Is selling a property with a tenant as hard as it seems? We reveal all...
Let’s imagine you’re a landlord and you want to sell your property. In an ideal world, you wanted to serve a section 21 notice to evict your tenants before advertising to sell your property. However, due to the current Coronavirus pandemic, a section 21 notice requires at least 6 months’ notice. After the 6 months’ notice, you as a landlord can apply to court.
BUT, once again due to Coronavirus, there’s a backlog of cases, further extending the amount of time it will take to evict tenants. On top of this, section 21 evictions can’t be carried out until after the 21st February 2021, due to the current lockdown.
Now you’re starting to feel a little stuck. Maybe, you start to think you should sell your property with the tenants in situ.
This seems a good option but when you’ve started asking around, you’ve been told there are of course complications to selling a property with tenants. For example, your property will appeal to a smaller pool of people, with the main market being experienced landlords.
Also, you have to hope your sitting tenant approves the viewings you’ve organised and aren’t rude towards potential buyers, making them appear to be nightmare tenants.
You’ve also got another added complication of trying to work the completion date around the rent payment date.
I know, it really does sound problematic, enough to make you wonder if it’s worth selling a property with tenants.
But what if it doesn’t have to be this hard? What if your sitting tenants can actually HELP you sell your property?
Is that possible?
We think so!
We’ve got answers to your questions on everything to do with selling tenanted properties and how to ‘use’ your sitting tenants to your advantage.
If you’re a landlord selling a property with tenants, our last section will be of particular interest to you, as we may have some potential buyers already lined up for you!
Whether you’re looking for a quick answer or want to find out everything, this menu will help you get around:
- What does sitting tenant mean?
- Can you sell a property with tenants in?
- Can a landlord sell a property without notifying the tenants?
- What are renters' rights when owner is selling?
- Is it easy to sell a house with a sitting tenant? Who will buy a house with a sitting tenant?
Struggling with selling a property with tenants?
A sitting tenant refers to the individual renting a property, which is being sold by the landlord, who have stated they wish to remain in the property. When the landlord has decided to sell the property and informed the tenants, they are within their rights to stay, providing that they still have time left in their lease.
Effectively, you could say a sitting tenant is a tenant who is ‘sold’ with the house.
Under the Housing Act 1988, a sitting tenant may also be referred to as a fully assured tenant. Due to these sitting tenants having long term security, some essentially having security for life, they are difficult to remove.
How long do you have to live somewhere to be considered a tenant?
When renting a property, all tenants names should be on the lease. You are, however, allowed to have guests to your property, but there is a point at which a guest may ‘cross the line’, meaning they appear to be living at the property, as though they are a tenant.
A guest can stay a maximum of 14 days in a 6-month period or 7 consecutive days, without overstaying their ‘guest’ welcome. Any longer than this and your guest is now officially considered a tenant and should therefore be named on the lease. If a new tenant is added to the lease, the landlord is entitled to increase the rent, should they wish to do so.
Yes, AND this article is going to tell you how selling a property with tenants may actually be the best way of selling!
Having said this, if you’re going to sell a property with tenants, there are some things you need to keep in mind…
Selling a property with tenants is no different to selling an empty property, in that potential buyers will still want to come and view the property. As a landlord, it’s your responsibility to notify the tenants at least 24-48 hours before a viewing. Tenants have every right to deny you access, especially if you’ve been inconsiderate and booked a viewing at 7am on a Sunday morning.
Another thing to bear in mind when selling a property with tenants, is to keep the tenants happy and on your ‘side’ as they have the power to reduce the value of your property. How do tenants have the ability to do this? Well, they could leave the property in a mess for viewings or be rude towards viewers. This will make a potential buyer think that the sitting tenants will be hard to deal with and make them look elsewhere.
A buyer may want to put in their own tenants and so buying your property with sitting tenants may seem a lot of hassle. This is because the buyer would have to buy the property, then give the sitting tenants a section 21 notice and then FINALLY, once the notice has been served, place their chosen tenants in the property.
This is a long process and there will be few people who want to undergo the hassle, meaning your property with sitting tenants will appeal to a smaller market.
Ah, you raised your eyebrows at the words ‘section 21 notice’. Maybe you’re unsure what that is or how it works? Let us help…
A section 21 notice is served to tenants when the landlord wants to evict them. To serve this notice, the landlord doesn’t need to have a reason for evicting tenants and is the most common way of evicting tenants in the UK. A section 21 notice is also called a ‘no-fault eviction’, as the tenants don’t need to be at fault to get evicted.
Generally, with a section 21 notice you must give your tenants at least 2 months’ notice to leave the property. However, due to the current coronavirus pandemic all section 21 notices have been put on hold until after 11th January 2021, AND due to the uncertain nature of the pandemic, could be extended longer.
