If you want to sell a property which has sitting tenants, it does not necessarily have to be difficult process. But unless you take the right steps, you can run into some trouble. Above all else, it is essential that you try to keep the tenant on your side.
There are two ways of selling a buy to let property with tenants in situ: selling to another landlord, or selling your property on the market to a ‘regular’ buyer.
Whichever option you choose, the rights of your tenants must be respected, along with the rights that you have as a landlord.
Selling a property with sitting tenants
It is very common for landlords to want to sell their property – but they have tenants in situ who they don’t want to lose, either for the sake of retaining the income while the property is on the market, or simply ‘keeping the peace’.
If your property is being tenanted under the Rent Act 1977, or under an assured tenancy agreement, then this gives your tenants tenure, and allows them to keep living in the property after the contact term has ended.
If your property is being tenanted under an Agreed Shorthold Tenancy agreement, you should give your tenants a Section 21 notice, which must expire before you can sell your property. If you have followed all the terms stipulated in the Agreed Shorthold Tenancy Agreement, yet your tenant refuses to leave the premises, you may have to initiate the eviction process.
You need to inform your tenant of your plans to sell, in writing, at least 2 months in advance. Although they can’t do anything about this decision, you want to keep them happy – and a written notice which reassures them of a smooth process will achieve this. Otherwise, your tenant may turn nasty, and make your property unpresentable on viewing days (resulting in you getting a lower offer).
Sitting tenants and viewings
Have a careful look at the agreement between you and your tenant, and see if there is a clause that allows you access to the property, regardless of the reason. If there is such a clause, you must give your tenants at least 24 hours’ notice prior to your visits.
Many landlords arrange property showings on a ‘schedule’ – for example, at the same hours on the same days, every week, so the tenants can arrange their schedule accordingly.
As the landlord, you need to be present at the property for all showings. You cannot give the keys to a prospective buyer and allow them to walk around freely.
Selling your property for the best price
Should you want to get the best possible price for your property when you decide to sell it, in most cases, you will get a better offer from a buyer on the market than you will from a developer – and therefore, it could be financially advantageous for your property to be tenant-free when you sell it.
Sometimes, if you speak to your tenants and offer them a financial incentive to leave the property, then they will agree to do so. This means that you can get a better deal on the sale of your property, if your tenants agree to an amount that makes financial sense.
However, keep in mind that this option can not be taken when your property is being tenanted under the Rent Act 1977, or under an assured tenancy agreement.
The impact of an Assured Shorthold Tenancy
An Assured Shorthold Tenancy Agreement is a legally binding contract. This agreement gives your tenants the exclusive right to use your property, and provides a minimum period during which your tenant can stay in your property without fear of eviction. An Assured Shorthold Tenancy Agreement should not impede a sale, however certain stipulations can impact the usual selling process.
Many buyers (both property developers and on-the-market) will want to view your property before making an offer. However, holding viewings on your property may breach your tenant’s rights, and you will need permission from your tenants to hold viewings. This is why it is so important that you maintain a friendly relationship with your tenants.
At WeBuyAnyHome, we don’t require viewings to purchase your property, which is a major reason why so many landlords use our service.
How to tell a tenant you are selling
Once you have decided to sell your property, you cannot simply turn up at the door and tell your tenants to leave. If the tenancy agreement does not have a specific period of time, and is open-ended, then you need to check whether this includes a ‘break clause’, which would enable you to advise the tenant of your desire to terminate the agreement.
Under Section 21 in the UK, you need to give your tenant a notice that you are selling your property at least 2 months in advance. This notice should be in writing – typically by letter.
To keep the peace and ensure a smooth transition, your letter should reassure your tenant of how the sale of your property will be carried out in a way that is hassle-free for both parties.
For example, as a courtesy, many landlords offer their tenants the opportunity to buy the property before it goes on the market.
Handling a problem tenant
Problematic tenants are a major frustration to many landlords. For example, a ‘problem tenant’ may be:
- Refusing to let prospective buyers enter the property
- Behaving unreasonably
- Leaving the property in poor condition
- Making lots of noise at inappropriate hours
- Introducing pets onto the premises, without permission
The eviction process can be scary, time-consuming and confusing. As a landlord, it may be easier for you to find another way to handle a problem tenant.
At WeBuyAnyHome, we purchase properties with problem tenants, and will also buy your property no matter what the condition.
Selling with tenants
WeBuyAnyHome understand that, for many landlords, selling an investment property with tenants in situ can often be complicated and stressful. The rights of your sitting tenants must be acknowledged and adhered to when selling, so it’s important to know the legal stipulations involved when selling a rental property.
We can help you sell with tenants. Our team of industry experts have vast experience in investment property sales, and have purchased numerous buy to let properties, which means your property sale is in safe, knowledgeable hands.