Selling a house with tenants
Can you sell a property with tenants? What are their rights?
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As a landlord, selling with tenants might be the easier and less stressful option - and we can provide you with an offer free of charge.
Why are landlords selling tenanted properties?
Selling a property with tenants can present unique challenges and considerations for landlords. While the idea of having a steady rental income and an appreciating asset might seem appealing, the reality is that managing tenanted properties involves more than meets the eye. There are various reasons why landlords may decide to sell their tenanted properties.
One significant factor is that being a landlord in the current rental market is not as profitable as it once was. The increasing regulations, costs, and tax burdens make property ownership more challenging, especially for landlords with significant debt.
Additionally, changes in the property market, such as rising interest rates and market risks, can make selling a property a wise choice to maximize proceeds.
The introduction of legislation like Section 24, which removes mortgage interest relief, and the increased regulation in the private rented sector add to the financial burdens for landlords.
Costly energy efficiency improvements and the stamp duty surcharge have also impacted the profitability of buy-to-let properties. Difficulty in raising rents due to affordability issues and the negative perception of landlords in certain sections of the media further contribute to the decision to sell.
Other factors influencing the choice to sell include the challenges of dealing with problem tenants, the rise of purpose-built rental developments, the need for significant refurbishment, and the desire to release locked-in equity for various purposes.
In conclusion, selling a property with tenants is a decision influenced by several factors, including financial considerations, market conditions, regulatory changes, and the overall management challenges associated with tenanted properties. Assessing these factors and seeking professional advice can help landlords make informed decisions about whether to sell their properties.
As a landlord, you might be considering selling your property, but if you have tenants in situ you might be left wondering whether or not you actually can, especially if you don’t want to go through the process of removing the tenants.
You’ll be glad to know that you still have options, but it’s a fairly substantial topic, so let’s dig in!
You can navigate to any particular query of interest using the navigation below:
Can I sell my property with a tenant?
The simple answer that you will be relieved to know is, yes, you can sell your flat, house or property whilst it’s occupied by tenants. It’s actually a fairly common thing that happens a lot as landlords find themselves in the situation that they want to release cash or simply don’t want to deal with the hassle, and on the flip side there’s actually very little the tenant can do about it.
The big thing to be aware of is it’s not like a traditional house sale mainly due to the market as an overall will be smaller, majority of the time you will be looking to sell to a landlord, or a want to be a landlord who is happy with the contract that you have in place. There are also a few more complications that you have to overcome, but we’ll talk more in-depth about them later in the article.
That being said, if everything is handled and done correctly, all parties will be happy with the solution and the tenants won’t notice anything different!
Why are landlords choosing to leave the buy-to-let market?
If you currently own a property that you have been renting out and you are considering selling it, there are two options to consider: selling it with tenants in place or selling it as a vacant property. Opting for the vacant property route provides you with a larger pool of potential buyers, as you won't be limited to just investors.
Depending on the local market conditions, selling the property as vacant may fetch a better price. However, in many areas of the country, where there is a shortage of available properties, there is often minimal difference in price between the two options.
It's advisable to consult with your real estate agent, who can provide insights into whether there is a significant disparity between the prices that can be achieved from investors versus owner-occupiers.
While buy-to-let property ownership has been considered a more favourable investment than the stock market, it comes with higher risks, especially if landlords have accumulated substantial secured debts. The regulatory requirements, costs, and tax burdens associated with buy-to-let properties can sometimes make it more trouble than it's worth.
What are the buy-to-let changes in 2023?
The end of the Buy-to-Let
The introduction of the stamp duty surcharge in April 2016 and stricter mortgage borrowing requirements imposed by the Prudential Regulation Authority's stress-testing criteria have undeniably slowed down the market.
Considering the current economic climate, factors such as the affordability crisis and the potential impact of Brexit on house prices should be taken into account when evaluating the value of buy-to-let properties. These circumstances might indicate that it could be an opportune time to exit the market.
It's essential to note that the notion often perpetuated by property "experts" and uninformed media sources that house prices double every 10 years is simply not true.
Tax considerations:
Investment properties typically incur capital gains tax, and depending on your circumstances, there may be allowances and exemptions available to reduce this liability. Capital gains tax can reach up to 28% of the increase in the value of your investment, so the final tax liability may impact your decision to sell, as it will reduce the net amount of money you receive after the sale.
If you have made capital improvements to the property during your ownership, you may be able to offset some of the tax liability. Additionally, utilizing your annual allowance for capital gains can further mitigate the tax burden.
Financial position:
If you have a mortgage on the buy to let property, there may be penalties if you sell before the fixed term of your mortgage product ends. If you are nearing the end of the fixed period, keep in mind that the conveyancing process typically takes a couple of months after accepting an offer. The mortgage will only be redeemed upon completion of the sale.
