Selling a House With Sitting Tenants: Step by Step Guide

Can You Sell a House With Tenants Still Living There?

Are you hoping to sell your house but still have tenants living in the property? Just because you have tenants in situ, doesn’t mean you cannot sell your property. The easiest option would be to wait until the end of your tenancy agreement and then market the property as vacant. However, there are various reasons why this might not be a good option for you. If this is the case, then there are a few things that you will need to do however before putting your property on the market. It might make the process a little more complicated than normal which is why we’re here to help.

This handy guide put together by property experts, Midland Homebuyers will show you everything you need to know about selling a property with tenants in residence.

Step One: Research Your Options

There are a few different ways you can go about selling a house with tenants currently renting the space from you. You can either sell your house as a tenanted investment or as a vacant property to someone who wants to use it as their own home. Selling the house as a vacant property will give you a bigger pool of potential buyers, however, this means you will have to evict your tenants and can make the selling process slightly more complicated. Complete some further research into both of your options and consult your lettings agent before deciding which option is going to be better for you both personally and financially.

Selling to Another Landlord

Selling to another landlord is the easier way to go about selling a house with tenants as it causes the least amount of disruption to both yourself and the sitting tenants. In this situation, having sitting tenants can even work as a great selling point because it means the new landlord will be making an income from the property straight away.

Selling to a Regular Buyer

Your other option is to market your house as a vacant property, meaning your home will need to be empty when it’s sold so the buyer can move in. This is a slightly more complicated process and you will have to make some allowances to your current tenants.

Occasionally, you might be able to sell your property to the tenants living there. It’s possible that whilst your tenants have been renting, they’ve also been saving up to buy a place of their own, although this isn’t often the case. However, if you have a good relationship with your tenants, it’s a good idea to offer them the chance to buy the property, as it would make the selling process much easier for you both.

Step Two: Inform Your Tenants

Most tenancy agreements are ‘assured shorthold tenancy’ (AST) agreements which are typically given for a period of 6-12 months. It also means that after this agreed period, the landlord is able to evict the tenants without a legal reason for eviction. However, your tenancy agreement is a legal contract between the landlord and tenants, which means no one is allowed to move into the property until the end of the tenancy. If you decide to sell the property before the end of this tenancy, make sure to inform your tenants and reassure them of the process so that they know they will not be evicted before their tenancy is up.

If the person buying your property is not a landlord and wants to move in, your tenants will need to leave. If your tenants are renting the property from you under a shorthold tenancy, you can give them notice at any time and they will have to leave the property by the set move-out date. This notice will be a Section 21, 60-day notice, before which they will have to leave the property and you will be free to market and sell it to a new owner.

Most tenancy agreements these days are ‘assured shorthold tenancy’ (AST) agreements meaning you would evict a tenant through a ‘Section 21’ notice, where two months notice must be given to bring the tenancy to an end.

Although Section 21 does not legally require you to give any reason to your tenants for their eviction, it’s good manners to explain the situation and why they will need to leave. Keeping things friendly with your tenants is also a good way to ensure the process goes smoothly and they don’t make the sale difficult for you.

Step Three: Marketing Your Property

Arranging Viewings

If you want to show potential buyers around the property, this will need to be written in the tenancy agreement signed by your tenants. Most tenancy agreements ask that tenants are accommodating to viewings however you will need to give your tenants 24 hours notice before showing people around, so you won’t be able to host viewings at a very short notice, which potential buyers will need to be aware of.

It’s important to keep your tenants happy throughout the process of selling the property – if there is too much disturbance with viewings, they might decide to leave early and you could lose out on rent payments. Try and keep your tenants happy by arranging your viewings for sensible times that work better for them. Maybe arrange viewings with potential buyers for whilst your tenants are work instead of on a Saturday morning for example.

If there is no mention of property viewings in the tenancy agreement, you will not be able to show people around without the permission of your tenants which they do have a right to decline. In these circumstances, it’s best to try and reason with your tenants and maybe offer them a discount on their rent to compensate for the disturbance caused by regular viewings.

Step Four: Arranging the Move Out with Your Tenants

As with most tenancy agreements, you will need to provide a written two months ‘Section 21’ eviction notice that would bring the tenancy to an end. In other cases you will need to check the terms of the contract as with ‘assured shorthold tenancy’ agreements, this can protect the tenants up to 6 months.

Under the Section 21 notice, you do not need to provide a reason by law to ask your sitting tenants to move, however, to ensure an easier and swift departure we would recommend to speak to your tenants and inform them of why you’re evicting them.

Step Five: Preparing for Your Sale

The contract of the sale will specify that the property is being sold with sitting tenants. The contract will need to include the names of the tenants, the rent paid and the terms of the tenancy and you will need to provide a valid gas safety certificate.

Potential Issues You Might Face with the Sale

With your tenants:

If your sitting tenants decide they don’t want to leave on the asking date, you will have to inform the courts. This could cost a lot of money so is best avoided if possible.

With buyers:

If you decide to put your property on the market to both regular buyers as well as landlords, it’s unlikely that many people will want to buy a property with tenants living there which could delay the process.

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