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Rise in properties purchased with sitting tenant
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
A new report has indicated that the number of landlords buying property with, ‘sitting tenants’ has increased to its highest level since 2005.
The survey by Countrywide Residential Lettings, which analysed in excess of 65,000 rental properties, indicated that in the last year, 11% of rental properties purchased by a landlord contained a sitting tenant. [1]
Longevity
These figures seem to suggest that more landlords are seeing the value of securing a property with a reliable, long-term tenant already living in. Figures suggest that tenants in properties sold as occupied have been residing in their home for a longer period than the average tenant. 25% of sitting tenants were found to have signed agreements of two years or more, in comparison to just 5% of overall renters.[2]
There are also signs of landlords wanting to buy properties from other landlords with tenants already in place. The proportion of property sales with a sitting tenant rose across the UK. Almost 25% of all house purchases by landlords in London came with a residing tenant, up from 12% in 2008.[3]
Significantly, London and the South East have the lowest yields, but are the areas where purchases with sitting tenants are most prominent. This is more than likely down to the fact that landlords are guaranteed an immediate rental income, thus improving their returns.
Rise in properties purchased with sitting tenant
However, between the 2008 and 2014, the North East of England was the area with the largest increase in landlords buying property with a tenant already in place.
Value
David Fell, research analyst at Countryside, feels that, ‘the secondary market of landlords selling investment properties to other landlords is growing.’ Fell believes, ‘landlords are increasingly recognising the long term value attached to keeping a reliable, high-quality tenant. Properties sold with a tenant in situ, which offer a read-made guaranteed income, can even trade at a premium.’[4]
Continuing, Fell stated that, buying a home with a sitting tenant makes sense for a lot of landlords. Having a good tenant already in place can be attractive to the purchasing landlord and means there is rent coming in from day one. It also allows landlord to avoid the costs associated with finding a tenant straight after buying.’[5]
[1-5] http://www.countrywide.co.uk/news/as-rents-increase-by-27-landlords-increasingly-look-to-purchase-properties-with-sitting-tenants/