Tenancy agreement considerations:
The tenancy agreement serves as the legally binding contract between you as the landlord and your tenant. It's important to note that even if the property is sold, it does not necessarily mean that the tenant must vacate. Instead, a new person can assume the role of the landlord.
Most tenancy agreements typically allow for property viewings during the last month or two of the tenancy. It's advisable to review your specific agreement to determine if this provision is specified.
It's crucial to understand that the tenancy agreement grants the tenant the right to "quiet enjoyment" during their tenancy. This means that you cannot assume unrestricted access for conducting viewings throughout the tenancy period.
If you are not in the final period of the tenancy and the agreement does not explicitly allow for viewings, it may be possible to negotiate reasonable access by reaching an agreement with your tenant.
Additionally, it's important to clarify the notice period required if you intend to reclaim possession of the property. Your tenancy agreement should specify the notice you need to give to your tenant in such cases.
It's worth noting that some agreements may include a break clause, enabling you to serve notice before the end of the agreement. However, without a break clause, you may need to wait until the end of the tenancy to regain possession. If the property is let under an Assured Shorthold Tenancy agreement, the tenant will also have a legal minimum right of occupation for six months.
How do you sell a house with a tenant in?
As we touched on, selling a property with tenants isn’t exactly as straightforward as selling a residential property as after all you have a tenant to consider. Unfortunately, you can’t just call your estate agent, and stick the property on the market after a few photos, and expect people to buy the property.
There are a couple of things that you have to do and think about prior to listing the property:
Talk to your tenants
It’s really important to talk to your tenant before marketing the property – we can’t stress this enough.
Emphasis the fact that the chances are it will actually mean very little changes for your tenant as their agreement will be carried on to a new landlord, but if you don’t talk to them and one day a for sale sign just appears outside the property they might be a little bit annoyed that they haven’t been made aware and cause you issues!
If your tenants aren’t playing ball, then this can create a whole host of problems.
Keeping your tenants in the loop
As well as informing them of the sale, you should keep them up to date throughout the process. Doing this, you also provide them with the option to buy the property themselves, especially if they have been living there for a considerable amount of time, let them know what price you will accept even if they don’t consider purchasing, it’ll make them feel involved and respected.
You’ll likely be selling to another landlord
Chances are you’re wanting to appeal to other landlords, willing to buy the property and take on the tenants – so you’ll need to market in a way that attracts them, yields! Also, be aware that they tend to be a little bit savvier than your everyday property buyer, landlords tend to be experienced and for the most part, won’t be foolish, so they’ll want to check tenant references and probe before actually making an offer.
Agreements & deposits
We’ll dig into this in more detail later in the article, but you also need to consider your tenant's deposit and transferring it across which is usually handled by your conveyancing solicitors, but we have a few tips around that, so keep reading!
Should you sell with or without a tenant?
Once you have made the firm decision to sell your property, you face the choice of selling it either with a tenant still in place or after the property has been vacated. This decision depends on your specific objectives and whether there is potential to achieve a higher sale price by having the property vacant and refurbished.
Selling a House with sitting tenants:
Selling the rental property "as is" is a common choice for landlords looking for a relatively quick disposal of their property portfolios. In this scenario, you can expect to attract interest from other landlords or owner-occupiers who are willing to roll up their sleeves and undertake necessary work on the property.
If the tenants currently residing in the property express their desire to remain, it may be more practical to sell to another landlord. This benefits both parties, as the tenants avoid the hassle of finding a new home, while you continue to receive rental income until the completion of the sale.
Refurbishing and selling the property:
On the other hand, if you have the time, financial resources, and energy to invest in refurbishing the property, you are likely to appeal to a broader range of potential buyers and potentially secure a better sale price.
It's important to consider the additional value you can create through refurbishment, as well as the financial losses incurred during the period when the property remains vacant. During this time, you will not be receiving any rental income and will need to wait for several months for the property to sell. To assist in assessing your options, you can utilize the calculator below.
It's important to carefully evaluate your goals, financial situation, and timeline when deciding whether to sell a rented property with or without a tenant. Consulting with a professional real estate agent or property advisor can provide you with valuable insights and guidance tailored to your specific circumstances.
Making the right decision
It’s not a straightforward question, there’s a lot to weigh up and consider – your immediate thought, if you’re happy with the tenants, would be not to upset them with eviction if you don’t need to, however, there are pros and cons to both side of the argument and as a landlord, it is something that you have to contemplate.
There’s a completely different process between selling a property as vacant and one that has tenants, so as you can imagine there are quite a few considerations that you have to think about before making such a big and perhaps costly decision.
Pro’s to selling with tenants
As you might have guessed by reading the start of this article, there are actually a lot of positives to selling your house with the tenants in situ, some of which you might not have considered.
We’ve listed some of what we consider to be the best “pros” for you below:
Maintaining rental income right until completion
If you are selling a more typical residential property you would look at putting it on the open market but selling on the open market takes months (usually anywhere between 3-9 months).
