Your Guide To Buying Commercial Property With Existing Tenants

Posted by Chris Ringham on Jan 26, 2022 10:38:00 AM

Your Guide To Buying Commerical Property With Existing Tenants

Commercial landlords are increasingly choosing to purchase properties with tenants already in place. There are a number of advantages to this approach. You can begin collecting rent immediately without having to advertise for tenants, and the property is likely to meet legal health and safety standards since it has already been let.

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However, there are also risks to consider when buying a commercial property with existing tenants. If the previous landlord was breaking health and safety rules, you may have to carry out extensive work to bring the property up to standard. This is much harder when the property is occupied. Also, if there are elements of the tenancy agreement that you are unhappy with, it will be difficult to change them. 

If you decide to buy a commercial property with occupying tenants, contact your solicitor or licensed conveyor with previous experience in handling properties with existing tenants. Planning ahead is key, so here are six steps you can take to ensure a smooth transition:

1. Check The Previous Landlord Was Following Legislation Correctly

Before making your purchase, it is vital to check whether the property meets health and safety standards. If changes are needed, you should consider whether the cost of these will undermine the value of your purchase. You can also refuse to complete your purchase until the current landlord has met their obligations.

2. Make Sure Your Conveyancer Asks The Right Questions

Choosing an experienced conveyancer is the best way to avoid the pitfalls of buying commercial property with tenants. Make sure they gather as much information as possible, including the dates of the last safety checks and details of any recent refurbishments.

3. How To Know When To Change Service Provider

You may be able to save money by switching utility providers, but this needs to be planned in advance. Most providers will require at least two weeks’ notice to make a change.

4. Try To Complete A Purchase On The Day Rent Is Due

Timing your purchase to coincide with rent day is better for you and the tenants. You can collect rent from day one and they won’t have to worry about changing the day they pay.

5. Set Up A Rent Deposit Deed With Your Solicitor

A rent deposit deed protects both the landlord and the tenants. It ensures that their deposit is kept safe, and it protects you against the cost of damage to the property.

6. Contact Tenants About Tenancy Agreement

You are legally bound to the existing tenancy agreement unless your tenants are willing to change it. Ask them if they would be happy to sign a new assured shorthold tenancy agreement. This makes the lease more secure by locking you both into a six-month contract.

We’re Here To Help

The process of leasing commercial property is far from simple. Here at Bowsers Solicitors, we have years of experience in every aspect of commercial property, and we’re always happy to offer advice. Get in touch today to get started.

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Image source: Pixabay

Topics: Residential and commercial conveyancing, commercial properties