Selling a House with Tenants: Tenants in Situ Guide

Estimated reading time 10 minutes

As more of the UK’s tenants rent for the long-term, the number of so-called ‘sitting tenants’ is on the rise. A sitting tenant is a renter living in a property that their landlord decides to sell. If the tenant has an ongoing contract or agreement with their original landlord, then they retain the right to live in the property when it changes hands. Some landlords actively look to purchase properties with sitting tenants as it could offer a settled and more reliable proposition if the tenants have already been living in the property for a long time.

A landlord taking on a sitting tenant will have the right to review the fair rent every two years (or before if significant improvements have been made), but they won’t be able to conduct this review themselves. The review, instead, will be carried out by a rent officer.

What is a sitting tenant?

A sitting tenant is someone who is renting a property at the time their owner decides to sell it. You can also use the expression “tenant in situ”.

Selling a house with a sitting tenant

Before you sell a house with a tenant you have to take a look at the type of lease you have in place. Depending on the type of contract the tenant has, you may be unable to sell the property vacant until the tenancy expires.

Month-to-Month Agreements

If your tenant is renting on a month-to-month basis, it means that you can give your tenants written notice. After this notice, make sure they have completely moved out of the property.

Termination Clause in The Lease

Check your rental agreement for a termination clause in case you want to sell your home. If there is a termination clause, you can terminate the contract on that basis.

Fixed-Term Leases

The situation becomes complicated when your tenants have a fixed-term lease without an early termination clause meaning you can’t just end the contract. Moreover, sitting tenants have their rights that you must respect. As for you, you have less options and less flexibility as the tenants have the right to stay for the duration of their contract.

Sitting tenant rights

A regulated tenancy is a long-term agreement between a tenant and a private landlord. These agreements date-back to before 15th January 1989 and offer the tenants a right to remain in the property for life.

Often the rent for regulated tenants can be much less than current rental values for the same kind of property with an Assured Shorthold tenancy (AST) in place, and therefore offers a different investment model to a landlord. This can make selling properties with regulated tenancies difficult as they often require specialised buyers. One of the best ways to sell a regulated tenancy is to a cash property buyer. Gaffsy have bought a number regulated tenancies and when you sell to them you benefit from their experience in doing so guaranteeing you the easiest, fastest and most stress free way of selling your property.

What options do I have when selling a property with tenants?

When you know that you cannot terminate the lease, you have several options about what you do with it:

1

Wait

You can wait for your tenants to move out or wait for the lease to expire. But this can take time.

2

Pay your tenant to move out

Paying your tenant for moving out is an option. Depending on the situation, your tenants may or may not agree. It will definitely take some time to communicate. Plus, it could be expensive.

3

Sell to your tenant

You can try to sell your property to your sitting tenants. Unfortunately, as in the case of the above, you have no influence on the decision of your tenants. Also, you have no guarantee that your tenants will not withdraw. Additionally, even if your tenants decide to buy your property, you have no influence on their financial situation. You also don’t know how long it will take for them to arrange cash or credit.

4

Sell with the tenancy

If you must sell the house fast. You have to sell it with tenants.

Who buys a property with a sitting tenant?

If you are looking to buy a property with tenants in situ, you can expect to pay considerably less for the house or flat in question. This can present a great opportunity for those who are willing and able to wait out the tenancy, as the property will jump back to market value once the current sitting tenant is no longer in situ.

The main issue buyers come up against when purchasing a property with tenants in situ is financing. Many lenders will be unwilling to lend on a property with sitting tenants, so cash house buyers are likely your best option. That said, as this scenario is happening more frequently and lenders are competing against each other in the current buy-to-let market, things are changing. Nonetheless cash home buyers like Gaffsy remain one of the best ways to sell a property with a sitting tenancy because as cash buyers we don’t need a mortgage.

How much does a sitting tenant devalue a property?

The value of a property with a sitting tenant in the UK can be affected in various ways, depending on the circumstances. In general, a sitting tenant can have both positive and negative impacts on the value of a property.

