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Rising number of landlords favour sitting tenant purchases

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  • 19/05/2015
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Rising number of landlords favour sitting tenant purchases
The number of landlords looking to buy properties which already have tenants in residence has reached its highest level since 2005 as investors recognise the value of long-term renters.

The research, carried out by Countrywide which analysed 65,000 rental properties, found that 11% of all properties bought last year by landlords had sitting tenants, a fourfold increase on 2008.

The secondary market of landlord-to-landlord sales rather than owner occupier-to-landlord sales reduces the likelood of having to fill a vacant buy-to-let property.

Across every region of the UK, the proportion of sales with a sitting tenant rose with over a quarter of all purchases by landlords in the capital coming with a sitting tenant, up from 12% in 2008. Low yield areas like London and the South East had the highest proportion of sitting tenant sales last year at 26% and 16% respectively as landlords look to minimise the impact of void periods on already squeezed rental profit margins.

Between 2008 and 2014, the North East of England saw the largest uplift in landlords buying with a tenant already in place. House price growth in this part of the country has remained subdued which places yield at the top of a landlord’s list of priorities.

David Fell, research analyst, 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.”

Fell said having a good tenant in place also allows landlords to avoid costs associated with the tenant search.

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