Buying a property with sitting tenants and what changes under the mortgage and conveyancing

If you buy a property which already has tenants, you will receive rent from the first day, avoiding both a vacancy period and the need to pay letting fees. You also take on the tenancy exactly as it currently is: the rent, the conditions, the deposit and any other problems associated with it. Because the Renters' Rights Act became fully effective on 1 May 2026, the kind of tenancy you are inheriting is a periodic assured tenancy which can only be terminated on specific legal grounds, which is why due diligence has never been so important.

The amount of tax and the terms of any loan will depend on your individual situation, and the following article provides general information only and not advice. Below is an explanation of how a mortgage, the conveyancing process, and the amounts involved differ from the case of a normal purchase.

The mortgage needs to be buy-to-let

It is impossible to obtain a standard residential mortgage for a property that is let, since you aren't going to be living in it; instead, you'll need a buy-to-let mortgage, and in reality frequently one that is specialised, as many of the conventional lenders are wary of properties which are being sold to tenants and may therefore refuse the mortgage or ask for a larger deposit. A broker who is familiar with the buy-to-let market is someone who earns their fee in this way. Nevertheless, the rental income is of help to you, since lenders when assessing buy-to-let mortgages mainly look at whether the rent covers the stress-tested interest, and a tenant who is paying their rent and has a good record provides strong evidence in this regard. Make sure that you have the seller's rent schedule and bank statements to hand, as the underwriters require proof that the rent is actual and not merely expected.

One warning before you apply: check what kind of tenancy you are buying. A small number of homes still carry regulated tenancies created before 15 January 1989, which give tenants lifetime security and an independently set fair rent. They are a specialist, deep-discount purchase, and most ordinary buy-to-let lenders will not finance them.

What you inherit under the Renters' Rights Act

Ownership passes to you automatically when the transaction is completed. The tenant doesn't have to sign any additional documents; you take on the role of the seller as landlord and thereby inherit the rent rate, the responsibilities and any history of arrears. Since nearly all tenancies are now periodic assured tenancies, there is no fixed term to expire and no provision under section 21 to rely on.

If you intend to carry out the sale with vacant possession at a later stage, the procedure is via Ground 1A: you must give four months' notice, this notice not being valid during the first 12 months of the tenancy (the period in question beginning when the tenancy starts, not when you purchase the property), and there has to be a 12-month ban on re-letting or re-marketing after you have used the notice. You should base your decision to buy on the tenancy that you can see, not on the vacant possession that you hope to achieve.

What your solicitor checks during conveyancing

When carrying out a property purchase in a rented building, an extra amount of due diligence specific to landlords has to be carried out in addition to the normal searches and title checks, as we set out in our full guide to conveyancing.

Your solicitor will particularly have to follow up on four items:

1. So that you know the actual rent paid, the details of any side agreements and whether or not there are arrears, the tenancy agreement and the rent record should be provided.
2. Evidence is required to show that the deposit had been placed in a government scheme within 30 days, together with the required information, since at the time of completion it must be transferred and re-protected under the tenant's name; courts may order the new landlord to pay the tenant one to three times the deposit if this is not the case.
3. The compliance file should include the current gas safety certificate, an electrical report that is no older than five years, an EPC of at least band E, smoke and carbon monoxide alarms, and any HMO or selective licence that is required for the area.
4. There is evidence that the right to rent checks were carried out when the tenancy was granted.

Completion day mechanics

Rent is calculated on the date of completion: if the tenant has paid a full month's rent when the move-in takes place and the completion occurs in the middle of the month, the seller will give the tenant a credit for the unused part of the rent through the completion statement. Once the transaction is complete, you have to inform the tenant in writing of their new landlord within two months and also serve a notice stating an address in England or Wales for the purpose of serving documents; until you have done this, you are not allowed to take action over any rent arrears.

The price and the tax

Tenanted properties frequently change hands for an amount less than the value at vacant possession. While investor and landlord platforms usually quote discounts of about 10%-20%, there is a great deal of variation depending on the type of tenancy, and homes that have a regulated tenant who was in place before 1989 are sold at still much lower prices.

Here the stamp duty is to your disadvantage since when you buy an extra property the 5% additional charge is applied on top of the normal rates and is calculated on the discounted price which you actually pay. For example, if a flat valued at £250,000 is priced 15% less at £212,500, the standard stamp duty is 2% of the amount over the £125,000 limit, that is £1,750 on the £87,500 above the £125,000 threshold. The surcharge then amounts to 5% of the full £212,500, that is £10,625—making the total cost £12,375, and the refund must be made within 14 days of the completion date.

The bottom line

When the property is let from the day it is purchased, a specialist buy-to-let mortgage is available and the amount paid is usually 10% to 20% less than the vacant value, even though there is a stamp duty charge of £12,375 on an average transaction of £212,500. Since the legal work is the factor that determines whether tenanted property purchases are successful or not, it is important to use a firm that has experience in such cases and to get several conveyancing quotes before making a decision.