New property, good tenants – but no AST

THE QUESTION

I've purchased a property (exchanged contracts already) that is currently let to a charity.

The charity, as I understand it, then put young adults who have recently come out of care into the property (either on a sublet or license I'm not sure at this stage).  It’s on a corporate tenancy agreement (i.e. just a common law tenancy not an AST).

Are there any lenders that allow this? Most want ASTs and the ones that I can find that allow corporate lets seem only to allow the company to then place one of their own employees in the property.

I did want to purchase this with a mortgage, but looks like I will have to use cash. I can give the charity notice a couple of months after completion so that I can get a buy-to-let mortgage, but it seems a shame to get rid of a tenant that is likely to be there for a long time so I could do with finding a mortgage lender that will allow all of the above.

THE ANSWER

There’s no need to get rid of a good tenant, particularly if the lease agreement means you have no voids, no agency fees and especially if it includes the charity makes good all maintenance issues before they hand the property back to you.

Most BTL lenders won’t lend on this because they like the simplicity of an AST where, in the event they have to repossess the property, they can just issue the tenant with two months’ notice to quit and sell the property with vacant possession.

Any commercial lender will lend on that type of lease agreement. You just need a good broker to dig out the most appropriate lenders for you.

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