So, whilst you’re in the property over those months you typically have to cover the expenses, including all the bills, house repayments, and anything that needs to be repaired whilst it’s up for sale to ensure it is presentable for viewings.
On the flip side, however, if you have tenants, they are hopefully paying rent right up until the point that you sell, meaning all your costs are completely covered.
There’s no renovation required
When you come to sell a property you’ll often have to give it a bit of a revamp, whether that be a small redecorating job or some major fixes, you usually have to do something. When you have tenants then usually you can’t do these jobs as regularly, and for the most part, as long as it’s liveable that will be accepted by a potential landlord buyer – you have a little more leeway.
No need for an eviction
The process of an eviction can be long, you will have to serve your tenants with a section 21.
This is a notice of possession meaning you can take control of the property at the end of the tenancy agreement or an agreed break clause.
You don’t have to give any particular reason for the eviction, but sometimes it can feel like a pretty tough thing to do, especially if you’re tenants have done nothing wrong, so it’s often not the route that people want to go down – that or they have a long fixed term.
It might be faster
If you have tenants with a fixed term and serve them with a section 21 then you might have to wait a significant period of time before you can actually market the property. Whereas if you have tenants, and especially if you have a decent yield, you might be able to attract a potential buyer much quicker than going through that whole process.
Con’s to selling with tenants
Obviously, there are downsides to selling with tenants too, which you need to consider. Here are some of what we consider to be the main “cons”:
You’ll likely achieve a lower price
Well, this isn’t always the case, but you are more likely to achieve a lower value for your property than if you went on the open market. This could be due to the decreased competition, but it’s more likely that landlords are a bit more in tune with the property market and are wanting to look for a deal rather than paying market value.
Access for viewing
Tenants don’t have to give you access for viewings, they can be awkward if they want and there isn’t anything that you can actually do about it. Some tenants might just be awkward for the sake of it, but others might work long hours for instance, and not allow you into the property without them being there, which is something that you have to work out in an initial honest conversation with the tenant(s) themselves.
Smaller property market
Whatever way you’re looking at it, the market for landlords will be smaller than the general open market for the public. That means it can be harder to find buyers, take you longer and you might get less competition.
Sell house with sitting tenants
When it comes to selling a property with existing tenants, there are several options available to you. One approach is to sell the property 'as is', a common choice among landlords looking for a relatively quick transaction for their property portfolios.
By opting for this route, you open the door to potential buyers who are either fellow landlords or owner-occupiers willing to invest some effort into refurbishing the property. These individuals are typically undeterred by the presence of current tenants and are willing to take on the responsibility of managing the property.
Furthermore, it's important to consider the desires of the tenants themselves. In some cases, the tenants may express an interest in remaining in the property even after it changes ownership. Should this be the case, selling to another landlord who is willing to accommodate their tenancy becomes a more suitable option.
By selling to a new landlord, you not only provide a convenient solution for the tenants, who avoid the hassle of finding alternative housing, but you also benefit from the rental income up until the completion of the sale. This ensures a smooth transition for all parties involved while maintaining a consistent stream of rental revenue for you.
Transitioning away from the buy-to-let market
For numerous landlords, making the decision to sell their rented properties and depart from the buy-to-let market has emerged as the most financially viable choice, particularly for those who possess a smaller portfolio consisting of one or two properties. These landlords are more susceptible to being pushed into a higher tax bracket compared to those with larger portfolios.
A comprehensive survey conducted by Simply Business in 2022, encompassing the responses of over 600 landlords, revealed that 33 percent of them believe their properties are no longer as profitable due to the limitations imposed on buy-to-let mortgage interest tax relief.
The survey also unveiled other noteworthy findings, including the fact that 16 percent of landlords have already sold or are contemplating selling a property in response to the impact of the buy-to-let mortgage tax changes. Furthermore, 28 percent of landlords expressed that an increase in tax relief would dissuade them from selling any properties in the future.
Data compiled by Propertymark indicates a noteworthy 13 percent surge in the number of landlords selling their properties between July and October of 2022. While this increase is likely influenced by the mounting cost of living and inflation, the impact of Section 24 on landlords' profits has made it increasingly challenging to cope with further cost escalations.
The evolving landscape of the buy-to-let market, coupled with tax adjustments, has prompted landlords to carefully reassess their investments. By weighing the financial implications and potential profitability against the prevailing market conditions, landlords are making calculated decisions to divest their rented properties and pursue alternative avenues.
The impact of Section 24 on landlords
Section 24 has had a significant and adverse impact on landlords who are considering selling their rented properties.
This particular section of the UK tax legislation, introduced in April 2017, restricts the amount of buy-to-let mortgage interest that landlords can offset against their rental income when calculating their tax liability.
