What is a sitting tenant & what are their rights?
When it comes to selling a buy-to-let property, there is a lot you will need to consider. But the most important aspect of selling you will need to decide on as a landlord, is what to do with your sitting tenant. Deciding what to do with your tenant will affect how your sale goes and sometimes how quickly you can sell.
But what is a sitting tenant? Can you evict them? And can they refuse viewings?
In this blog post, we will be checking out our guide to sitting tenants, what their rights are, and how we can help you sell.
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What does tenant in situ mean?
If a tenant is referred to as a 'tenant in situ', it means they are a sitting tenant. Technically, the term refers to any tenancy agreement that was signed since January 1989.
What is the difference between a sitting tenant and a tenant in situ?
As we have already discussed, a tenant in situ and a sitting tenant are technically the same thing, as the two terms are used interchangeably. Whilst a tenant in situ has a tenancy agreement signed after 1989, a sitting tenant will have signed their agreement before 1989.
A sitting tenant or tenant in situ is a tenant who live in the property when it is being sold. Whether or not the tenant remains in the property or not whilst the sale is progressing is up to you, however, you will have to adhere to strict guidelines when evicting a tenant.
Do sitting tenants have rights?
As is the case with any tenant, sitting tenants have rights. Exactly what rights your sitting tenants have will depend upon the type of existing tenancy agreement you have, as well as the type of agreement.
What rights does a sitting tenant have?
An example of this would be if you have an assured shorthold tenancy (AST) in place, then your tenant has the right to live in the property for a fixed period of time. This will typically be between 6 and 12 months, however, if you do not renew the tenancy and your tenant stays on, then it becomes a periodic tenancy. This will mean that rather than a fixed-term contract, it will switch to a rolling monthly contract.
If your tenant has an assured or regulated tenancy, then their tenancy rights are more comprehensive than an AST. If this is the case, then they may have rights of succession. This will mean that they can leave the tenancy rights to relatives and may also have the right to stay in the property indefinitely.
However, most assured and regulated tenancies were agreed upon before January 1989, so will not apply to many contracts in place today.
Do sitting tenants' rights change after 10 years?
No, if you own a property with a tenant, their rights do not automatically change after 10 years. However, the type of tenancy your tenants have will affect the rights they have in place.
For example, tenants with an AST will not have rights of succession or the right to live in a property indefinitely. But if they have a regulated or assured tenancy then they may do.
Do sitting tenants pay rent?
Throughout the sale process, your tenants must still pay you rent. If they fail to do so, then legally you would be able to start the process of evicting the tenant under Section 8 of the Housing Act 1988.
Eight weeks' rent if paid weekly or fortnightly
Two month's rent if paid monthly
Three months' rent if paid quarterly or annually
Can sitting tenants refuse viewings?
Whether or not tenants can refuse viewings will depend upon the tenancy agreement that is in place. Some contracts have clauses that specify that tenants should allow viewings to take place, however, if there is nothing in writing then you are under no legal obligation to agree.
If there is a clause allowing for viewings in your tenancy agreement, then it may be difficult to enforce regardless. So if you are a landlord, it is a good idea to give as much notice as possible in order to be as considerate of your tenants' personal lives.
Can you evict a sitting tenant?
You will be unable to evict a sitting tenant unless they break the conditions of their existing tenancy agreements. The property should be sold as a going concern. This will mean that it is part of the sale deal that includes homes for sitting tenants as well as vacant possessions.
If the tenant has an ongoing contract or an agreement with their original landlord, then they will retain the right to live in the property when the time comes for it to change ownership.
A tenant in situ will also retain the right to remain in the property until their tenancy reaches its end or they are evicted for a good cause.
Similarly, a sitting tenant also has the right to occupy a property for life without being disturbed, and should that tenant die, they are allowed to pass on the tenancy to either a spouse or another family member.
If you wish to regain possession of your property, then you will be able to do this by issuing a Section 21 notice of possession. This can be enforced whether your tenant has an AST or periodic tenancy in place, however, there are specific rules that must be followed. This is because if your tenants reject the notice, then it will mean you will need to go through the courts, which can be lengthy and expensive.
If you are struggling with your tenants, such as they stop paying rent, then you would be able to serve them a Section 8 notice of eviction.
