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Selling a House With Tenants: The Ultimate Guide

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If your buy-to-let property is occupied it doesn’t mean you cannot sell it. Landlords sell their tenanted homes all the time. We can understand why you might be in two minds about it; you may worry it’s a complicated process or don’t want to cause stress for your settled and wonderful tenants.

You are fully within your rights to sell your property. However, it is worth bearing in mind that your tenants will have rights too and you will need to understand the legalities surrounding selling with them in situ. At SOLD.CO.UK we are the experts when it comes to residential property sales and have worked with a number of landlords and buy-to-let investors to ensure their properties sell and their tenants are happy.

Can you sell a house with tenants?

You can choose to sell your property with your current tenants – think of it as a package deal for a new landlord or investor. The marketing of your property will let potential buyers know that the tenants will remain, meaning once the sale has completed, they will then start paying rent to the new buyer. This saves the new owner from going through the process of finding tenants and letting the property sit empty with no rental yield coming in. For BTL investors purchasing a property with tenants in situ can be attractive.

However, you can choose to terminate the tenancy and sell the property vacant. The amount of notice you will need to give is dependant on different factors such as whether the tenants are still in a fixed-term tenancy or if there is a break clause in the contract. The government website has all the details relating to tenancy agreements and ending a tenancy.

Typically, it’s more expensive to sell a property when its empty. Once you have legally repossessed the home you will no longer benefit from the rental income. Which, if you have a mortgage on the property, could be an issue if you don’t manage to sell your house quickly. 

What are the benefits of selling a house with tenants?

Selling your BTL property with tenants in situ can cause some headaches and complications. However, very rarely is selling any property completely stress free. On the upside, there are some serious advantages to selling up and letting your tenants remain in the property.

Maintain your rental income

Selling with sitting tenants means you will not lose out on any rental income. Throughout the selling process, up until completion, you will continue you to receive rental payment from your tenants just as you have in the months and years previous. This also means if a sale falls through you are still have money coming in.

Avoid unnecessary costs

Along with maintaining your rental income, you won’t have to pay out of your own pocket for utility costs. If you decided to evict your tenants before selling up, you would then have to cover the council tax, utilities and other bills.

No need to refurbish the property

Selling with tenants means you can sell the house or flat as is. You won’t need to repair any damage, refurbish, or redecorate like you would if the property was vacant. Buyers will also know that the home is fully compliant, therefore saving themselves a lot of money as no safety checks will need to be carried out when preparing the property for tenants if it were empty.

Potential for a quick sale

Landlords and BTL investors are often experienced. Whilst a property purchase for the normal residential buyer is based on emotion, for investors it is based on facts and figures. For this reason, sales can often be quicker, even with tenants in situ, as it is solely a business transaction. 

Tenants feel secure

Depending on the type of landlord or buy-to-let investor you are, selling with your current tenants in situ may be important to you. Whilst you may own the property, to tenants it is their home. Being made to move as you wish to sell their house can be extremely worrying for occupants.

Very rarely will the new landlord or investor buying your property evict sitting tenants upon completion. If your tenants’ wellbeing is important to you there is no reason why you cannot consider only selling to parties willing to keep your current tenants onboard. This can, in some circumstances, even be written into the contract.

With a guaranteed rental income for the new owner, it is likely they will oblige. Good tenants are hard to come by so this could be a real bonus for buyers.

Buying a house with tenants

Before selling, you will want to make sure you have everything in order for a potential investment buyer. Tenancy paperwork and legal documents which will need to be provided include, but are not limited to:

  • A signed tenancy agreement
  • Terms of the tenancy
  • Evidence of the tenants’ right to rent
  • Safety certifications for gas and electric
  • Confirmation of deposit protection
  • Copies of any legal notices on the tenants
  • Current repair/outstanding repairs report

Be aware of sitting tenants’ rights

If you choose to sell with tenants in situ you will need to be mindful of their rights. If they have an ongoing agreement or contract with you then they retain the right to remain living in their home even when it changes hands.

However, if your tenants fall under an Assured Shorthold Tenancy, the new landlord will take on this tenancy agreement. With AST contracts the landlord will be entitled to evict your tenants on possession of the property by serving a Section 21 notice. However, this is rare, and most investment purchasers will continue letting the tenants live there even under an AST.

Once the new investor has the property in their name, they can tweak tenant contracts or renew and create a new agreement based on their ownership.

If the tenant/s entered a contract before 1989 they will have a security of tenure. This means they have the right to remain in the property under the Rent Act 1977.

Homeowners’ rights to quiet enjoyment UK

Whilst flexibility when selling your BTL property is key, your tenants do not have to give the green light to every viewing scheduled. On the grounds of their right to quiet enjoyment of the property it is worth bearing in mind that it is their home and typical residential sellers would not be able to facilitate every viewing request, so you cannot expect your tenants to oblige either.

Whilst you may think your tenant is being awkward on purpose by flexing their quiet enjoyment rights, there are a number of personal reasons they may not be able to give the go ahead to every appointment to view. Scenarios can include:

  • Unable to take time off work to be present for viewings
  • Uncomfortable with people viewing their home without them
  • Embarrassment over cleanliness or their lifestyle choices
  • Feelings of anxiety or concern
  • Privacy related issues
  • They work from home
  • Out of principle as it is their home and viewings should be arranged on their terms

There will need to be flexibility on both sides, but it is common courtesy to liaise with your tenants beforehand and agree on days and time periods when viewings would be appropriate for them. It is also important to give tenants at least 24 hours’ notice prior to a  viewing should they want to tidy up or neaten the garden etc.

Are you selling a property with tenants?

If you’d like to sell your house for free and in a timeframe that suits you, SOLD.CO.UK can make you a no-obligation offer. We can sell any house, in any condition, regardless of whether it has tenants or is a traditional residential home. What sets us apart from other online estate agents is our pool of pre-qualified buyers, some of whom are investors or landlords that are ready and waiting to buy your property.

Selling with us won’t cost you a penny and we even cover your legal costs. Simply get a free valuation today to get started. Alternatively, give our property experts a ring on 0800 566 8490.

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