
- Request a full check‑in inventory signed by the tenant.
- Ensure photos or videos are included.
- This protects you when handling deposit disputes.
- Check if a check‑out inventory has ever been completed.
- Legal Compliance and Notices
- Check whether any Section 8 or Section 21 notices have been issued.
- Confirm if court proceedings or possession actions are ongoing.
- Ensure the tenant has not been served notice incorrectly — this becomes your issue once you purchase.
- Tenant Behaviour and Property Condition
- Ask the seller or agent about:
- Tenant conduct
- Any complaints or disputes
- Property maintenance issues
- If possible, inspect the property while respecting the tenant’s rights.
- Insurance and Safety Records
- Check whether landlord insurance is in place (though you will need your own policy).
- Ask for records of smoke alarm and CO alarm testing, as required by the Smoke and Carbon Monoxide Alarm Regulations.
- Transfer of Tenancy on Completion
When you buy the property:
- The tenancy automatically transfers to you.
- All existing agreements, obligations, and rent terms remain unchanged.
- You must give the tenant your details (Section 48 Notice) for rent payment purposes.
Conclusion
Buying a property with a tenant in situ can save money, provide immediate rental income, and reduce void periods — but only when you carry out thorough due diligence. Ensure legal compliance, obtain all critical documents, and verify the tenant’s payment and conduct history to make an informed decision.
