Why a buy to let with a tenant in situ can be a great investment

A new analysis of buy to let properties now on sale, shows that those with tenants in situ make good investments - but they are few and far between.

A study by the Lomond lettings agency group shows that buy to let properties with tenants in situ account for just 2.8% of total sales listings.

However, those who can locate a suitable investment opportunity could save as much as 25% on the market value of their investment.
 
Lomond says a property with a sitting tenant is one way of investing in the rental market with minimal fuss. The primary benefit is the fact that with the tenant already paying rent, you can secure a guaranteed rental income right from the off.
 
Such an investment also provides peace of mind, given that the tenants in situ will have already been vetted by a letting agent; and the previous landlord will have had to take care of much of the nitty gritty associated with a rental property - such as any compliance certificates, gas safety and in the case of HMOs, licensing.
 
However figures show that, in the current market, there are some 12,423 investment opportunities available with a tenant in situ across Britain. This equates to just 2.8% of all available homes on the market.

This figure falls to as low as 0.3% of total market listings in London and even in Yorkshire - where the highest proportion of properties with a sitting tenant are found - such opportunities still only account for 6.3% of total market stock.
 
Lomond says that indirectly a property with a tenant in situ can present a good investment opportunity.

It says a sitting tenant can often devalue a property due to the fact that any potential buyer inherits the responsibility of the tenancy agreement with the existing tenant. This can deter the average buyer who intends to use the property as their own, as they may not be able to move in for some months until the tenancy comes to an end, or until the eviction process is complete.
 
For buy-to-let investors, however, the potential reduction in market value of a property with a sitting tenant only helps to increase the yield on their investment.
 
This new analysis shows that the average asking price for a property with a tenant in situ currently sits at £149,124 across Britain, some 15% less than wider comparable market values - and this discount climbs as high as 24.6% in Scotland.
 
Even in the East of England, where the reduction in value of a property with a sitting tenant is at its lowest, investors can still benefit from an average discount of 10.8% compared to wider market values.