One of the key implications of Section 24 is that it has led to a reduction in landlords' profitability.
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Previously, landlords could deduct their mortgage interest payments as an allowable expense, reducing their taxable rental income.
However, under the new rules, landlords are no longer able to deduct the full amount of mortgage interest, and instead receive a basic rate tax reduction.
This change has resulted in higher tax bills for many landlords, eroding their rental yields and cutting into their overall profitability.
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For landlords who own one or two properties, the impact of Section 24 is particularly pronounced. As their rental income may push them into higher tax brackets, they are more likely to experience a significant reduction in their net income after accounting for increased tax liabilities.
The introduction of Section 24 has prompted many landlords to reassess their investment strategies and consider selling their rented properties. The higher tax burden, coupled with additional regulatory and financial pressures, has made it increasingly challenging for landlords to maintain a profitable rental business.
As a result, some landlords have chosen to exit the buy-to-let market altogether, seeking alternative investment opportunities with potentially higher returns and fewer tax implications.
It's crucial for landlords to carefully evaluate the financial implications of Section 24 and assess whether selling their rented properties is a more viable option.
Seeking advice from tax professionals or property advisors can provide valuable insights and guidance tailored to individual circumstances, helping landlords make informed decisions about their investment portfolios.
Notifying your tenants of the sale
That leads us very nicely into this next section, what is integral to the whole process, whatever way you want to go about it – you need to discuss it openly with your tenants!
If you are open with them about the sale from the start it will hopefully prevent issues with viewing access and it also opens up an avenue for the tenant to make an offer on the property as we touched on before.
If you have chosen to sell with tenants it’s integral that they are on your side, try and make sure they are happy before approaching the subject – a new potential buyer may want to view the house, and they likely also want to do their own checks on the tenants, the tenants are ultimately a large part of you making that sale.
Turn the conversation to favour you. Be reassuring to your tenants and tell them that this option means that you don’t have to kick them out because they’ve been such great tenants & you’re going to sell the property to another landlord so their occupation is likely safe.
Can you use a normal estate agent to sell a tenanted property?
Yes, you can use your local estate agent to sell your tenanted property – however, we would recommend not just jumping into signing with the first estate agent that you get in touch with.
As it’s quite a specialist type of sale, putting it straight on the open market might not attract as much attention as you initial thought, you want to choose an estate agent that has an extensive list of relationships with people they know will be interested in your property before even putting it on any popular property portal.
Obviously, it’s quite hard to determine beforehand if they’re telling the truth – but by speaking to them you can hopefully get a feel if they have any interested parties. Also for that reason, if you’re selling a tenanted property it might be better to stray away from online estate agents as you’ll likely miss this step which might be the difference from selling your home.
Arranging viewings
The tricky part when you have tenants is, of course, arranging the viewings for potential buyers – whilst also balancing your tenant's rights and respecting them, you need to be really careful when arranging this as to not strain the relationship.
It’s important that you stick to a few rules when arranging viewings with tenants:
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1. Give noticeYou should give your tenant at least 24 hours’ notice, and we stress the at least part! The more notice that you give them the more likely they are going to be able to make arrangements and it will ultimately cause them less stress.
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2. Seek consentThe tenant MUST give consent – if the tenant can’t do the date and time that you propose the viewing that’s it. You need to arrange the viewings around them, ask when the most convenient time for them is, and schedule that way.
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3. Be cautiousBe careful – having constant viewings might be seen as interfering and against your responsibilities as a landlord. The tenants have a lot of power in this situation, so don’t annoy them! They have to grant you access or it could actually be deemed as trespassing.
Selling a rented property - What are your options
At this point, you’ve hopefully made your decision, and if that’s to sell your property with the tenants in situ, you have a few options to consider on what path you go down. We’ve taken a look at a few of those options, explained each, and highlighted some pro’s & con’s to help your decision:
Selling to a quick house buying company (private buyer)
Before we start off in this – full disclosure, we are a cash house buying company that can buy your tenanted property in 7 days. Although we might be slightly biased, we always want to be as transparent as possible as we recognise that our service won’t work for everyone, but now that’s out the way, what exactly is a quick house buying company?
A cash house buying company is exactly as it sounds, they buy homes for cash and in doing so can operate very quickly – for instance, we can purchase your home in as little as 7 days. The main service is the speed of the sale and the fact it’s a minimal hassle, but in return, you won’t achieve full market value, but you don’t have to go on the open market.
Pros
Minimal disruption to your tenants with little to no viewings – dependant
We have several sale solutions
We’ll cover the solicitor's costs
It’s hassle-free – we handle literally everything for you
We buy in any location or in any condition
You can get an offer with absolutely no obligation, it’s FREE
Cons
You won’t achieve full market value for the property – much like if you sold to a landlord
Utilising the services of an estate agents
Opting to sell a tenanted property through an estate agent is a commonly chosen route for many landlords. To ensure a smooth and successful process, consider the following tips:
Selling at auction
The process of auctioning a tenanted property has become more transparent and easier to navigate, offering various advantages for property sellers. The emergence of numerous online auction houses has significantly contributed to the growth of this sector, providing additional opportunities for sellers to reach a wider pool of potential buyers.
