More than 8,500 homes across England are currently being marketed for sale with tenants in situ, according to analysis by The Letting Partnership, which estimates the total at 8,553 properties, equivalent to 1.8% of the 470,922 homes currently listed for sale nationwide.
The figures point to a meaningful pool of tenanted stock available to landlords seeking to expand their portfolios, with properties in the North of England accounting for a disproportionate share. Yorkshire and the Humber has the highest proportion of tenanted listings relative to available sales stock, with 1,575 properties representing 5.1% of the 31,143 homes currently on the market in that region.
The North West follows with the largest absolute total of any English region. Some 2,227 tenanted properties are currently listed, making up 4.6% of available sales listings. The North East also ranks highly, with 601 tenanted homes representing 4.3% of the region's 14,113 available listings.
Tenanted properties are far less common in southern markets. In London, just 0.3% of available sales listings are marketed with tenants in situ, rising to 0.7% in the South West and 0.9% across the South East.
For landlords considering this type of acquisition, purchasing a property with an existing tenant removes the initial void period and the cost of finding and securing a new occupant, with rental income beginning from the point of completion. However, The Letting Partnership, which provides client money handling services to letting agents, cautions that buying with a tenant in situ also means taking on the financial history of an existing tenancy.
The company identifies several checks it considers essential before and at completion. The tenancy deposit must be accounted for and its current protection arrangements confirmed, so that the appropriate transfer or re-registration can be arranged. The rent ledger should also be reconciled to establish whether payments are up to date and to identify any arrears or outstanding balances.
Timing adds a further consideration: where completion falls part-way through a rental period and rent has already been paid to the outgoing landlord or agent, the relevant amount may need apportioning between the parties as part of the completion process.
Chris Mason, chief operating officer of The Letting Partnership, said the appeal of acquiring an income-generating property does not remove the need for careful financial due diligence.
"Buying a property with a tenant already in situ can be an attractive proposition for landlords. Rather than acquiring an empty property and then having to find a tenant before generating a return, the income stream is already established from day one.
"But landlords need to remember that they aren't just acquiring the property and the tenant, they're also taking on the financial history of that tenancy.
"That means understanding exactly where the deposit sits and how it is protected, whether the rent account is completely up to date and whether there are any outstanding balances. If completion takes place part-way through a rental period, there may also be rent already collected that needs to be correctly apportioned between the outgoing and incoming landlord.
"This is where accurate client accounting and a clear audit trail become extremely important. The ownership of the property might change overnight, but the tenancy doesn't, and neither does everything that has happened financially before completion.
"For landlords and agents alike, a clean handover means knowing exactly what money is held, what has been paid, what remains outstanding and ensuring the records supporting that position transfer with the tenancy. Getting that right allows the incoming landlord to enjoy the benefits of an established tenancy without inheriting avoidable accounting problems."
