Selling With Tenants in Situ: Landlord Questions Answered

Selling a property with tenants still living there is fast becoming a common scenario for landlords in the UK. Whilst selling with tenants in situ can have its advantages, it also requires careful planning and understanding of the legal, financial, and practical implications. In this comprehensive guide, we answer the most frequently asked questions landlords have when selling a property with sitting tenants.

What does tenant in situ mean?

A tenant in situ refers to a tenant who continues to live in a property while it is being sold and after ownership transfers to a new landlord. Essentially, this means that the tenant’s rights and responsibilities remain unchanged, and their tenancy agreement is legally transferred to the new owner.

Can I sell my property with tenants in situ?

Yes, landlords can sell properties with tenants in situ. The existing tenancy agreement transfers to the new owner, who assumes the role of landlord. This arrangement can be particularly appealing to investors looking for a property that generates rental income from day one. However, the process differs slightly from selling a vacant property, as it primarily appeals to buy-to-let investors rather than owner-occupiers.

What are the benefits of selling with sitting tenants?

Continuous rental income 

One of the biggest advantages of selling with tenants in situ is that you continue to receive rent payments until the sale is finalised. This eliminates the risk of void periods, ensuring a steady stream of income.

Attracting buy-to-let investors

Many investors prefer purchasing properties with sitting tenants because it provides immediate rental income without the hassle of finding new tenants. If your tenants have a good payment history and a long-term tenancy agreement, this can make your property even more appealing.

Reduced disruption for tenants

For tenants, remaining in the property means they don’t have to go through the hassle of moving out or finding alternative accommodation. This stability can make them more cooperative during the sales process.

Avoiding additional costs

Selling a property without tenants often requires refurbishments and marketing efforts to attract new buyers. Keeping tenants in place reduces these costs while ensuring that rental income continues uninterrupted.

Are there any disadvantages to selling with tenants in situ?

While selling a tenanted property has clear advantages, there are also some challenges to consider:

Smaller buyer pool

Since the property is primarily suited for investors rather than owner-occupiers, the number of potential buyers is smaller. This could affect the speed of the sale and potentially the final sale price.

Viewing restrictions

Tenants have the right to ‘quiet enjoyment’ of the property, meaning they do not have to allow viewings unless it’s stated in the tenancy agreement. If tenants are uncooperative, arranging viewings can be difficult.

Potential for a lower sale price

Owner-occupiers might be willing to pay more for a vacant property than an investor would for a tenanted one. Some investors may also factor in potential risks, such as problematic tenants, and adjust their offers accordingly.

Legal complexities

Selling a tenanted property involves additional legal considerations, including ensuring that tenancy agreements, deposits, and compliance documents are properly transferred to the new owner.

How should I inform my tenants about the sale?

Transparency is key when selling a tenanted property. It’s best to communicate with your tenants early in the process to explain what’s happening and reassure them that their tenancy agreement remains in place. Here are some steps to follow:

1. Notify them in advance: Although you are not legally required to tell tenants about the sale immediately, giving them early notice will build trust.
2. Reassure them about their tenancy: Let them know that their rights remain unchanged and that the new landlord will take over their tenancy agreement.
3. Explain the process: Clarify how viewings will be conducted and how their cooperation can make the process smoother.
4. Offer incentives: In some cases, landlords offer incentives, such as reduced rent, to encourage tenants to cooperate with viewings.

What legal considerations should I be aware of when selling with tenants in situ?

Tenancy agreement

Ensure you have a legally binding tenancy agreement in place. This document must be transferred to the new owner as part of the sale.

Deposit protection

If the tenant’s deposit is held in a government-approved scheme, you will need to transfer it to the new landlord and inform the tenant.

Compliance certificates

The property must meet all legal requirements, including having an Energy Performance Certificate (EPC), Gas Safety Certificate, and Electrical Installation Condition Report (EICR). These documents must be provided to the buyer.

Notice periods

If you decide to sell the property when vacant, you must serve notice to your tenants in accordance with their tenancy agreement and the law. For an Assured Shorthold Tenancy (AST), this typically means serving a Section 21 notice, which requires at least two months’ notice.

Does the type of tenancy affect the sale?

Yes, the type of tenancy agreement can influence the sale process:

• Assured shorthold tenancies (ASTs): These are the most common tenancy agreements in the UK. They offer landlords the flexibility to regain possession of the property after the fixed term ends, making them more attractive to investors.
• Regulated tenancies: These provide tenants with long-term security and controlled rents. Selling a property with a regulated tenant can be challenging since the new owner must accept the existing rental terms.
• Periodic tenancies: These roll over monthly or weekly, which can be advantageous for buyers who want flexibility but may be seen as less stable by investors.

Should I use an estate agent specialising in buy-to-let sales?

While any estate agent can list your property, working with an agent who specialises in buy-to-let sales can be beneficial. They will have a network of investor buyers and understand the nuances of selling tenanted properties. Some online estate agents also cater specifically to landlords selling tenanted properties.

Struggling to sell your tenanted property?

At Sell House Fast, we specialise in buying properties with tenants in place, with our seamless solution that saves you time, stress and money. Our extensive experience means we fully understand the specific challenges of selling a property with tenants — and we’re here to help you overcome them.

Our cash house buyer service is designed to take the stress out of selling a tenanted property, offering a guaranteed sale and a straightforward process that eliminates the common headaches associated with traditional property sales. With our personalised approach and commitment to transparency, you can trust us to handle your property sale with the utmost professionalism and care. Get your free cash offer today.