Buying a property with an existing tenant in place is often an attractive investment. Rental income is available immediately after purchase, and there is no need to incur additional expense finding a tenant.
During the course of the purchase, there are legal requirements which the buyer’s solicitors should investigate and comply with. For example, checking that the tenancy deposit has been properly registered, or that a gas safety check has been completed.
Darren Kelly is Head of our Dispute Resolution team and has over 20 years’ experience in dispute resolution.
However, there is one important requirement which is often overlooked, even by some solicitors. Under Section 3 of the Landlord and Tenant Act 1985, if the landlord’s interest is transferred, the buyer must notify the tenant in writing. The notice must include the new landlord’s name and address, and in most cases there is a deadline of two months after the date of purchase. The notice must be given even if the previous landlord has already sent a similar notice to the tenant.
It is a criminal offence for the buyer not to comply with this requirement and the legislation sets out a maximum penalty of £2,500. We wonder why the parliamentary draftsmen thought that making a simple oversight a criminal offence would be sensible or proportionate? We also wonder who actually benefits from this legislation. For example, what is the likelihood of the police prosecuting a landlord for not sending this notice? Especially if the tenant already knows who their landlord is and is paying rent to them.
Can landlords ignore this requirement?
On the one hand, tenants may not care about receiving such a letter. However, if a landlord wishes to evict the tenant and gives the required written notice to quit (a section 21 notice), this could aggravate the tenant. They might try petitioning the police to act. Landlords should ask themselves whether they wish to run the risk of a policy enquiry?
What if the tenant refuses to leave?
Ben Bourne is an experienced litigation solicitor whose main areas of work include the handling of disputes.
If the tenant refuses to leave after receiving the section 21 notice, the landlord will need to apply for a court order before taking back possession. Usually, the Court will use the accelerated procedure, and will grant a possession order without a hearing. However, if the tenant informs the Court that the landlord did not send out the notice when he purchased the property, this could prejudice the landlord’s case. The Court could then order that the case be decided at a formal hearing. This process would be lengthier and far more costly, and could mean several more months with a non-paying tenant living in the property. All this is easily avoided by simply sending the required letter to the tenant.
Finally, it should be noted that the requirement to notify tenants of the change of landlord also applies to transfers between family members or group companies. This may be less obvious to both landlords and tenants. Is it worth double-checking on your next purchase?
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