Browse Forums Real Estate 1 Feb 24, 2009 12:34 pm Hi all,
(Hope this thread is in the right area - wasn't really sure!). Basically, I want to buy my first home - but a lot of the houses in my price range are listed with headings like "investors look here!" (etc) Basically, these homes have tenants, often with leases till the end of the year. Some of the properties look really good - but I'm stuck. I want the FHOG. I'm guessing I can't buy one of these as I: (a) Can't kick them out until the end of the lease; and (b) Can't get the first home owners grant if I can't live in it for whatever the requirement is, if the lease doesn't expire till 8 months into the first year or whatever. Any advice? Or am I completely out of luck here? Buying a tenanted property to live in as first home owner? 2Feb 24, 2009 12:41 pm webbiegareth Hi all, (Hope this thread is in the right area - wasn't really sure!). Basically, I want to buy my first home - but a lot of the houses in my price range are listed with headings like "investors look here!" (etc) Basically, these homes have tenants, often with leases till the end of the year. Some of the properties look really good - but I'm stuck. I want the FHOG. I'm guessing I can't buy one of these as I: (a) Can't kick them out until the end of the lease; and (b) Can't get the first home owners grant if I can't live in it for whatever the requirement is, if the lease doesn't expire till 8 months into the first year or whatever. Any advice? Or am I completely out of luck here? The First Home Owners Grant rules allow for this. You need to move into your home within the first 12 months of settlement. You can confirm this with your mortgage broker at the time of application for your home loan as well as by calling the relevant state Revenue Department. Not completely out of luck, but also I would not buy a house with a tenant that has a 12 month lease on it for fear of repaying the First Home Owners Grant back to the government. Re: Buying a tenanted property to live in as first home owner? 3Feb 24, 2009 1:16 pm Thanks!
I have (finally) looked for the criteria, and found this: #### You (or at least one applicant) must occupy the home as your/their principal place of residence for a continuous period of at least 6 months, commencing within 12 months of either settlement or completion of construction. #### I initially took that as meaning I would need to occupy the property for six months *within* the first 12 months. (i.e. you need to move in within the first six months). But instead, it sounds like I can move in during the 11th month, and as long as I then stay there for a continuous six months, I'm fine. The two places I'm interested in both have leases that expire at the end of October ('09). Re: Buying a tenanted property to live in as first home owner? 4Feb 24, 2009 1:33 pm webbiegareth Thanks! I have (finally) looked for the criteria, and found this: #### You (or at least one applicant) must occupy the home as your/their principal place of residence for a continuous period of at least 6 months, commencing within 12 months of either settlement or completion of construction. I was going to tell you this so good find, you didn't need us after all In addition, if a tenant has a lease agreement in place you as the owner don't actually have any right to occupy the property before its up. Which most people know, BUT, if all parties are in agreeance, the tenant can break the lease earlier than the specified time. Just wanted to tell you in case you had thought of moving in earlier. I've heard of cases where the new owner would pay the existing tenants moving costs or similar in order to get into their property before the lease is up, kind of like paying them compensation to break the lease - of course its the tenants choice though. Sounds ******* I know but it happens. ICK So glad the building is over, never again. Loooove our house, but still not quite sure it was worth all of the stress they put us through! Re: Buying a tenanted property to live in as first home owner? 5Feb 24, 2009 2:11 pm Yeah I figured that was the case.
It's a tricky situation - I currently rent a house, so I'd have to continue renting (and maybe even sign another six month lease myself!), while at the same time paying mortgage (well, mortgage minus rental income on the new property) until closer to the end of the year! Not really the ideal situation, but if I really, really like the place - I guess it's worth it! Time to start inspecting. Re: Buying a tenanted property to live in as first home owner? 6Feb 24, 2009 3:54 pm I've done what you are asking.
I bought a place that settled last October and the tenants have a lease until June. So i will be in the place in about 8/9 months from the time i bought it. The hardest part is waititng to get in there! Fortunately i am still living at home so i don't have to pay rent and a mortgage. Re: Buying a tenanted property to live in as first home owner? 7Feb 26, 2009 8:07 am I've also bought my first home (2br unit) subject to existing tenancy: settled last week, tenancy ends early May
Sure it's a pain to wait wait wait but don't let tenants put you off buying a place if you think the property is right for you: a) You still can get FHOG and stamp duty (transfer duty) concession as long as you satisfy the residence requirements b) (this from what I have been told) All costs relating to the property while it is rented are tax-deductible ... mortgage interest, property management fees, strata fees, rates, water rates, repairs, depreciation (under conditions) c) The incoming rent is good as well, helps offset paying your own rent, but bear in mind it'll be taxable income (but you can claim deductions against it as above) You can make this work for you (and appear to be a nice landlord) by finding out from the tenants what needs to be fixed and taking care of it all before you eventually move in ... the repairs are tax deductible and if a real estate is managing the place they often have good rates negotiated with local tradies. I've just given my tenants very early notice that their tenancy won't be renewed in May - hoping they'll decide to go before then as I'm itching to move. Poor buggers, they're engaged and planning their wedding but "crap happens" Re: Buying a tenanted property to live in as first home owner? 8Feb 26, 2009 9:39 am After buying the property you could also tell them that you will let them out of their lease with one weeks notice with no penalty aswell, that way they may start looking and get out earlier then expected.
