Q. I want to purchase a property to operate my new business; however there is a lease agreement in place with the current owner and his lessee. Can I still purchase the property and start my new business when transfer has taken place?

A.    Huur Gaat Voor Koop - refers to the situation whereby a property, subject to a lease, is sold to a purchaser and a tenant occupies such property.

The tenant is legally entitled to remain in such property despite the property having been sold. In other words, the new owner may not evict the tenant, provided he adheres to the terms and conditions of the lease, which remains valid and binding until legal termination thereof ; either by the institution of legal process, effluxion of time or mutual agreement.

Strategy 1
The lease agreement expires within 2 years:
If registration and transfer of the property have taken place, and the tenant’s lease is still in place, you as the new owner have the right to receive the rental income until expiry of the lease agreement. The rental income will cover most (if not all depending on the property and rental agreement in place) of your bond repayments.

Strategy 2
The lease agreement expires within 2-3 years but the current tenant is not utilizing all the space:
Depending on the size of your new operation, maybe start off small, utilizing the space that is available and receive the monthly rental income from the tenant which will compensate your mortgage repayments and allow you to grow your business at the same time. Once the lease expires, increase the size of your workspace and maximize your output.