Buy-to-let mortgages



Selling a tenanted property

October 27, 2021
Information published was correct at the time of writing

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Buying and selling property is all in a day’s work for landlords, but if the property you are selling has current sitting tenants, the matter is a little more complicated. Selling a house or flat with sitting tenants will obviously require a little tact, but it shouldn’t automatically cause tension. Not if the task is handled correctly, anyway. As a landlord, you have legal responsibilities to the tenants that you’ll need to be aware of and you’ll need to follow the correct process. Whether you’re in the process of selling a tenanted property or are still considering whether or not to do so, we’ve provided some tips to help guide you through the process.

SELLING WITH SITTING TENANTS
You could sell your property as an investment property with sitting tenants. Other buy-to-let landlords might be attracted by the fact that they won’t have to market the property and won’t have any period of vacancy after buying it, so will receive an income immediately. This can help you to negotiate a good price for the property. However, you’ll be limiting your audience of potential buyers to landlords only, excluding a larger number of people who are searching for a home to live in. You may receive fewer offers as a result.

ENDING THE TENANCY
You could give your tenants notice that you want to regain possession of the property. Under Section 21 of the Housing Act 1988, you have the automatic right of possession at the end of the fixed term of the tenancy. The only requirements are that you give, from 1 October 2021, at least two months’ notice in writing, and that you have properly protected your tenants’ deposit in a government-approved scheme. Section 21 does not allow you to end a tenancy before the end of the fixed term.

ENDING THE TENANCY EARLY
It’s possible to end a tenancy early under Section 8 of the Housing Act 1988, but you would need to have grounds to do so. Acceptable reasons include if the tenants have used the property for illegal activities or if they are in rent arrears. You cannot use Section 8 simply because you want to sell the property. Section 8 requires notice of between two weeks and two months from 1 October 2021. It’s sensible to allow additional time in case the tenants refuse to leave. In this case, you’ll need to apply for a possession order from the courts.

CONDUCTING VIEWINGS WITH SITTING TENANTS
Whether you choose to end the tenancy or sell the property with sitting tenants, you’ll likely need to conduct viewings while the tenants still live there. To do so, it must be specified in the tenancy agreement that you have the right to conduct viewings, and you must give the tenants 24 hours’ notice of each visit. So, it is practical to schedule as many visits as possible on a particular date, rather than across multiple dates. If the tenancy agreement does not specify your right to conduct viewings, you’ll need to approach your tenants for permission. It will help if you have a good relationship with them and if you have acted fairly towards them in this process.

TRANSFERRING A TENANCY AGREEMENT TO A NEW LANDLORD
If you sell the property with sitting tenants, the same tenancy agreement can remain in effect. You’ll simply need to change the name and contact details of the landlord to the new owner. It’s sensible to initiate communications between the tenants and the new owner as soon as possible and keep the tenants well informed throughout the sales process, as they have the right not to sign the amended tenancy agreement, which can create a difficult situation. In most cases, following the rules, communicating well and making an effort to be fair will result in a smooth transaction.

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