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Investing in a tenanted property can be a great benefit, especially if the tenant is settled and intends to stay long term – this means it starts earning you income from day one and no future void period for the foreseeable, it’s a win-win!
OR IS IT? Well that would be perfect, but unfortunately it’s not always that easy. Before you start going down the conveyancing route and applying for a mortgage, here are a few questions you should ask the seller or their agent, to avoid trip-ups and/or delays or worse still, a fall-through with costs incurred.
Original tenancy start date and whether it is still in a fixed term or periodic
This will confirm how long the tenant has been in-situ
Ask for a copy of the original Tenancy Agreement
Take time to READ the agreement to check the dates, rent, names on the agreement (this should be checked with the current occupancy), any permitted occupiers and any special clauses. Also check that the Agreement has been signed and dated by all parties.
What is the current rent and when was the rent last reviewed?
If the tenant has been in the property for a number of years and a rent review is way overdue, this could cause insecurity/payment issues going forward, if not handled correctly. Similarly, if the rent has recently been increased and it is below market rent, it might be a while before the rent can be increased again. It is also advisable to ask for a copy of the last increase notice, to avoid any future potential queries.
Is there any history of rent arrears and is the rent currently up to date?
Request a full rent statement from day one of the tenancy if available. If there have been any rent arrears in the past, ask for detailed information.
Deregulation Act 2015 compliance: Was the tenant provided with the following documents prior to the tenancy commencing?
The seller/agent should be able to provide proof that these were served prior to the tenancy commencement; failure to serve these documents could invalidate a future Section 21 Notice.
What is the current EPC rating and when was it carried out?
All tenanted properties should legally have an EPC rating of E or above – this is due to change to a minimum C rating for all new tenancies from April 2026. If the EPC is below C, check on the certificate to see what recommendations are required to increase it to a C, and the potential costs involved. An EPC lasts for 10 years.
Is an up to date Gas Safety Certificate available?
You should be supplied with a copy of the certificate. This is an annual requirement.
Is an up to date Electrical Installation Condition Report (EICR) available?
This is a legal requirement and a certificate is valid for 5 years. You should also check that the certificate states that the installation is ‘satisfactory’ and if there are any recommendations or hazard warnings.
Is there a breakages/damages deposit, and is it below the capped amount?
If the tenant paid a deposit at the start of the tenancy it should be stated in the tenancy agreement, and the deposit should have been registered with one of the approved schemes within 30 days of being paid by the tenant. The tenant should also have been provided with the deposit certificate, Prescribed Information and the relevant deposit scheme leaflet, all within the 30 day period – proof of this should be obtained to avoid future issues with possession and/or deposit claims.
Are there any outstanding repairs/tenant issues/complaints/insurance claims?
Any of these could potentially affect potential costs or tenancy issues and full details should be obtained and considered carefully.
Once you have obtained answers to all of the above, you should be able to make an informed decision about your potential investment.