Selling apartment

ndilly

Hi, We are looking to sell my apartment in Lymewood Mews,Santry in the next few months. We have about €252k left in the mortgage and properties there are selling for around €240-€250k at the moment. We need to sell with the tenants as we cannot afford to cover the mortgage ourselves as we have other commitments. Do you think we should hold off selling for another few months as we want to cover the fees etc. Also is it hard to sell with the tenants in. Looking for advise please?

ted1

ndilly wrote: »

Hi, We are looking to sell my apartment in Lymewood Mews,Santry in the next few months. We have about €252k left in the mortgage and properties there are selling for around €240-€250k at the moment. We need to sell with the tenants as we cannot afford to cover the mortgage ourselves as we have other commitments. Do you think we should hold off selling for another few months as we want to cover the fees etc. Also is it hard to sell with the tenants in. Looking for advise please?

No one will get a mortgage from the bank with sitting tenants. So there goes that market.

ndilly

Can you please explain?

Brian201888

They mean you'll basically only be able to sell to a cash buyer investor. Noone would risk buying for their own use with tenants and no bank would give a mortgage anyway.

Only hope would be selling to a landlord, this will effect sale price, you'll be far better off removing the tenants first.

Fian

A Bank will not issue a mortgage to a potential purchaser unless there is vacant possession. Effectively this means you need to evict your tenants if you want to sell, otherwise you are unlikely to get full market value for the sale.

__..__

In a few months you might not be allowed to sell by law if the current trend towards landlords from our gov continues.
I'm so worried about that that I've given my tenants notice. I find it all too risky to stomach now.
No landlord in Ireland would buy a house with a sitting tenant anyway. You just don't know what you are going to end up with.

CeilingFly

You're selling. Tell the tenants that you are selling and that you will need vacant posession in about 3 months.

Offer them first refusal if they wish to buy at current market value. Give them a couple of weeks to think it over - A 225k mortage will cost them about €1,000 a month

Other option is to negotiate a reduced payment with bank - now that its not in negative equity they may be able to do interest only for 12 months.

lcwill

I bought with a sitting tenant. Checked them out first and got all details of their lease and their payment history (the property was managed by the same company I use to manage another rented apartment so I was fairly sure I could trust them). I made sure purchase agreement specified that the apartment would be sold including all fixtures and fusnishings as I didn't want to refurbish until the sitting tenant had left, which they did of their own accord a few months later. I got it pretty cheap, at a time when things were cheap, and I know the sitting tenant had made it hard to sell.

I don't understand why banks can't allow purchase of occupied properties. That is what the government should make illegal. Then they could remove sale of property as a reason to evict tenants - and I imagine that makes up a huge share of evictions. A sitting tenant should be seen as a bonus, not a negative.

jimmycrackcorm

lcwill wrote:

I got it pretty cheap, at a time when things were cheap, and I know the sitting tenant had made it hard to sell.

There's your answer. Because otherwise it's not as financially beneficial for many buyers.

You can't charge market rent, but someone who buys without a sitting tenant can.

As for the idea of banning the removal of sitting tenants in sales, all that will do is stop landlords renting where they sell at the first opportunity instead.

lcwill

jimmycrackcorm wrote: »

There's your answer. Because otherwise it's not as financially beneficial for many buyers.

You can't charge market rent, but someone who buys without a sitting tenant can.

As for the idea of banning the removal of sitting tenants in sales, all that will do is stop landlords renting where they sell at the first opportunity instead.

Benefits of buying with a sitting tenant are significant too though - you are getting rent from the day you buy, no costs of works to get it lettable, no letting fees, some price discount, you can refurbish without running into the ridiculous revenue rule that works carried out after purchase but before a property has been rented out are not deductable. I see the banks as the biggest obstacle, and the only way to change their approach, all at the same time, is legislation.

The_Conductor

lcwill wrote: »

I don't understand why banks can't allow purchase of occupied properties. That is what the government should make illegal. Then they could remove sale of property as a reason to evict tenants - and I imagine that makes up a huge share of evictions. A sitting tenant should be seen as a bonus, not a negative.

A sitting tenant is only a bonus for a prospective landlord- no other category of potential purchaser- other than a prospective landlord- and even then- given RPZ legislation- a prospective landlord is only interested in purchasing a property that has a reasonable ROI (return on investment) associated with it. Typically this would be a gross of around 8%.

If a property is RPZ'ed at below market rates (as most are)- this means any seller will only get an artificially low offer price from a prospective landlord- as they will crunch the numbers and see exactly what the sitting tenant is worth financially towards the purchase price.

If the property is to be bought by someone who wants to live in it themselves- they could find a tenant employing all manner of mechanisms- exhausting the RTB adjudications and tribunals- before moving onto the courts- and if they have nowhere to go- they could be in the property for literally years- the record set earlier this year is 9 years without paying rent- despite the commentary in the RTB annual report suggesting they fast-track these cases and have hearings within 12 weeks.

What lending institution in their right mind would give a purchaser a mortgage on a property that has a tenant who may or may not pay rent, who regardless of what relationship they had with the previous owner, has no relationship with the new owner- and who has more property rights to the property- than does the lender from whom the mortgage is being sought?

If you want to remove the right to terminate a tenancy on the sale of a property- you have to have a commensurate increase in property rights for the owner of the property and any lender who might have a lien on the property- which means fast-track evictions if tenants fall behind in rent. This is not tenable in the current political climate in Ireland.

Yes- a sitting tenant might suit some prospective landlords down to the ground- however, they might be the greatest curse on earth to others- and the manner in which the rent could be artificially set at below market levels- means any prospective seller- such as the OP- could end up having to settle for 30-40% less than market value for the property- despite next door selling for tens of thousands more- without a sitting tenant.

You're not going to coin a set of circumstances that suits everyone- however, as it stands the pendelum has swung in a remarkable manner in favour of tenants.

Personally I don't think the option to terminate a tenancy on the intended sale of a unit- should be removed from the legislation. I do however think that if this clause is used- that if the property is being relet without being sold (and there will be cases where for whatever reason it simply isn't sold)- that the original tenant should be found- and offered the property back- at their original rent, regardless of any upgrades that have occurred, save the allowable 4% per annum increase. I.e. if a landlord abuses the clause- the tenant gets the property back- and if its been improved or refurbished- the tenant gets a better property back- and tough luck on the landlord.

However- a reasonable timeframe has to be allowed to the landlord- to bring the property to a marketable spec- and this could very well include considerable joinery, carpentry and/or masonry work. In the current climate- where its nigh impossible to get hold of a carpenter (or pretty much any other trade)- this could well take many months- this is just a fact of life- if the landlord is going down this road- he/she cannot relet the property in the intervening period of time before its sold.