Can you sell a property with sitting tenants?

Times are tough for buy-to-let landlords right now. What with mortgage rates still sitting well above the average of the last two decades, coupled with fresh potential taxation moves from the UK government towards landlords, it’s no surprise that some are looking to downsize their portfolio right now.

The issue of sitting tenants is one of the biggest factors that wrongly prevents landlords from selling-off properties and giving themselves more cash in the bank. That’s because it’s entirely possible for landlords to sell a property with tenants in situ. In fact, in some cases, it can make the property all the more attractive in the eyes of the right buyer.

Getting to grips with the UK’s tenancy laws

Legislation surrounding tenancy agreements in the UK can feel like a bit of a minefield for landlords. Ultimately, it depends whether your tenants are on an older agreement or an Assured Shorthold Tenancy (AST). Make sure you respect their legal rights before, during and after any potential sale.

Tenants have the right to ‘quiet enjoyment’ of your property. Consequently, you can’t turf them out mid-tenancy without sufficient notice. If you decide to sell mid-tenancy and you’re happy for them to stay in situ, the agreement remains active and rolls over to the new owner.

Why sitting tenants can be appealing to certain buyers

Selling a buy-to-let property with a tenant in situ and rolling the tenancy agreement over to the next owner feels like a dream scenario, but it’s very much a reality. Other property investors are likely to embrace buying a buy-to-let property with reliable tenants already in place.

Firstly, it means they don’t need to do any legwork finding new trustworthy tenants. Secondly, it gives investors a ready-made income stream from the moment they complete the purchase.

Another route to take is to sell via cash buyers. This is especially effective if you’re interested in selling your house fast and avoiding the open market. Cash buyers are often happy to purchase properties with sitting tenants and aren’t fazed by the additional paperwork or legal considerations. What’s more, cash buyers can often give you your money in as little as seven days. That’s compared with the 175-day average it takes for a property to complete on the open market.

The importance of communicating with your tenants

However you plan to sell-off a buy-to-let property, it’s incumbent on you as a landlord to keep your tenants firmly in the loop. Let’s face it, no-one likes being given nasty surprises. Furthermore, you can only imagine how unsettling it would be to sit in the living room and witness a ‘For Sale’ sign being unknowingly installed in the front garden.

Once you’ve decided the time is right to sell one of your assets, be upfront about your plans. Make it clear what this means for your tenants and reassure them if you plan to sell to a buyer that’s happy for their existing tenancy agreement to roll over. If you’ve got multiple buyers that want to view the property first, you should also give your tenants ample notice and respect their privacy.

By handling this entire process with tact and integrity, it’s very possible to sell a home with sitting tenants and avoid breaching anyone’s rights.