In addition to traditional auctions, there is a unique approach known as the 'modern method of auction.' This method can be best described as a hybrid between an auction and a sale facilitated by estate agents. It offers a distinctive avenue for sellers to explore, combining the advantages of both auction and private sale.
A significant proportion of auction buyers are landlords themselves, actively seeking opportunities to expand their property portfolios.
Additionally, professional investors often participate in auctions, aiming to acquire properties for refurbishment or renovation. Furthermore, even regular buyers, looking to find a family home that they can renovate themselves, often explore auction opportunities.
The auction environment tends to attract buyers who are more business-minded and motivated to expedite the transaction process.
Consequently, sellers are less likely to encounter time-wasters, nit-pickers, or window shoppers, as buyers participating in auctions are typically more serious and decisive.
Pros
One notable advantage of selling a tenanted property through an auction is that the presence of structural issues or problems such as Japanese Knotweed does not necessarily deter buyers.
Auction buyers are often accustomed to dealing with these types of risks and are more willing to proceed with the purchase, enabling sellers to sell the property without significant hurdles.
Additionally, auction buyers are required to have their finances in order before participating in the bidding process. Once the hammer falls, whether in the auction room or on the online platform, contracts are exchanged promptly, and buyers have a fixed period of 20 to 28 days to complete the sale.
This level of commitment from buyers minimizes the occurrence of buyers pulling out or having a change of mind, as they would risk losing the deposit (typically 10%) and incurring associated fees and penalties.
Moreover, selling a property through an auction eliminates the possibility of being "gazundered." This term refers to the unfortunate situation where a buyer suddenly reduces their offer just before the exchange and completion of the sale. The auction process secures the agreed-upon price, protecting sellers from last-minute renegotiations.
It's worth noting that many auctioneers also engage in private and off-market sales, providing additional avenues for sellers to fast-track property transactions and explore alternative channels.
However, there are certain considerations and drawbacks to be aware of when selling a tenanted property through an auction. The timeline for selling a property at auction can be longer than anticipated, primarily due to the marketing period, arranging viewings, and conducting valuations, which can take up to a month or even longer.
During peak periods, sellers may face additional delays in securing an auction slot. Furthermore, once the property is sold, buyers typically have another 20 to 28 days to complete the transaction, potentially prolonging the overall process.
Cons
Selling through an auction involves organizing 2 to 3 open days for prospective buyers to inspect the property, which may cause some disruption. However, sellers are not necessarily required to be present during these viewings.
In terms of fees, it's important to recognize that reputable auctioneers offer a specialized service, which can result in higher commissions compared to those charged by estate agents. It's crucial not to be enticed by low auction fees, as they may indicate poor marketing efforts for your property.
Additionally, depending on the chosen auction house, sellers may incur enhanced advertising expenses, room hire fees, and fees for accessing the online platform. Sellers should also consider covering their own legal costs.
Determining the appropriate 'reserve' price for the property presents a challenge. Setting the reserve price too high may discourage potential bidders, resulting
Selling to another landlord
Selling a tenanted property to another landlord introduces a different dynamic to the transaction, as you are likely to engage with a more astute and knowledgeable buyer in this scenario.
Potential buy-to-let investors, for instance, will carefully assess fundamental aspects of the property such as gross/net yield and return on investment (ROI).
Furthermore, they will consider the additional risks associated with operating in the rental market. To facilitate a smooth sale, it is essential to provide the following information, prioritized in order of importance (providing as much as possible enhances the buyer's confidence):
Pros
Savvy buyers: Selling to another landlord means dealing with a more knowledgeable and experienced buyer who understands the rental market and its intricacies.
Focus on key fundamentals: Landlord buyers, especially buy-to-let investors, prioritize key fundamentals such as gross/net yield and return on investment (ROI), ensuring a thorough assessment of the property's financial potential.
Familiarity with risks: Landlord buyers are typically accustomed to the risks associated with owning rental properties, making them more likely to proceed with the purchase despite any challenges or complexities.
Streamlined transition: Completion of the sale can align with the rent payment date, simplifying the transition and avoiding rental apportionments.
Assurance of finance: Buyers' solicitors verify that the buyer has the necessary financing in place for buy-to-let purposes, ensuring a smoother transaction.
Cons
Extensive documentation: Selling to another landlord requires providing a substantial amount of documentation related to the tenancy, such as the current Assured Shorthold Tenancy agreement, bank statements, proof of deposit protection, and more.
