Is a new tenancy required when a landlord changes hands?
Properties are usually purchased with vacant possession, however in some transactions the buyer will purchase the property with a tenant in situ, especially in the buy-to-let market.
When this happens, what does the new owner need to know?
Firstly, there is no need for a new tenancy agreement. The tenancy will continue on the same terms; upon completion, the purchaser will become the new landlord and the tenancy is assigned to them.
Under the Landlord and Tenancy Act 1985, a new landlord is required to inform their tenants where there has been a change in landlord (Section 3 Notice). They must also provide an address in England or Wales where notices can be served on the landlord (Section 48 Notice).
Formal notice of the assignment, including the landlords name and address, must be provided to the tenant no later than the next day on which rent is payable under the tenancy or, if that is not within two months of the assignment, the end of that two-month period.
The new landlord is still able to seek vacant possession, provided the applicable notice can be served. If a buyer is intending to purchase a property with a tenant in situ, then they should seek legal advice on the terms of the tenancy. For example, the tenancy agreement may be for a fixed term without a break clause so the landlord would not be able to use a Section 21 Notice to evict in the fixed term and would need to rely on the grounds under Section 8.
If a landlord has served a possession notice and the tenant fails to vacate the property, then possession proceedings must be issued. If the paperwork encloses a tenancy agreement with the previous landlord but the property has been purchased by a new landlord, then it is likely that the judge will need to see evidence to demonstrate that the new landlord has a right to possession.
Therefore, we would recommend that landlords consider all their legal options before taking on a property with a tenant in-situ. You need to be sure you have all paperwork in order in the event of any claim, or if an eviction is necessary. For example, it is very common for a judge to list hearings for any gaps in paperwork or anything that requires an explanation. This can delay possession being granted, as the case would be adjourned. This can be very frustrating, particularly where a landlord has already waited months to get before the judge in the first place.
If you have any queries about the purchase of a property with a tenant in situ, talk to us – we will be happy to help.