On the positive side, a sitting tenant can provide a steady rental income stream for a new landlord, which may be desirable for some investors. Additionally, if the tenant has been in place for a long time and has a good rental history, this can provide a level of stability and reliability to potential buyers.

On the negative side, a sitting tenant can limit the potential buyer pool, as some buyers may not be interested in purchasing a property with a tenant in place. Furthermore, a tenant may have certain rights that can make it difficult for the landlord to regain possession of the property. For example, in some cases, a tenant may have the right to remain in the property for life, which could significantly limit the landlord’s options. Overall, the impact of a sitting tenant on a property’s value in the UK can vary widely depending on factors such as the length of the tenancy, the rental income generated, and the specific terms of the tenancy agreement. As such, it is difficult to provide a specific estimate of how much a sitting tenant may devalue a property in the UK without more information about the specific situation. This is why Gaffsy are happy to provide a free cash offer to landlords selling properties with and without tenants in situ.

Selling a property with tenants

Selling a property with sitting tenants may seem difficult,  but.. you can still sell it. It is clearly going to involve more effort than selling a house without tenants. Dealing with a professional landlord like Gaffsy will be a huge advantage in the negotiation stage. 

Should I notify my tenant of the sale?

Tenants have the right to know about a property change in ownership. If you or someone in your family would be in this situation, you would like to know what will happen. So, you need to talk to your tenants before you put the property on the market!

Sell your property to Gaffsy

The traditional process of selling a home can be complicated and stressful especially with sitting tenants. Selling to property buyers can solve a lot of difficulties. First, you don’t have to worry about how to deal with sitting tenants and what to tell them. Second, it is a quick house sale, and that means you can sell your home at any time for a guaranteed price. We can sell to a timeframe that suits you. A quick sale or a little extra time to get your affairs in order, we work to get you moving.

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Benefits of selling your tenanted house to Gaffsy:

  • Rapid house sale – We can sell your house fast.
  • We will explain the sale process and the transfer of ownership to your tenants.
  • Your tenants are free to stay, so you don’t have to worry about failing to complete the contract.
  • You don’t have to worry about the sale process.
  • You don’t have to pay any estate agent, auctioneer, solicitor or surveyor fees. 
  • You don’t have to repair the damage caused by the tenancy before selling the property.
  • Guaranteed sale on a guaranteed date.

Selling a property with tenants FAQs

If you have further questions regarding how we can buy your tenanted property from you, don’t hesitate to contact us. Alternatively, some of our most frequently asked questions can be seen below.

Do I need to renovate the property before selling?

Selling a tenanted property on the open market does see a large number of landlords investing in improvements. However, because tenants have the right to ‘Quiet Enjoyment’ means that facilitating refurbishments can be difficult.
We buy any home, in any condition. This means you don’t need to complete any home improvements and disturb your tenants when selling to Gaffsy. We can buy the property directly from you with your tenants in situ.

Can I sell my property with tenants in situ?

Yes, you can sell your property with tenants in it. However, you need to inform your tenants about the sale and give them appropriate notice before proceeding with a sale. You also need to comply with any laws regarding landlord-tenant relationships. Gaffsy can help you with selling a buy-to-let property.

What happens to the tenant’s lease when I sell the property?

When you sell the property with tenants in situ the new owner becomes the landlord and assumes all the rights and responsibilities of the former landlord. The lease with the tenant remains in place until it expires, and the new owner must honor the terms of the lease.

Can I evict tenants before selling my property?

You cannot evict tenants without a valid reason, even if you plan to sell your property. You can only terminate a lease if the tenant breaches the lease agreement.

Can I show the property to potential buyers while the tenants are living there?

Yes, you can show the property to potential buyers while the tenants are living there. However, you must give them reasonable notice and respect their rights to privacy. You should also try to schedule showings at a convenient time for the tenants. Gaffy can conduct your in-person valuation whenever is appropriate for your tenants and yourself.

Can I increase the rent before selling the property?

You can increase the rent before selling the property, but you must comply with UK law. You must also provide written notice of the rent increase to your tenants before it takes effect.

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