Why a Buy-to-Let with a Tenant in Situ Can Be a Great Investment
A new analysis of buy-to-let properties currently on the market shows that those with tenants in situ can make excellent investments—although they are relatively rare.
Research by the Lomond lettings agency group shows that buy-to-let properties with tenants in situ represent only 2.8% of all sales listings. However, investors who find the right property can potentially save up to 25% on the market value.
Lomond highlights that properties with sitting tenants offer a straightforward way to invest in the rental market. The key benefit is an immediate rental income, as tenants are already in place and paying rent.
Additionally, this type of investment brings peace of mind. Tenants in situ have already been screened by a letting agent, and the previous landlord has managed essential tasks such as obtaining compliance certificates, ensuring gas safety, and handling HMO licensing.
Currently, there are approximately 12,423 investment properties with a tenant in situ across Britain, accounting for just 2.8% of all homes on the market. In London, this figure drops to 0.3%, while in Yorkshire, where these opportunities are most common, they still only make up 6.3% of the market.
Lomond suggests that properties with sitting tenants can present a valuable investment opportunity.
A sitting tenant can lower a property’s market value since buyers inherit the tenancy agreement, which might deter those looking to occupy the property immediately. They may have to wait several months until the tenancy ends or go through the eviction process.
For buy-to-let investors, the decreased market value of a property with a sitting tenant can enhance the return on investment.
The latest analysis shows that the average asking price for a property with a tenant in situ is £149,124 across Britain, about 15% lower than comparable market values. In Scotland, this discount can reach up to 24.6%.
Even in the East of England, where the price reduction for properties with sitting tenants is the smallest, investors can still enjoy an average discount of 10.8% compared to the broader market.