Ive had that offer made to me in the past as a tenant. Re: Buying a tenanted property to live in as first home owne 9Jul 06, 2010 6:09 pm Digging up another old thread... I have recently purchased a house which is currently tenanted. What I really want to know is do I get in contact with the current owners agent, or is this something that the settlement agent does? Surely there would have to be some signing on my part to the existing (or a new) standard residential property lease schedule/contract? Another quick question - does the lease agent's property condition report form a part of my contract? Tim Re: Buying a tenanted property to live in as first home owne 10Jul 07, 2010 7:15 am Timm do I get in contact with the current owners agent, or is this something that the settlement agent does? does the lease agent's property condition report form a part of my contract? Speaking from my NSW experience ... 1. The leasing agent will probably contact you near to settlement to ask if you want them to continue the property management, if so you will need to sign-up to their property management services. They will have no business with you until you are officially the new owner (at settlement) 2. The condition report isnt part of your purchase contract but the tenancy lease is attached to the contract. When buying my place I was interested in seeing the condition report (damage might be noted) so I asked for it from the leasing agent and with the vendor's approval, I got a copy Re: Buying a tenanted property to live in as first home owne 11Jul 07, 2010 9:08 am The vast majority of residential leases in Victoria (I'm actually pretty sure this applies to all leases, but I'm cautious about throwing a blanket statement out there) actually allow the landlord to break the lease prior to the actual termination date if they (or a close family member) are planning to live there. You have to give 62 days notice, though (and I'm pretty sure this can be given prior to settlement) Residential Tenancies Act 1997 - SECT 258 Premises to be occupied by landlord or landlord's family 258. Premises to be occupied by landlord or landlord's family (1) A landlord may give a tenant a notice to vacate rented premises if the premises are immediately after the termination date to be occupied- (a) by the landlord; or (b) in the case of a landlord who is an individual- (i) by the landlord's partner, son, daughter, parent or partner's parent; or (ii) by another person who normally lives with the landlord and is wholly or substantially dependent on the landlord. (2) The notice must specify a termination date that is not less than 60 days after the date on which the notice is given. Re: Buying a tenanted property to live in as first home owne 12Jul 07, 2010 6:54 pm Cheers for the responses. Yes no real need to break the lease early (currently leased for approx 2 months after settlement), the tenants are considering moving out early in to a larger place, and I am no no rush to move out, or to move in so we are both in that fortunate situation. After a little bit of digging around has given me the main response which I was after. And actually receiving a copy of the signed offer and acceptance has cleared it all up! What I was a little concerned about (probably over concerned due to my day to day work) was that if something was in the property condition report, it would form a part of the condition of the house on settlement. My logic was - I am entering a contract where the existing property lease is an attachment - the property condition report forms a part of the existing lease agreement - so worst case scenario say the property condition reports outlines that the A/C and over don't work, was I deemed to have signed off on that. But Annexture A of of my contract clears this up Also; in regards to getting a copy of the property condition report, the Joint Form of General Conditions for the Sale of Land (applicable to WA people only, and I only have a copy of the 2002 document, there has been a revised 2009 document) - Clause 6.9 General provisions where property is leased reads "where the Property is at settlement or, on possession, subject to a Lease, the following will apply; section a) The Seller must deliver to the buyer on the earlier of settlement or possession, the following: (part 4) The Property Condition Report where a Property Condition Report has been prepared in respect to the premises the subject of the lease. Or long story short, a quick call to the leasing agent got me a copy Re: Buying a tenanted property to live in as first home owne 13Jul 09, 2010 1:42 pm We bought a tenanted property as our first home. It was good timing though for us, in that we signed the contract in May, got a 3 month settlement so didn’t take possession until August, and the tenants’ lease expired around the same time as this, so we didn’t need to worry about collecting rent or having to fix anything that broke, or take out landlord insurance or any of that stuff in the very brief period between us settling and their lease expiring. So once they moved out, we took over. Then we had a few weeks of having the empty apartment to spruce it up before we moved in ourselves. But yeah, unless the tenants have some strange extended 2 year lease or something in place, you should be fine, as long as you move in within 12 months of the settlement date. Then you can still get the FHOG, no worries. How the hell did I become a senior member!? I know nothing! If you are in Victoria you have a statutory right to your own building inspector regardless of builder's consent. No negotiations are required. However the builder will… 1 2889 You might be able to apply to divert the sewer at your expense. In NSW you would contact a Water services co-ordinator and they would give you advice as to whether or not… 1 16130 Ask for some kickplate to be added and also for tradies to be requested to use lanyards on tools on that side of the building. Be respectful and have the discussion… 1 1685 |