Detailed property requirements: Landlord buyers may have specific criteria, such as up-to-date certifications (EPC, gas checks, etc.), fire safety standards, and compliance with regulations, increasing the demands on the seller.
Tenant considerations: The sale process may involve notifying the lettings agent if payments are made through them or ensuring a smooth transition of rental payments to the new landlord, which requires coordination and potential communication with the tenant.
Inherited tenancy agreement: Despite the change in ownership, any existing tenancy agreement remains valid under the seller's name, potentially requiring ongoing management and responsibilities.
Dealing with a problem tenant
During any part of this process, something you might encounter is unhappy tenants, either for the fact, you’re wanting to sell or maybe they're just generally unhappy, it happens!
If you’ve read through this article, you’ll realise that your tenant's co-operation in order for you to sell the property with them in situ is pretty much essential. You won’t be able to host viewings of the property and you also can’t just walk in.
There are two things you can do in this situation, you can try and remedy the situation or you can start formal eviction proceedings.
It’s always easier to try and remedy the issue if you can, try not to be too intrusive. Explain your side of the story and try and understand why they are unhappy – something like a temporary agreed reduction in rent might be a good solution until you can get the property sold.
If you have no luck, it’s time to serve a Section 21 notice – this tells the tenants that you want them to leave. There’s no need to explain why you want them to leave, but you need to give them adequate notice, usually, at least 2 months and you need to specify the date that you wish to take possession of the property.
Make sure you record everything, sending everything by recorded delivery and keeping a log of any communication, which you should then fill in an N215 form confirming you have followed all the correct procedures.
Selling with a tenant in Situ
When it comes to selling a property with a tenant already in place, the situation can vary. In some instances, the tenant may be willing to vacate or may have already secured alternative accommodation, making the transition smoother for all parties involved.
Additionally, certain landlords may have strategically planned their sale to coincide with the tenant's departure, resulting in a favourable outcome.
However, if neither of these scenarios applies, it is crucial to engage in a candid and open conversation with the tenant.
Here are some valuable suggestions to consider:
Communication
Arrange a meeting at the property, allowing you to assess its condition while providing an opportunity for discussion.
Maintain a courteous and empathetic approach. Recognize that most tenants fulfil their rental obligations promptly and contribute positively to the landlord-tenant relationship. Therefore, adopting a draconian attitude would be unjust.
Strive for a "win-win" resolution by demonstrating a willingness to compromise and find common ground.
Honesty
Explain the reasons for selling the property, allowing the tenant to understand your perspective.
Address the tenant's natural concerns about the new landlord and the possibility of eviction. Assure them that you will make every effort to handle the situation appropriately.
Communicate to the tenant that you will convey to the buyer their positive tenancy record and their desire to remain in the property.
Stay connected
Attempt to establish contact between the prospective buyer and the tenant, either through a meeting or a phone call.
Keep the tenant informed about the progress of the sale, ensuring they remain updated throughout the process.
Reassure the tenant that they can reach out to you whenever necessary.
Express your willingness to stay in touch even after the sale concludes, offering assistance if concerns arise regarding potential eviction by the new landlord.
If the tenant is worried about rent increases, provide them with a breakdown of local market rates obtained from reputable sources such as Rightmove and Zoopla. Explain that landlords typically cannot surpass these market levels.
Confirm that their deposit will remain unaffected, and if required, provide them with evidence and confirmation to alleviate any concerns.
Engage the services of a solicitor experienced in handling properties with tenants.
Managing viewings with a tenant in situ (occupied property)
This situation can be delicate, particularly as the tenant continues to pay rent and extends a favour by accommodating the viewings.
It is important to note that, under Common Law, tenants are entitled to live in peace and quiet until the tenancy is legally terminated. Therefore, it is understandable that tenants may feel uncomfortable with their personal belongings being displayed online and strangers entering their home.
To navigate this process smoothly while minimizing inconvenience, consider the following tips:
Collaborate with an estate agent who possesses experience in handling sales involving tenanted properties. They should approach the tenants respectfully and refrain from intruding upon their privacy.
Although the tenancy agreement may grant you the right to visit the property with viewers after providing 24 hours' notice (or more), prioritize the tenant's schedule. Allow them to suggest suitable times, even if they fall outside standard hours.
Consider offering a discounted rent rate, ensuring that a separate and legally binding agreement is in place to safeguard both parties' interests.
Arrange block viewings or discuss the possibility of hosting an open day with the agent. This approach fosters a competitive environment among potential buyers while enabling you to coordinate with the tenant to find the most convenient day.
Express gratitude for the tenant's cooperation by sending a thoughtful gesture, such as a box of chocolates or a small gift.
If the situation becomes excessively burdensome, it may be preferable to wait until the tenant vacates the property, especially if the premises require tidying or refreshing before showcasing to potential buyers.
