Selling a Property with Sitting Tenants: A Guide for Landlords

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Are you planning to sell your rental property, but you still have tenants? Selling a property with sitting tenants can be tricky, but not impossible. Here we'll cover what a sitting tenant is, what your rights and duties are as a landlord, and how to sell your property with or without tenants. We’ll also give you some tips on how to keep a good relationship with your tenants and how to find a suitable buyer for your property.

What is a sitting tenant and how can it impact the sale of a property?

sitting tenant or a tenant in situ is a renter who lives in a property that the landlord wants to sell. If the tenant has an ongoing contract with the landlord, they have the right to stay in the property when it is sold, unless they agree to leave or are evicted by the landlord. A sitting tenant could be someone who pays their rent on time or someone who falls behind on their payments.

As a landlord, you have certain rights and responsibilities when it comes to selling a property with sitting tenants. Depending on the type of tenancy agreement you have with your tenants, you may be able to evict them or give them notice to leave before selling the property, or you may have to sell the property with the tenants in situ and transfer the tenancy agreement to the new landlord.

Assured shorthold tenancy (AST)

An assured shorthold tenancy (AST) is the most common type of tenancy agreement in England and Wales. It usually lasts for six or 12 months and can be renewed or extended by mutual agreement. As a landlord, you can end an AST by serving a valid Section 21 notice under the Housing Act 1988, giving your tenants at least two months’ notice to vacate the property. You can do this at any time after the fixed term has ended or if there is a break clause in the contract that allows you to end the tenancy early. You don’t need to give a reason for ending the tenancy, but you must follow certain rules and procedures, such as protecting your tenants’ deposit in a government-approved scheme and providing them with an energy performance certificate (EPC) and a gas safety certificate. Also, they could take measures against it.

Alternatively, you can serve a Section 8 notice under the Housing Act 1988, giving your tenants between two weeks and two months’ notice to leave, depending on the grounds for eviction. You can use this option if your tenants have breached the terms of the tenancy agreement, such as not paying rent, causing damage to the property, or engaging in antisocial behaviour. You will need to provide evidence of the breach and apply to the court for a possession order if your tenants don’t leave by the specified date.

Regulated tenancy

regulated tenancy is a type of tenancy agreement that was common before 15 January 1989. It gives tenants more security of tenure and protection from eviction than an AST. As a landlord, you can only end a regulated tenancy by serving a valid notice to quit and obtaining a possession order from the court on one of 17 grounds specified in the Rent Act 1977. Some of these grounds include non-payment of rent, nuisance or annoyance to neighbours, deterioration of the property, or redevelopment of the land. You will also need to prove that you have suitable alternative accommodation for your tenants or that you are willing to pay them compensation for leaving.

Other types of tenancy agreements

There are other types of tenancy agreements that may apply to your situation, such as assured tenanciescontractual tenancies, or company let agreements. Each of these has different rules and implications for selling a property with sitting tenants. You should consult your solicitor or legal adviser before taking any action.

How to sell a property with sitting tenants

If you decide to sell your property with sitting tenants, there are two main ways you can do this: either subject to the tenancy or with vacant possession on completion.

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Subject to the tenancy

Selling a property subject to the tenancy means that you sell the property with the tenants in situ and transfer the existing tenancy agreement to the new landlord. The new landlord will then take over all your rights and responsibilities as the landlord and collect rent from your tenants. This option may appeal to buyers who are looking for an investment property with a steady income and a ready-made tenant. However, you may need to offer a discount on the market value of the property to attract such buyers, as they will inherit the existing tenancy agreement and its terms and conditions.

With vacant possession on completion

Selling a property with vacant possession on completion means that you sell the property without any tenants and with no ongoing tenancy agreement. This option may appeal to buyers who are looking for a property to live in or to renovate and resell. However, you will need to ensure that you and/or your tenants vacate the property on the day of completion as specified in the contract, remove all belongings from the property except those items that are part of the agreement, such as white goods or furniture, and leave the property in a clean and tidy condition.

How to find a suitable buyer for your property

Finding a suitable buyer for your property with sitting tenants may take longer than selling a vacant property, as you will need to find someone who is willing to take on the existing tenancy agreement or wait until it expires. However, there are some ways you can increase your chances of finding a buyer and selling your property quickly and smoothly:

  • Use an online estate agent or a specialist company that deals with selling properties with sitting tenants. They will have access to a network of buyers who are looking for such properties and can handle all the legal and administrative aspects of the sale.

  • Market your property effectively and highlight its advantages, such as its location, condition, features, rental income, and tenant profile. Use professional photos and videos, write an engaging description, and provide all the relevant information and documents, such as the tenancy agreement, EPC, gas safety certificate, etc.

  • Be flexible and realistic with your asking price and negotiation. Consider the market conditions, the demand for properties with sitting tenants, and the length and terms of the tenancy agreement. Be prepared to offer a discount or accept a lower offer if it means selling your property faster and easier.

💡 Extra Tip: Maintain a good relationship with your tenants

Whether you decide to sell your property with or without sitting tenants, it’s important to maintain a good relationship with your tenants throughout the process. This will help you avoid any disputes or delays that could affect your sale. Here are some tips on how to keep your tenants happy and cooperative:

  • Inform your tenants of your intention to sell the property as soon as possible and explain why you are selling and what it means for them.

  • Ask your tenants whether they are interested in buying the property themselves or staying as tenants after the sale. If they are, you may be able to negotiate a deal that suits both parties.

  • Respect your tenants’ privacy and rights when arranging viewings or inspections. Give them at least 24 hours’ notice and agree on a convenient time and date. Don’t enter the property without their permission or when they are not present.

  • Communicate with your tenants regularly and keep them updated on the progress of the sale. Answer any questions or concerns they may have and reassure them that their tenancy agreement will be honoured until the end of the term or until they agree to leave.

  • Offer your tenants some incentives or compensation for their cooperation, such as a rent reduction, a reference letter, or assistance with finding a new property.

If you don’t know where to start…

Selling a property with sitting tenants can be challenging, but not impossible. You need to understand what type of tenancy agreement you have with your tenants and what your rights and responsibilities are as a landlord. You'll also need to maintain a good relationship with your tenants, communicate with them regularly, and offer them some incentives or compensation for their cooperation. Finally, you need to find a suitable buyer for your property, market it effectively, and be flexible and realistic with your asking price and negotiation.

If you need any help or advice on selling a property with sitting tenants, Lawhive can help you find landlord & tenant solicitors in England and Wales that can provide legal advice, documents and representation. Tell us about your case and get a fixed quote from best in class, fully regulated solicitors.

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