Sell A Property with Tenants in Situ
When talking about selling a house, most assume that the property in question is one that the sellers once lived in. However, with the cost of living crisis and many still recovering from the 2009 recession, tenanted properties are just as (if not more) popular than owned properties in London’s property market. Selling a tenanted property is not as straightforward as selling other types of property as there are tenant laws and procedures that you must abide by.
What Is A Tenanted Property?
A tenanted property, also known as a rental property, refers to a property that is currently occupied by tenants who are paying rent to the property owner. These properties can encompass a range of housing types, including houses, apartments, and condominiums.
Like any city, London has a massive tenant property market as renting tends to be a more affordable way for people to experience living in London than buying and owning a property. As such, London’s tenanted properties hold a distinct place in the city’s diverse property market.
Tenanted properties come with existing lease agreements between the tenants and the property owner. These agreements outline the terms and conditions of the rental arrangement, including the decided rent amount, payment schedule, maintenance responsibilities, and duration of the tenancy.
The presence of tenants can significantly impact the process of selling a property, as both the rights of the tenants and the interests of potential buyers must be considered.
In London’s competitive real estate market, tenanted properties offer unique investment opportunities for both buyers and sellers. Buyers may see value in purchasing a property with established tenants and a predictable income stream, while sellers can use the current tenancy to attract investors looking to acquire existing rental assets.
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Is It Better To Sell A Tenant Property With Or Without Tenants
Countless people from all over the world are always looking for ways to move to one of the most beloved and historical cities in the world, so tenant property owners will never be short on potential tenants. That is why some buyers will prefer vacant properties as they will be able to implement their own rental agreements with new tenants, while other buyers may be more attracted to properties with existing or long-term tenancies as they may prove to be a more reliable investment. The question for the seller of a tenant property is which will attract more buyers: a property with or without tenants? Let’s delve into the advantages of each option to provide a clearer perspective.
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Selling With Tenants
Immediate Income Stream
Selling a property with existing tenants means that the buyer will inherit an established rental income stream from day one. This can be appealing to investors seeking immediate returns on their investments.
Properties with reliable tenants can attract investors looking to expand their rental portfolio without the hassle of finding new tenants.
Less Vacancy Risk
If a property already has an existing tenant then there is less risk that the property will sit empty for a prolonged time which can dramatically affect the investment value of the property.
Selling Without Tenants
Wider Buyer Pool
A vacant property appeals to a broader range of buyers, including those who plan to use the property for personal residence. This can potentially lead to a faster sale.
Flexibility for Buyers
Vacant properties allow buyers to move in or make renovations without the need to coordinate with tenants.
Higher Sale Price
Depending on the property’s condition, vacant properties may have the potential to command higher sale prices, as buyers may perceive them as move-in ready.
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Frequently Asked Questions About Selling A Tenanted Property in London
Can you evict a tenant because you want to sell the property?
In the UK, including London, landlords cannot simply evict a tenant solely because they want to sell the property. Tenants have legal rights and protections in place to ensure fair treatment and prevent arbitrary eviction. However, it’s possible to sell a property with a tenant in situ while respecting their rights.
Keep open communication with your tenant and tell them about your plans to sell as early as possible. This transparency can lay the foundation for a cooperative arrangement. You should also provide appropriate notice, considering the type of tenancy agreement. During the sales process, respect the terms of the existing lease, coordinate property viewings with the tenant, and uphold their rights. By approaching the situation with empathy, understanding, and adherence to legal requirements, you can navigate the process of selling a property with a tenant fairly and lawfully.
How much notice do I have to give a tenant if I want to sell my property?
It can be a little complicated regarding the law when you need to give notice to a tenant when wanting to sell your property, but you are required to give a notice period to your existing tenants if you plan to sell. Different types of tenancy agreements require different types of notice periods.
