I’m buying a house with tenants in situ – do I draft a new lease?
Tread carefully as this area can be a minefield, and horror stories abound
“It would advisable to relinquish the existing lease agreement and have a new lease drawn up.” Photograph: iStock
I am currently in the process of purchasing a house that already has two tenants in situ. As it is as an investment, I wish to leave the two tenants there as I am told they are good, honest people and cause no trouble. However, can you advise what both positions are in relation to the tenancy agreement? As the new landlord, should I terminate the existing agreement and agree a new one? I have heard some horror stories in relation to tenancy agreements. I want to be sure how to proceed just in case my own situation changes and I need to live in the house.
How reliable and impartial is the advice given regarding the quality of tenants already in situ? Is the property located in a Rent Pressure Zone? If so there will be restrictions on rent increases. This would be particularly relevant to you as landlord if full open-market rental value is not currently being realised.
While you can purchase the property with tenants in situ, it is strongly recommended that you, as purchaser of the property, obtain written references for the existing tenants that would presumably have been originally supplied to the current owner at the outset before the tenants took up occupation.
Failing this, you should obtain these written references directly from the tenants, as you will now be their new landlord. Then these references must be verified by phone.
Many “horror” stories result from not obtaining the relevant references or if these references are not screened properly.
While the original lease can still stand, it is imperative that you have your solicitor look over the current lease before you commit to buying.
If you decide to continue with the terms of the existing lease, you may, as the new owner of the property, update the original Residential Tenancies Board registration by providing the RTB with your name, PPS number, correspondence address and proof of ownership. The RTB €90 registration fee is not payable, as you are merely updating an existing registration.
If eventually you do decide to move in to the property, the relevant periods and format of notice required to be given to your tenants can be found on the RTB website
However, it would advisable to relinquish the existing lease agreement and have a new lease agreement drawn up, as you will now be the new landlord.
If eventually you do decide to move in to the property, the relevant periods and format of notice required to be given to your tenants can be found on the RTB website. This period of notice will be determined by the length of time the tenants are in occupation and takes effect after expiry of the lease. This notice must be accompanied by a declaration from a solicitor.
Tread carefully as this area can be a minefield. I would also be advisable to obtain professional advice in these areas from a solicitor and a residential agency surveyor. Some new investors try to go it alone in order to “save money”, which may well lead to costly horror stories.
- Roger Berkeley is a Chartered Residential Agency Surveyor and member of the Society of Chartered Surveyors Ireland, scsi.ie