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What is Buy to Let?
Throughout Leicester, there are hundreds of Buy to Let properties owned by people in the city. You can get this type of mortgage on any type of property, anywhere in the city, from many of the dozens of banks operating throughout Leicester.
When you get a Buy to Let mortgage, it means that you have bought a property with the sole intention of renting it out.
You will typically only pay off the interest on your mortgage – but once the term comes to an end, you must either sell, remortgage or buy out the remainder of the house.
Buy to Let is popular in Leicester because there is a big market for it. There are three major universities in the city, with well over 60,000 students combined, and many of these students need somewhere to rent throughout the educational year.
Furthermore, the average property price in the city is £298,000, which is often out of reach for someone earning the city’s average salary of £33,579.
Property investors also see a lot of potential in purchasing a Leicester Buy to Let, because the city’s market has a strong track record of improving year-on-year. For example, in the past year alone, Leicester prices have gone up by 7%.
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The pros & cons of selling a property with tenants in Leicester
Selling your Leicester house with tenants in-situ enables you to maintain a consistent source of income, right up until completion day. You will also be able to offer your new owner an immediate income once they take over the property – which can save them the hassle of finding new tenants themselves.
On the other hand, property investors see in-situ tenants as a ‘risk’ because they don’t have a prior relationship with them, don’t have control over how much rent they pay, and may not be able to evict them anytime soon.
Meanwhile, a tenanted house prevents someone from living in the property themselves. This is the main priority of most people buying a house in Leicester – so, unfortunately, your house will be much less attractive to these people.
Frequently Asked Questions About Selling A Tenanted Property in Leicester
Can a sitting tenant buy the property?
If you are thinking of selling your rental property directly to your tenants, this may seem like the easiest and quickest solution. This is called buying as a sitting tenant.
There are pros and cons to selling your rental property directly to your tenants:
Pros of selling to your tenant:
- Hassle-free: No need to market your property or pay estate agency fees
- Easy move: No moving process and no need to hand over keys upon completion
Cons of selling to your tenant:
- Appeal to negotiate: Some tenants may feel entitled to pay less than the market value in exchange for a hassle-free, easy sale. Some others may feel they have added value to the property while they have been living there.
How much notice do I have to give a tenant if I want to sell my property?
The sale may come as a shock to the tenant, so try to explain your reasons for the sale as it could go a long way in making the eviction process amicable and pleasant for all involved. Be polite and respectful as being told you need to leave your home, can be a distressing conversation for a tenant and one that needs to be handled with care.
Also, it is crucial to know your rights and theirs in order to follow the legal process correctly and efficiently to make the process easier for the tenant and buyer.
Can a landlord sell a property without notifying the tenants?
A landlord should always inform their tenant that their property is being sold. Even if they don’t inform the tenant until the sale is complete, the tenancy agreement will stand. This means the new landlord will simply inherit the existing tenancy agreement and will have to abide by the terms of it. They will not be able to evict the tenant simply even when the property has changed ownership.
What rights do sitting tenants have?
When selling a rental property with a tenant in situ, the tenant does have certain rights which must be observed.
When it comes to the tenant’s right to remain in the property, it will all depend on what type of tenancy agreement is in place. If your tenant has an assured shorthold tenancy (AST) agreement, then they have the right to live in a property for a fixed period.
If you need to sell your rental property before the agreed end date, your tenant is entitled to stay on as a sitting tenant while the property changes hands. In simple terms, they have sitting tenants’ rights.
Can you evict a tenant because you want to sell the property?
The landlord cannot evict the tenant within the first 4 months of their tenancy, whether they are on a fixed-term contract or a flexible periodic tenancy.
After 4 months, the landlord can give a 2 months notice at any time.
If they are on a fixed-term contract, they have the right to stay for the duration of the fixed term, unless there’s a clause in the rental contract that says otherwise. This is usually called a break clause in a contract.