In cases where an estate agent or auction house is involved, property viewings become necessary. If accommodating these viewings becomes challenging, you might need to consider accepting a lower offer.
Certain quick house sale companies may be open to purchasing the property without conducting a viewing.
Transferring the tenancy agreement & deposit
The other thing that you have to think about that’s a bit different from a standard house sale when you’re selling with tenants, is the tenancy deposit and agreement.
Let’s tackle the agreement first, this will be transferred to the buyer and you wash your hands of that point. The new landlord essentially steps into your shoes, the tenancy agreement will remain in place even though the name of the landlord will be out of date.
The deposit is a little bit more tricky, but this should ultimately be handled by your conveyancing solicitor. They should arrange for the deposit to be transferred to the new landlord, which is why we would recommend choosing a solicitor that is experienced in dealing with selling properties that are tenanted, it’ll make the whole job a lot easier.
Transferring the tenancy agreement & deposit
The other thing that you have to think about that’s a bit different from a standard house sale when you’re selling with tenants, is the tenancy deposit and agreement.
Let’s tackle the agreement first, this will be transferred to the buyer and you wash your hands of that point. The new landlord essentially steps into your shoes, the tenancy agreement will remain in place even though the name of the landlord will be out of date.
The deposit is a little bit more tricky, but this should ultimately be handled by your conveyancing solicitor. They should arrange for the deposit to be transferred to the new landlord, which is why we would recommend choosing a solicitor that is experienced in dealing with selling properties that are tenanted, it’ll make the whole job a lot easier.
Why sell to The Property Buying Company?
We’ve spoken about quick house sale companies and how they can help you, but there are a lot out there, so why us? We’re genuine and from the start, we’ll be completely transparent and honest about what we can offer you.
We’re also not middlemen like a lot of the competition, we have our own cash reserves ready to buy your property. Importantly, we’re a name you know you can trust, being a part of The Property Ombudsman and The National Association of Property Buyers.
What also sets us apart is our customer service. As you might be able to tell by the length of this article, selling a tenanted property has a few more steps when compared to a standard sale, which can already be stressful and time-consuming.
Not to worry though, when you sell to us we handle absolutely everything for you from start to finish. You don’t just have to take our word for it though, our service is well regarded by hundreds of previous customers which you can see on all the popular review platforms such as Trustpilot.
Landlord selling house: What are your tenants' rights?
Is your landlord selling the property you live in? Are you wondering what your rights are?
Read below as we dive into all things' Landlord Selling House'.
Being a tenant in a rented property can be a hassle-free period of your life, but what happens if your landlord decides to sell? Zoopla suggests that 39% of millennials are unable to understand exactly what their tenants’ rights are when there is a change in ownership, and 32% don't know why they were evicted in the first place.
Tenants' rights during a sale
As a tenant, you will have a lease with your current landlord – this lease is a legal interest in a property. The interest remains unchanged when there is an ownership change of the property you live in. The law protects your tenant rights and cannot be limited, restricted or altered by the purchasing landlord.
When there is a change in ownership, your rights remain for the entire fixed-term agreement you had with your previous landlord. The new landlord is legally forced to accept sitting tenants, but the landlord can follow the established eviction process to remove you from your tenancy.
If you are a tenant, you will always have the right to peaceful enjoyment; this includes when there is an ownership change. Peaceful enjoyment is when you are free to deny access to anyone you do not want in your home.
This includes prospective buyers, house viewings, or estate agents, and with a court order, you can even deny access to the police. Your landlord, current or new, must give a twenty-four-hour notice for personal inspection, but you can still restrict their entry – the only exception to the rule is if your landlord suspects a fire or gas leak within your rented property.
Part of your tenant rights means you also have the right to live in a safe and protected environment. You should report any repair problems to your landlord, who should fix them in due time — even if they are selling the property. You may take landlords to court if the property becomes unsafe or hazardous to tenants under the Landlord and Tenant Act from 1985.
How can you get evicted?
When there is a change of ownership of the building or if you are on a fixed-term shorthold tenancy, eviction procedures do not change. You will be able to find the eviction process in your tenancy agreement, and the new or old landlord must follow this, or you can take them to court.
The eviction process allows the landlord to always return the procession of property solely to themselves — this process is not instant, but if they follow the process correctly, they can evict their tenants. As a silver lining, it also allows you, the tenant, to find alternative accommodation before the eviction process is complete.