If you’re worried about how the coronavirus pandemic will affect your rental property, this may be able to provide you with more information.
It’s not all as bad as it sounds though, sitting tenants can actually be the key to help you unlock the difficult nature that is selling a property. The section 21 notice ban has actually made it better for selling a property with tenants! Keep reading and we’ll tell you how to act fast to take advantage of this situation…
Worried about the pause on Section 21 notices?
When selling a property with tenants, you’re technically able to put the property up for sale without notifying them. However, we can’t imagine they will be best pleased if they were to come home to a ‘for sale’ sign on the front of the house.
If the property is to sell, legally you do have to notify them the property is sold.
It’s easier for all parties if you have a sit-down conversation with your tenants, explaining to them why you want to sell the property and reassure them that they can stay in the property (meaning they will become sitting tenants). After this conversation, it’s also a good idea to give them written notice, so both parties have proof of the conversation.
Also, for you as a landlord, it's better to tell your tenants and keep them happy, as they could make it extremely tricky for you to sell. For example, the tenants could refuse you access to the property for viewings. During viewings, if they do allow you access, they might leave the property in a mess and be rude towards potential buyers, which of course will put them off buying.
After all, who wants to buy a property with sitting tenants who look like they’ll be a nightmare to deal with?
When to tell the tenants that you are selling?
So, as we said earlier, when selling a property with tenants the landlord doesn’t actually HAVE to tell the tenants until the house is sold. However, to keep your tenants happy, it’s a good idea to arrange a sit-down conversation with them, at least 2 months before you put it onto the market. This way you’re able to explain why you’re selling and reassure them that you’re not kicking them out and that you’re actually selling the property with them in it.
A possible outcome of sitting down with your sitting tenants could be that they ask if they could buy the property off you. This is quite a rare outcome, as generally tenants are renting as they can’t afford to buy. But that’s not to say it hasn’t happened!
If this is the case, there will have to be negotiations with the bank, as the mortgage is going to change from a buy to let mortgage to a ‘normal’ mortgage. This could be the most ideal outcome, as you get to sell your property and your tenants get ownership of the house and will feel comfortable in the knowledge the property is now under their control. Smiles all round!
According to Zoopla, 39% of millennials fail to understand their rights as a sitting tenant when the landlord is selling and 32% didn’t know they could be evicted after the property is sold, despite doing nothing wrong.
If you’re reading this and thinking, ‘I could be part of that 39%! What are my rights as a renter with the landlord selling?’ then you’ve come to the right place.
As far as the law is concerned, even with the landlord selling a property, the tenancy agreement is still legally binding, and the tenants are entitled to stay in the property, meaning they will become sitting tenants. If the tenancy agreement says there’s 6 months left in the contract, then the tenants are still able to stay for that six months.
During the selling process, the sitting tenants are within their rights to disallow viewings or only allow them when convenient. In fact, the sitting tenants are able to deny access to everyone, even the police if they don’t have a court order. Tenants may feel they’re out of control of the selling process, but the landlord actually had to work the sale around them.
Another thing to make sitting tenants feel more at ease – the new landlord has to comply with all the same rules as the old landlord, meaning the ownership ‘changing hands’ shouldn’t actually change anything from the sitting tenants’ point of view.
Also, under section 3 of the Landlord and Tenant Act 1985, it’s the new landlord’s responsibility to notify the sitting tenant of their property purchase. The notice must be in writing, including their name, address and contact details, and be delivered to the sitting tenant within the first two months of sale completion.
A landlord selling the property you live in may initially sound a daunting and stressful experience, but the renter actually has more power than you may at first think and the whole process is designed so that the sitting tenant can feel more at ease.
If you'd like to know more about sitting tenants' rights when the landlord is selling the property, have a read of this.
Finding it hard to sell with sitting tenants?
Like with a lot of things, selling a house with tenants has its upsides and downsides. The answer as to whether it’s easy or not is down to opinion, so everyone will think different. However, we’re going to break down the pros and cons of selling a property with tenants to allow you to make your own decision…
Pros of selling a property with tenants:
- Landlords don’t have to worry about paying the mortgage. If the landlord was to evict the tenants before selling, then the landlord would have to pay for the mortgage on the property with their own money and if the sale is to take a long period of time, the amount of money the landlord has to pay will stack up.
- No risk of attracting unwanted attention. An empty property is often known to attract ‘lodgers’, who are generally homeless people making use of your empty property as a place to live without paying any rent. Empty properties also attract vandalism, which will in turn make the property harder to sell.
- No stress of serving the tenant a section 21 notice. Especially with the current pause on section 21 notices, it’s never been a better time to sell your property with your sitting tenants in situ. It’s also unknown if after the 11th January 2021 whether or not there will be an extension on this ‘pause’. Why not make use of this ban, and sell your tenanted property now?
