Research from Countrywide claimed it is in London and the South East where yields are lowest and where the proportion of landlord purchases with a sitting tenant is highest.
There, landlords are most likely to buy a property with a sitting tenant to ensure they receive a rental income immediately, improving their return.
This is achieved by landlords buying directly from other landlords who are selling up, rather than buying from an owner occupier and having to find a new tenant.
Between 2008 and 2014, the North East of England saw the largest uplift in landlords buying with a tenant already in place.
Given the limited growth in house prices since 2008, landlords attach great importance to the yield they are able to achieve.
Selling with a sitting tenant allows a vendor to demonstrate the yield they are already achieving and means the new landlord will receive an income immediately in a market where it takes longer than average to get a tenant. Equally the new landlord won’t incur search costs or suffer any void period.
David Fell, research analyst at Countrywide, said: “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 ready-made guaranteed income, can even trade at a premium.”