If your landlord wishes to end a fixed-term tenancy, then they must use one of the following mechanisms if applicable:
| Mechanism | Explanation |
|---|---|
| Serve a section 21 'no-fault' eviction notice. This is being banned in the UK in 2023. | The landlord can evict a tenant, even if they are not at fault — using a date which comes in on the last day of your fixed term agreement but also a minimum of 2 months between the day it is issued and the day it comes into effect. |
| Serve a section 8 eviction notice. | If you, as the tenant, have breached your tenancy agreement (for example - not paid rent), your landlord may give you the section 8 eviction notice. |
| Obtain possession from the court. | If, as the tenant, you do not vacate the property after being served either a section 8 or section 21, your landlord will obtain possession from the court, and your rented property will be visited by the county bailiffs — who will remove you with force. |
| Special 'break clause' in the tenancy agreement. | If your tenancy agreement includes a break clause, then after the period stated, you or your landlord can use this to end your lease early – this process must be fair, or it is not lawful. |
| Surrendering rented property. | As the tenant, you can agree with the landlord to end your agreement prematurely, which can either happen through a deed or implied. |
If your fixed term expires, your tenancy can continue into a periodic tenancy unless you have agreed with your landlord.
A periodic tenancy runs from one month to the next and offers more flexibility to both you as the tenant and your landlord — your landlord will be able to use standard eviction procedures.
If your landlord wishes to end your periodic tenancy, then they must follow one of these if applicable:
| Mechanism | Explanation |
|---|---|
| Serve a section 21 'no-fault' eviction notice. This is being banned in the UK in 2023. | The landlord should issue this a minimum of 2 months before your last day of a fixed-term agreement. |
| Serve a section 8 eviction notice. | If, as a tenant, you have breached your tenancy agreement, for example, antisocial behaviour. |
| Obtain possession from the court. | If you do not leave the property after being served a section 21 or 8 eviction notice, your landlord may obtain possession from the court, allowing county bailiffs to remove you from the property physically. |
| End tenancy with the agreement of the tenant. | If you and the landlord agree for the tenancy to end, you will be given an eviction notice. |
| The tenant has served a notice to end the tenancy. | If you serve your landlord with a notice to end your tenancy, you should follow your tenancy agreement procedure. |
If your landlord wants you to leave their property, they must, by law, follow the correct procedure — they cannot evict you because the property is sold or they want to sell. This is counted as an illegal eviction and criminal offence.
Tenants' rights when the sale goes through
When the property sells and ownership of the building changes, your tenancy will continue until your fixed term ends. Your new landlord must allow you to keep living in the rented property with peaceful enjoyment and life in a safe and protected environment. The new landlord must also honour any previous terms agreed with the old landlord.
Luckily most prospective buyers of tenanted properties are landlords themselves or have an interest in becoming landlords — in which case; they will be happy for you to sign a new agreement with them or a periodic tenancy.
If your new landlord wishes to vacate the property, they must give you at least two months' notice or wait until the break clause.
The new landlord's responsibilities
When new ownership ensues, and you have a new landlord, they have no additional or new rights that the last landlord did not — they have to follow the same regulations. The only difference is that your new landlord will have other responsibilities to follow during the transfer period.
Within 30 days, they should have informed you which government-approved tenancy deposit scheme they chose. Within two months of ownership change, your new landlord should tell you their name, address and how to contact them — this is protected under Section 3 of the Landlord and Tenant Act of 1985.
It is lawfully necessary that your new landlord or their solicitors conduct a property audit to test the property's safe environment and whether the property and tenant comply with legal requirements for leasing in the United Kingdom.
This audit includes, but is not limited to:
Carrying out a gas inspection by a registered engineer every year.
If there are more than three people on the property, then your landlord should carry out an Electrical Safety Inspection every five years. The Electrical Safety Certificates is valid for ten years if fewer than three tenants exist.
Ensure the building is safe to live in.
Landlords' rights during the sale of a rented property
Much like the tenant rights, as a landlord you are entitled to protection during a change in ownership. If you are a landlord and wondering what your rights are and how they are going to change in the coming years; here is a quick breakdown of what's to come:
Campaigners claim that the Section 21 'no-fault' eviction notices are one of the most significant causes of homelessness. The Institute for Public Policy Research (IPPR) advocates for protecting tenant rights and allowing people to live in privately rented property for at least three years without being evicted, provided they do not breach their lease.
They want landlords to be barred from evicting tenants during the first three years of selling the property — landlords that did want to sell their property would have to do so with sitting tenants.
In response to campaigners, a government consultation had been fighting to extend the length of tenancies to three years to give renters more stability, and in 2023, the government will ban section 21 'no-fault' eviction notice.
Under the new system, landlords cannot evict you from your rented property without a breach of the tenancy agreement, a valid legal reason, or a break clause. Landlords will still be able to use the section 8 eviction notice if you breach your tenancy agreement via antisocial behaviour, criminal activity or rent arrears.
If you want to sell your tenanted property, why not sell to us? We are a national homebuyer well versed in tenanted properties and sitting tenants in situ. We are a cash-buying company, so we have our cash reserves ready to purchase your property whenever you are ready. We recognise that speed and reliability are essential for any landlord selling property.
We'll buy any house, any size and with any number of tenants, in as little as seven days! And, as a little thank you for using our service, we will even cover all your legal costs.
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