Buying property with lifetime tenancy?

Hi Carol,

Do you know exactly what type of tenancy is in place or even if there is one?

Sitting tenants can be very tricky to deal with and could have protected rights over the occupation of the property.

I suggest you take very good legal advice on this. I am currently involved with a case (a farmer) who is trying to sell a property with a sitting tenant with a lifetime lease. She has been there c.40 years, and is over 90 years old. As the lease is over 21 years in length, an issue called "leasehold enfranchisement" apparently comes into play. This gives the tenant, and her heirs for two years after her death, the right to buy the property from whoever owns it (which could be you, if you have bought it), at a tenanted value. Clearly this has severe effects on the property's actual value today! As I say, take good legal advice first.

If the tenants have been in occupation for 40 years, presumably they are Rent Act tenants. As Neil says, protected tenants are notoriously difficult to remove and will also likely pay a lower rent than you would get under an AST for a similar property. There is no section 21 equivalent under the Rent Act 1970 so there is no option to end the tenancy unless there is a breach of covenant or you are able to prove one of the other grounds for possession in the statute. In any event the Court has a wide discretion to suspend or adjourn possession claims which it will be more likely to exercise if the tenants are elderly or vulnerable.

Also bear in mind that in some circumstances, a Rent Act tenancy can be inherited by a family member if the tenants pass away, providing that family member was living in the property with them for at least two years before they pass. Otherwise their next of kin family member will automatically acquire an AST which you would need to terminate before vacant possession can be obtained.

Unless you can get the house for a knock-down price and the physical bricks and mortar represent a sounds investment, I would be tempted to look elsewhere!

Oh!! Carol please don't be fooled,

If you buy this dwelling you take a fall,

Leaving poor 'ole Carol drowning

Could be trouble ahead. Unless you have say, £40K to £50K in cash and can get it for that sort of money ( and you are in for the long term) don't do it. The present tenants might still be there in 20 years time and then it passes to their heirs ! Too risky. Also ask yourself - why are the present owners looking to sell it ? These tenants are so, soo secure and your options, as their landlord, are few.

This is a very complex area Carol. As mentioned the tenant, or their heirs, may have the right to buy the freehold (enfranchisement) and/or have the right to extend the lease for another 80 years.

Whether they have these rights is complex. In summary, from: http://www.knightfrank.co.uk/residential/leasehold-reform/frequently-asked-questions

"Do I qualify to buy the freehold of my leasehold house?
- You must own a long lease, i.e. a lease which was originally granted for a term of 21 years or more.
- You must own a qualifying house, being one which is separate and does not lie over or under another property demised to anyone else.
- The leaseholder must have owned their leasehold house for a minimum of two years.
- There is no longer a residence test."

A more detailed summary of the various acts which have fiddled with this area of law of the last half century is here: http://www.isurv.com/site/scripts/documents_info.aspx?documentID=3422

In summary, get all the facts, including copies of all documentation, and get proper, paid for, written, professional indemnity insured, legal advice.