- You will attract experienced landlords, who are serious about buying your property, meaning a faster sale. When selling an empty property, you can often get time wasters who just want to view the property to be a bit nosey and were never seriously interested in buying.
- Could increase the value of the property. Due to the property having sitting tenants, buyers can see they will have a source of income from day 1 after buying the property, making it a more appealing and valuable option.
Cons of selling a property with tenants:
- The property is going to appeal to a smaller market. There are less people who want to be a landlord than there are people looking for a house for themselves, meaning the pool of people who may potentially be interested in your property is smaller.
- Sitting tenants add an extra complication to the selling process. For example, viewings need to be arranged around the sitting tenants and they’re within their right to completely deny the landlord access and refuse viewings.
- The time of completion becomes more complicated with a sitting tenant. This is because if completion doesn’t take place on a rent payment day, the rent from the tenant will have to be split between the old and new landlord, which just adds an extra obstacle into the situation.
- Although attracting experienced landlords is a positive, it could also been seen as a downside to selling a property with tenants. This is because experienced landlords know what signs to look for when judging whether the sitting tenant will be a problem to deal with. This will result in the potential landlord inspecting the tenants more carefully and any ‘red flag’ could put them off buying.
- Sitting tenants could limit the value of the property. I know we said that sitting tenants could increase the value of the property, but this is dependent on the buyer and how they view the property. Generally speaking, most tenanted properties do end up selling for less than the market value.
So, you may be thinking it sounds a lot of hassle to sell a property with tenants, is it a better idea to just keep hold of your buy-to-let property? Well, this is another ‘down to your own opinion’ kind of answer.
We do already have a blog to help you in making a decision and you can give that a read here.
If you're asking us, we think it’s never been a better time to sell your property with tenants! Want to know where to find a buyer for your tenanted property? Just keep reading and we’ll give you an answer…
Act fast and sell your tenanted property to us...
Who will buy a house with a sitting tenant?
After reading our list of pros and cons, you might have decided it sounds hard to sell a tenanted property, leaving you thinking ‘who will buy a house with a sitting tenant?!’ as you’re desperately trying to get rid of yours. Well, the good news is there are actually a few options which can help you get a fast house sale.
You could either sell your tenanted property at auction or sell to a quick house sale company.
At auction you get serious buyers who are looking for the type of property you’re selling and will likely have their finances in place. After the hammer comes down on a sale, contracts are exchanged, and the buyer has between 20 to 28 days to complete. However, the buyer is still able to pull out and forfeit their 10% deposit.
With a fast house sale company, all you have to say is ‘sell my house quickly’ and they will give you a cash offer, with some able to complete in as little as 7 days! These companies also don’t pull out of sales, unlike at auction.
Also, at both auction and quick house sale companies you will only be selling to serious buyers and won’t have any time wasters. It’s also highly unlikely you will get ‘gazundered’ in either situation. In case you’re unsure, being ‘gazundered’ is when a buyer suddenly drops their price after it has been agreed, before exchange and completion.
At auction, there’s demand from multiple buyers which can mean the price is driven up, meaning you could get a higher price than you expected. However, at auction you have to pay a commission of the sold price to the auctioneer and you will also have to pay for advertising and marketing costs, as well as room hire. You will also have to cover all your own legal fees.
At a quick house sale company, you don’t have to pay anything, you’re effectively selling your house ‘for free’. Yes, you don’t even have to pay your own legal fees, you just get an offer, accept it and then get the cash in your bank, FAST.
Although through auction you will have serious buyers bidding, part of the process will be that your property needs to have a few open days, causing disruption to your sitting tenants. Also, the buying of your tenanted property will generally be subject to a survey.
But with a fast house sale company, the offer isn’t subject to a survey and if a house viewing needs to be arranged, it will only be one quick viewing, organised around you and your sitting tenants to make sure all parties are happy and there is as little disruption as possible.
Also, unlike at auction, with a quick house sale company, they’re only focused on your property and there aren’t several other properties available to compete with yours. A quick house sale company also doesn’t take any commission, as they’re buying the tenanted property off you, unlike at auction where you’re using them as a medium to sell your house for you.
So, where can you find one of these companies to sell your house quickly?
We’re happy to buy your property off you, sitting tenants in situ, for CASH. We’re able to move your sale quickly, with our average completion time between 2-3 weeks. We cover all the costs, even your legal fees, and unlike at auction we’re only focused on your property, so you’re not competing against multiple other tenanted properties.
Also, we won't be put off your property by some slightly moody sitting tenants!
Why not get you on your way to selling your tenanted property fast by giving us a call or completing our online form to get your no-obligation cash offer, which we could have in your bank in as little as 7 days!
Get rid of your tenanted property for CASH in 7 days...