Beware of hidden regulations

By Charlie Jacoby, November 26, 2009

Landlords are being urged to swot up before bidding on properties with regulated tenancies. These give a tenant the right to be in a property for life, often at 50 to 70 per cent of market rent. Chris Baguley, director at Auction Finance, says a property with a regulated tenancy can still be a great investment. “You get a fixed rent and when the tenant leaves, you get normal rights of ownership. I’ve seen an investor buy properties for £20,000 less than other houses on the same street. However, the tenants were in their 50s with a rent fixed at £50 a week. The landlords may not gain access to the property for another 40 years and the rent is way below the market rent.”

Among Mr Bagueley’s advice is: check the age of tenants if you are relying on making money when the tenancy comes to an end; check who is responsible for council tax, TV licence etc. Look at other liabilities — in some cases landlords are even contracted to remove asbestos. “Fully read the legal pack before the auction,” he says.

Last updated: 1:12pm, November 26 2009