In the competitive landscape of property investment, having a sitting tenant can be a significant boon for buy-to-let (BTL) investors, providing immediate rental income and peace of mind says Property 118. However, such opportunities are scarce and might not be such good news for sellers.
Lomond, a prominent buyer of estate agencies, has disclosed that a mere 2.8% of properties currently on the market come with tenants in situ. Despite the rarity, the advantages for investors who secure such properties are substantial.
Substantial Savings and Immediate Income
Investors who manage to find a property with an existing tenant can benefit from significant cost savings. Properties with sitting tenants often come at a discount of up to 15% off the market value, with discounts in Scotland reaching as high as 24.6%.
Ed Phillips, the Chief Executive of Lomond, emphasized the potential benefits: “A sitting tenant provides a fantastic opportunity for buy-to-let investors, especially those new to the sector. It offers a ready-made investment and allows for an immediate rental income.”
Due Diligence is Crucial
Phillips also cautioned investors to conduct thorough due diligence: “It’s crucial to ensure that the tenant is reliable and maintains their rental payments without any issues. Properties managed by an agent can offer added security, as these tenants are typically vetted and have a documented rental history.”
Why the Discount?
The discount associated with properties having tenants in situ stems from the delay it imposes on potential buyers who wish to occupy the property themselves. This situation deters traditional home buyers but provides an excellent opportunity for BTL investors seeking rental income rather than immediate occupancy.
Investment Opportunities Across Britain
Lomond’s research indicates that there are currently 12,423 properties with tenants in situ available for investment across Britain. These properties have an average asking price of £149,124, which is 15% lower than comparable market prices.
For BTL investors, finding a property with a sitting tenant may be challenging, but the financial rewards and immediate income stream can make the search well worth the effort. However, if you are the seller you might be getting significantly less for your property with a sitting tenant than with an empty property. And that might explain why so many landlords issue Section 21 notices rather than try and sell with tenants in-situ.