How much notice do you need to give when selling?
If you decide to sell the property with vacant possession, then you will need to issue a notice of eviction. If your tenants have broken their tenancy agreement you can issue a Section 8, or a Section 21 if not.
Both of these notice types bring with them their own pros and cons, so you will need to weigh up which one is the most beneficial for your circumstances.
If you decide to sell your rental with tenants, then your options are:
Wait it out:One of your options is to wait until the end of the tenancy. If your tenants have AST, then the tenancy date should be stated on the contract.
Give notice:If you have too long left on the tenancy to wait it out or you wish to give formal notice, then you can issue a Section 21. If your tenants have fallen behind on rental payments, then you will be able to issue a Section 8 notice as well.
First refusal:Should your tenant have lived in the property for a while, you could offer them the opportunity to buy the property from you before you sell to a new landlord.
Sell with sitting tenants:Finally, you could sell with sitting tenants, but this may affect your asking price.
Sitting Tenant Rent Act 1977
The Sitting Tenant Rent Act 1977 was an act that was brought into effect to protect tenants of residential property by preventing landlords from charging them unfair rents. It also gave them the legal right to remain in the property as tenants even once their original agreement with the landlord has been terminated or has expired.
If the landlord still wants to evict the tenant, then landlords will need to prove to a court that they have a 'ground' for possession.
What should you do before selling a property with tenants in situ?
When it comes to selling your property with sitting tenants, there are a few steps you will need to take before you put your home on the open market.
Provide accurate gas safety certificates and EPC ratings
Carry out testing of smoke and carbon monoxide alarms to Health and Safety standards
Collect property condition reports and an inventory
Update your property's Electrical Installation Condition Report (EICR)
Be sure to collect essential paperwork, such as your tenant rent payment history, deposit amounts, and the tenancy agreement.
What are the advantages to buying a buying a property with sitting tenant?
As with any selling situation, there are pros and cons to selling with sitting tenants. Below are some of the advantages of selling with tenants in situ:
You will be able to market your property to buy-to-let investors and maintain the sale date
The new landlord will inherit tenants and receive income from day one
The tenant will be able to stay in their home and avoid the hassle of finding a new home to live
What are the pitfalls of buying a property with a sitting tenant?
If you are selling a property with sitting tenants, then there are some downsides that you will need to consider. For example, viewings for your property are a lot more difficult. As whilst your tenants may not object to viewings, they can be a lot more difficult to arrange. You will not be able to turn up with a prospective buyer unannounced, you will have to arrange each viewing with your tenant. And whilst it may sound obvious, you should arrange the viewings considerably.
Whilst selling with tenants in situ will make your property popular with investors, but it will make your property unappealing to the vast majority of other buyers on the market. Buyers will be less likely to purchase a home if they have to first evict tenants before they can move in.
If your property is in an area of low rental interest you may also find your property is on the market for longer.
Is it better to sell a property with or without a tenant?
Whether or not it is better to sell a property with or without tenants will depend upon your personal situation. However, it is worth bearing in mind that a sitting tenant can negatively affect the value of your property by at least 20% if you have an assured shorthold tenancy in place. If you have an assured or regulated tenancy agreement in place, then property value could be reduced by 30% to 40%.
It can also take around 6 months to sell on the open market in the current climate, however, this will depend upon the size, location, and price of your property.
You should also bear in mind that whilst an empty property may get you a higher asking price, it will also mean that you will have longer to cover mortgage repayments without any extra rental income. And the longer a property is empty, the more payments will need covering, and the risk of having the property vandalised or broken into rises.
However, it does not need to be this way. Here at The Property Buying Company, we will buy any property, in any condition, in any location.
If you are a landlord looking to avoid the hassle that a tenanted property sale can bring, then you can sell to us, in a timeline that suits you. We are a genuine cash buyer, who are able to buy property as soon as you are ready to sell, whether it is tenanted or not.
We are proud members of the regulatory boards The National Association of Property Buyers as well as The Property Ombudsman. We are also rated as excellent on Trustpilot.
Plus, as an extra thank you for selling with us, we cover all of the fees you would typically associate with selling a house - even the legal ones!
Ready to sell your property with tenants in situ? Then get in touch today or fill in one of our online valuation forms now to receive a no-obligation CASH offer...