Tenant in situ- calculate property value

[Knuttell]

Seeing quite a few properties for sale with tenants in situ at low monthly rent. What is the accepted method to calculate the property value in such cases?

Monthly rent x 12 x ( how many years?)

 

[Right Winger]

No real accepted method. Depends on specific circumstances. Is there a good demand from potential owner occupiers? Would an incentive of a few grand shift the tenant? Can you renovate the property to come within RPZ exemptions?

 

[SPC100]

Can you reset rent to market rates if it's left empty for some period of time?

 

[SPC100]

It would be interesting to see a date set of sold properties along with the last charged rent for them.

 

[Luternau]

Can you reset rent to market rates if it's left empty for some period of time?

You can after two years vacant or on upgrading property by a significant degree. A no fault ending of tenancy would only be after serving notice tevicting tenant for permitted reasons, normally to use for family member or sell.

It comes to mind that if evicting tenant was possible, the property would be on the market with vacant possession. Its an interesting question OP. I don't know if many use the rule of annual rent x years = value. With rent controls etc it could result in a considerable discount to vacant possession value.

Maybe this is the next chapter of the housing supply and rental crisis.

 

[DannyBoyD]

Can you reset rent to market rates if it's left empty for some period of time?

As long as there is no registered tenancy w RTB for 2 years, you can reset to market rent.

Family member cld live there for two years; house doesn't have to be empty.

 

[lff12]

Seeing quite a few properties for sale with tenants in situ at low monthly rent. What is the accepted method to calculate the property value in such cases?

Monthly rent x 12 x ( how many years?)

Saw a couple of these in last year or so and they eventually sold for about 20-25% less than typical market rate for vacant possession houses around them. It would depend on the actual rent and the profile of the tenants as well as the typical vacant value.

 

[lff12]

No real accepted method. Depends on specific circumstances. Is there a good demand from potential owner occupiers? Would an incentive of a few grand shift the tenant? Can you renovate the property to come within RPZ exemptions?

A lot of these would have good demand from FTBs, many of whom are happy to take on a "tired" property that needs a little work but is liveable. They cannot touch these properties themselves but technically, if you are a cash buyer or getting a BTL mortgage you can borrow on these (an owner occupier I'm told would have difficulty in getting a mortgage on a property with a tenant-in-situ, or more correctly a solicitor willing to sign off in those circumstances AND a bank happy to still lend on assumption you can evict AND pay rent etc).

No "a few grand" wouldn't shift the tenant in most cases and would put you on a poor footing with RTB.
What you could do, now that eviction ban is over, is buy as investor, evict with correct notice period straight away, and go through the entire process. From other posters on here, that would be roughly up to 2 years. At that point you could just sell and hope to make up the difference between the price you paid and vacant possession value of same. If prices stay on current trajectory it would probably be a good profit, if you are willing to run through the ugly process of a potentially prolonged repossession.

If you've got the money to do so a BER rating of 7 points on the scale or greater would also reset the rent. Thats the equivalent of taking a property from a D2 to a B1 so its going to cost you, on top of the potentially protracted eviction process mentioned above.