Liam Gretton

How to Sell Your Property if You Have a Tenant

Home tenants

When it comes to being a landlord, whether it’s your first time dealing with tenants or your hundredth time, dealing with tenants is something that is inevitable, so you need to get to terms with what you can and cannot do.

If you’re looking to sell one of your investment properties, but you still have sitting tenants in your home, you’re probably wondering what the do’s and don’ts are so everyone ends up happy in this situation.

Well, that’s why we’re going to look at how selling a house with a sitting tenant works, what rights they have (what rights you have), how difficult or easy the process is, and the overall benefits and drawbacks of the whole process.

 

What is a Sitting Tenant?

In simple terms, a sitting tenant (known as a ‘tenant in situ’) is someone who is still living at the landlord’s property when they’ve decided to sell it and put it on the market. This can happen because the tenancy agreement is still in place and they have time to live there on their contract still.

 

Can You Sell Your Property With a Sitting Tenant?

It is possible to still sell your rental property with a sitting tenant, however, you must note that your sitting tenant has rights when you sell the property, so it’s always best to check with them before you sell the property so there’s a verbal agreement before doing so.

Letting them know beforehand is not only morally the right thing to do, but it’s also going to make the process much smoother for you and them when selling the property. As long as your intentions are made clear and the tenants’ rights are taken into account, the property is yours to sell.

 

What Rights Does the Sitting Tenant Have?

As the seller of the property reading this or even as the sitting tenant potentially getting yourself prepared for something like this to happen, sitting tenant rights need to be considered by both parties, so let’s take a look at them:

  • If you’ve signed an Assured Shorthold Tenancy (AST), you can remain living in the home until your fixed tenancy expires.
  • You essentially have the right to remain until your tenancy agreement ends or you’re evicted for any legal reasons that can be proven.
  • The landlord must serve a notice period before the eviction as per the local tenancy laws.
  • Any eviction against you has to go under severe legal procedures and if they can’t provide valid evidence, you’re typically going to be granted to stay put.

 

Generally, as the tenant of a rented property, you will be secure against eviction as long as you’re giving the landlord no legal reason to do so.

 

What Rights Do Landlords Have When Selling the Property?

Just as sitting tenants have rights in this situation, so do landlords. Let’s take a look at what you can do if you’re selling your property with sitting tenants still living there:

  • As of now (until it gets abolished), Section 21 is a notice you can hand in to take full ownership back of your property once the tenancy has ended, meaning you can sell the property on your terms.
  • Landlords can use a Section 8 eviction notice if the sitting tenant has broken any of the tenancy agreement terms.
  • You have the right to review fair rent every two years, but this has to go through a Rent Officer.

 

If you want to learn more about the entire eviction process and whether or not you can or cannot do it when you’re deciding to sell the property, just check these rules on GOV.UK.

 

Benefits and Drawbacks of Selling a House With a Sitting Tenant

Selling with tenants can be difficult… or easy. Some many benefits and drawbacks can play out:

Benefits of SellingDrawbacks of Selling
You have a great tenant relationship and they’re willing to move when you want to sell.If you have a difficult tenant, it may make this process a lot more stressful than you wanted.
Your tenant has to continue to pay rent even when the property is up for sale.There will only be a limited pool of buyers (mainly buy-to-let landlords) because people won’t want to buy if tenants still live there.
With tenants still living there, it will be more difficult for the home to become ruined and even vandalised, as they’ll want to keep living conditions high.It could potentially devalue the price of your property.
If you’re selling to another landlord with good tenants living there, this could become a very easy and streamlined sale.You may find it hard to get viewings.
You will likely not have to redecorate (costing you more money) with people living there still.The paperwork will be a lot more complex than your typical home sale.

 

Is the Process Worth Going Through to Sell Your Investment Property?

Whether or not the process is worth going through to sell your investment property is entirely down to your individual needs, such as: how badly you need to sell the property, whether you have a brilliant sitting tenant, your local market conditions, and many more. We cannot say more about whether it’s worth it or not unless we know more about your personal situation.

However, you should seriously consider the pros and cons we discussed above and research/relate them back to your own property.

As factors such as property value may decrease, you may not get many viewings, which could determine whether it’s worth it or not to you. Ultimately, you have to make that decision or speak to an expert when selling your property.

 

Sitting Tenant FAQs

It can certainly decrease the value of property for typical property buyers, with it decreasing between 20-40% depending on the tenancy agreement. If it’s an Assured Shorthold Tenancy, you can expect it to decrease 20-25% in value, and if it’s a regulated tenancy, it could potentially decrease 30-40% in value.

In terms of whether your sitting tenant can buy your property, although they don’t have an automatic right to buy the property (unless it’s owned by the local authority), if the landlord gives them first refusal, then they can be the ones to buy the property. So, yes, a sitting tenant can buy your property if you’re happy with them being the new owner. 

Whether you can reuse viewings to occur as the sitting tenant will depend on your tenancy agreement. If you have in your contract that viewings should be allowed if necessary, then there’s nothing you can do. However, if the contract doesn’t state anything about viewings, you don’t legally have to agree to viewings taking place.

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