A tenanted property up for sale used to spell trouble. Purchasers, banks and building societies were all equally nervous and vendors became resigned to chopping the asking price. But this could all be about to change as tenants in certain properties become assets rather than liabilities.

Among the growing number of people buying for investment are those who realise that a property with a tenant has an enormous advantage. Although a feature of the commercial property world, it is still in its infancy in the residential sector.

If the British have become more sophisticated in their approach to investing in property, it is in large part due to the influence of the Far East, and it is these buyers from Hong Kong and Singapore who are now most likely to be selling their central London investments mid-tenancy.

Hamptons International is among the first to recognise the market. George Humphreys, who has set up a new department within investment lettings, says it removes uncertainties. "As a buyer you acquire a property with an income stream, so you know the yield," Mr Humphreys says.

In Manchester, Robert Jordan has seen his residential letting agency inundated with young professional couples renting out property they never intend to live in. "They have good incomes and want to get a foothold in the property market, even though they don't intend to settle down yet. Buying a property that already has a tenant would be ideal, and I see it as an emerging market. Tenancy agreements must, of course, include the right of the landlord to pass it on to someone else."

As a member of the Association of Residential Letting Agents, which launched the Buy to Let scheme in 1996, he is less sure how the mortgage lenders would react. "I have my doubts as to whether they are up to speed on this," he admits.

The deals offered by the mortgage companies since have encouraged many new, small investors. They are able to borrow up to 80 per cent and can take repayment holidays during unlet periods.

Douglas & Gordon, estate agents, have just sold a refurbished three-bedroom mansion flat overlooking a park and tennis courts and within walking distance of Putney tube station in London. The asking price was pounds 250,000 and it will be let for pounds 375 a week, giving a gross return of about 8 per cent. "But if you are really only interested in yields, ex-council flats are in great demand", says James Bailey. "There were recently four investors after a three-bedroom flat in a small Fulham block, with parking and a garden, on the market for pounds 100,000. The buyer will get a 12 per cent yield and after 10 years will probably sell for pounds 150,000 more."

And if anybody thought the Thatcher legacy had died, they only need look at the shrewd council tenants themselves, adds Mr Bailey. "They might have paid about pounds 20,000 or pounds 30,000 for a flat, but as they were not allowed to sell for two years, they rented the property out and bought out of town on the income."

Correction: last week, an editing error saw Beaney Pearce referred to as solicitors. They are, of course, London estate agents.