Especially in the buy to let market, it’s common for a property to be purchased with a tenant in occupation under a tenancy previously created by the seller.
If you purchase a property with an existing tenancy, the tenancy is assigned to the purchaser who becomes the new landlord.
The tenancy continues as it did and the new landlord is bound by the terms of the tenancy in place. This includes if the tenancy was a verbal tenancy. All the legal protections afforded to the occupying tenant will continue as per the rules at the time.
Name and Address of Landlord
On purchase, the new landlord must give notice to the tenant not later than the next day on which rent is payable under the tenancy or, if that is within two months of the assignment, the end of that period of two months.
This notice is under section 3 Landlord and Tenant Act 1985:
3 Duty to inform tenant of assignment of landlord’s interest.
(1) If the interest of the landlord under a tenancy of premises which consist of or include a dwelling is assigned, the new landlord shall give notice in writing of the assignment, and of his name and address, to the tenant not later than the next day on which rent is payable under the tenancy or, if that is within two months of the assignment, the end of that period of two months.
It seems the address provided under section 3 should be the landlords actual address.
In addition to above, under section 48 Landlord and Tenant Act 1987, a landlord must always supply by notice to a tenant, an address in England or Wales where notices will be deemed served on the landlord. In most cases, the section 3 and 48 will be the same address.
A common question is whether to do a new tenancy agreement or not.
There’s no requirement to do so especially if the new landlord is happy with the terms in the existing agreement. The new landlord simply takes over the tenancy as mentioned earlier.
It will also depend whether the current tenant is willing to sign a new tenancy agreement. There would be no way of forcing a new agreement on an existing tenant.
However, many landlords would prefer to do a new tenancy especially if they are familiar with the terms they commonly use. If this is your preference and the tenant is happy, this is absolutely fine and in fact would be a good way to tidy up all the paperwork.
Another advantage is the name and address as discussed earlier can be dealt with in the new tenancy agreement.
All the documents will need to supplied just like any other tenancy (e.g. how to rent, deposit prescribed information, gas safety, electrical safety, EPC etc.). It shouldn’t be treated as a “renewal” but should instead be treated like a brand new tenancy (which technically it would be because it’s not the same landlord).
You can download a tenancy agreement from our Tenancy Builder here.
If there’s a deposit with the current landlord, this will need to be checked that it was protected. Depending on where it’s held, it will need unprotecting and then re-protecting under the new landlord.
If there was an inventory prepared, the new landlord will be bound by the contents and entitled to the property being returned as per the inventory (less fair wear and tear).
If the tenant is in rent arrears at the time of purchase, who is entitled to the arrears might depend on how the property was purchased.
A common way is that the purchaser would pay the seller the amount of the arrears on top of the purchase price. That way, if the tenant pays the arrears to the new landlord the new landlord is entitled to retain the payments. Without this, it could be that the seller is entitled to any arrears that fell due before the purchase.
It may also be the case that the terms of sale specifically mention what happens with any arrears paid to the new landlord after the sale.