For an Assured Shorthold Tenancy (AST), you must give your tenant at least 2 months’ notice using a Section 21 notice, which is a “no-fault” eviction notice. If the tenancy is still within its fixed term, you can issue a Section 21 notice only after the fixed term ends. In this case, the notice period remains 2 months.
In a periodic tenancy, which is a month-to-month arrangement, the notice period is typically one full rental period, usually a month. Or if your agreed periodic tenancy is every 2 months, then you need to provide a 2 month notice period.
How much does it cost to sell a tenanted property in London?
The cost of selling a tenanted property in London varies depending on the type of agency you use, if your property has an existing tenant and any improvements that need to be done to the property before it can be listed. As such, a specific number for selling a tenanted property can’t really be given, but here is a list of 8 of the main costs you will need to consider when selling your tenanted property:
- Estate Agent Fees: Engaging an estate agent to manage the sale involves fees, typically a percentage of the property’s sale price – though Sold offer a new, industry-disruptive model for agent fees that limits how much the seller will have to pay.
- Legal Fees: Sellers should budget for legal fees, including those associated with drafting contracts, ensuring compliance with relevant laws, and handling the transfer of ownership.
- Tenant-Related Costs: If the sale requires tenant cooperation, costs may include tenant incentives, such as covering moving expenses or offering reduced rent during the transition.
- Property Preparation: Depending on the property’s condition, there might be costs associated with preparing the property for sale, such as minor repairs, cleaning, or staging.
- Valuation Fees: If an updated property valuation is needed, budget for potential valuation fees to accurately assess the property’s market value.
- Conveyancing Costs: Conveyancing fees cover legal aspects of the property transfer, ensuring all legal requirements are met.
- Capital Gains Tax: Depending on the seller’s circumstances, capital gains tax may apply to the sale of an investment property. Consulting a tax professional is advised to understand tax implications.
- Mortgage Costs: If there’s an outstanding mortgage on the property, there may be fees related to early repayment or releasing the property from the mortgage.
Can Sold help me sell my tenanted property?
Sold is well-equipped to assist you in selling your London-based tenanted property. With their expertise in the real estate market and specialisation in tenanted property transactions, Sold offers a range of services tailored to your needs. Better yet, Sold is very aware of the type of investors looking to get a foothold on London’s tenanted property ladder and may already have a buyer in mind for you.
The one thing that helps any property transaction, but especially tenanted property transactions, is open communication, which can be time-consuming and a little awkward for the seller. That is why Sold facilitates transparent discussions between the seller and existing tenants to ensure that all parties are informed and comfortable throughout the sales process. More so, Sold takes a tenant-focused approach to selling a tenanted property, respecting the rights and the needs of the existing tenant from the start. They coordinate viewings to minimise disruption and prioritise tenants’ convenience, fostering a cooperative atmosphere.
Though Sold is more than experienced with selling rental properties, they know exactly what a potential tenanted property buyer is looking for in an existing tenanted property. That is why Sold emphasises the benefits of purchasing an income-generating asset, using marketing strategies to effectively communicate the value proposition to potential buyers. Sold already has an established network of investors and buyers, including those specifically interested in tenanted properties in the London area. Between the specialised marketing techniques and previous buyer relations, you will not have to wait long for your tenanted property to sell.
An accurate property value can be the key turning point when a potential buyer is looking to take on a property with existing tenants. Book your free valuation today to understand the impacts of existing tenancies on the market value of your property and if selling your property with existing tenants will be worth the legal obligations you will need to abide by during the selling process.
If you are selling a tenanted property for the first time and feel overwhelmed by the legalities of such an ordeal, there is no need to worry. Navigating the legal intricacies of selling a tenanted property is a forte of Sold. They ensure that all transactions adhere to legal requirements, safeguarding the interests of both parties. Sold’s experience in tenanted property sales streamlines the process for both sellers and buyers. Their guidance fosters an efficient transition of ownership while preserving tenant relationships, which is vital for a successful sale. After all, no potential buyers want to take on a tenanted property with a poor tenant-owner relationship.
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