8,553 tenanted homes are on the market — buyers should audit the deposit, arrears and licence before exchange

The number that matters is 8,553: that is how many homes in England are currently being marketed for sale with tenants in situ, according to The Letting Partnership. For London buyers, that means more chances to acquire income from day one — and more scope to inherit old tenancy problems that should have been fixed before the deal reached exchange.

The appeal of a tenanted purchase is obvious: no initial void, no letting-up period, and immediate cash flow. But the real risk is not whether the tenant is still in occupation. It is whether the paperwork, money trail and compliance record stand up once ownership changes.

Start with the deposit

If the tenant paid a deposit, the buyer needs proof of which scheme holds it, how much was protected, when it was protected, and whether the prescribed information was properly served. In England, those obligations sit under the Housing Act 2004. If the record is incomplete, or the seller cannot show how the deposit will be transferred or re-registered, that is not a clerical issue. It can affect disputes, deductions and any future possession strategy.

Before exchange, ask for the deposit certificate, prescribed information and written confirmation of the agreed transfer process. If those documents are missing, treat that as a live transaction risk.

Reconcile the rent ledger from day one

A buyer should not accept a bland assurance that the tenant is “up to date”. Ask for the full rent ledger from the start of the tenancy, showing rent due, rent received, credits, arrears and adjustments line by line.

This matters because arrears do not become simpler when a property changes hands. If money is owed, the contract should state clearly whether those arrears remain with the seller, transfer to the buyer or are reflected through a retention or price adjustment. Without that, a supposedly income-producing purchase can turn into an argument over who owns the debt.

Put rent apportionment in writing

If completion falls part-way through a rental period, the completion statement should show exactly how rent is apportioned between seller and buyer. That sounds basic, but it is often handled loosely.

Take a London flat renting at £2,000 per calendar month. If completion takes place on the 15th, roughly half the month’s rent should be credited to the buyer. If that is not recorded properly in the solicitor’s statement and matched in the managing agent’s records, the accounting goes wrong immediately.

The handover file should be complete, not promised later

At minimum, the buyer should receive:

• the tenancy agreement
• any renewal or variation
• deposit documents
• the full rent ledger
• payment history
• details of notices served
• current compliance certificates
• evidence of any required property licence

If a managing agent has been involved, the handover should also include a clear client money trail: statements, reconciliations and confirmation of where tenant funds sit at completion. Verbal assurances are worthless if a dispute emerges later.

In London, licensing is an address-by-address check

This is where tenant-in-situ deals can become expensive. In boroughs such as Newham, Waltham Forest, Brent, Haringey and Southwark, a property may fall within selective, additional or HMO licensing depending on the address and property type. Buyers should also verify the gas safety record, EICR, EPC, and smoke and CO alarm compliance.

A buyer who completes without checking the licensing and safety file is not buying convenience. They are buying uncertainty, and potentially enforcement risk.

This is a market signal, not a legal change

The rise in tenant-in-situ listings is a market development, not a new law. The legal duties on deposits, records and safety compliance already exist. What changes in these transactions is the importance of allocating responsibility clearly before exchange rather than trying to repair defects after completion.

The three checks that matter most before exchange

First, obtain the full tenancy pack: agreement, deposit paperwork, prescribed information, rent ledger from the tenancy start, payment history, safety certificates, EPC, EICR, licensing evidence and copies of any notices.

Second, instruct your solicitor to deal expressly with arrears, deposit defects, apportionments and missing compliance items through warranties, indemnities or a retention where needed.

Third, agree in writing how the deposit will be transferred or re-protected and how rent will be apportioned on completion, with named parties responsible.

If the file reveals an unprotected deposit, significant arrears, missing gas safety paperwork or a licensing gap, the practical options are to renegotiate, hold money back or delay completion. Completing first and sorting it out later is how a clean income purchase becomes a liability.

Rentals & Sales can help buyers and landlords review a tenant-in-situ sale file before exchange, from licensing checks to deposit and rent-ledger handover issues.