Landlord Guide On Selling A Property With Tenants

Selling Property With Tenants

Let me put your spinning mind at ease by answering the most frequently asked question when it comes to selling a tenanted property

Yes, you can sell your property while it’s occupied with tenants; landlords do it all the time, and there’s diddly-squat your tenant can do about it. Facts!

However, whether you want to sell while it’s occupied is a whole other bag of jam donuts; there are several points that ought to be considered before [haphazardly] throwing your tenanted property onto the market…

Let’s get into it!

Page contents:

Your options when selling a tenanted property

If you wish to sell your property which is currently occupied with a tenant, you have two options:

  • Sell with the tenancy
    With this option, you will sell your property subject to the existing tenancy. That means your tenant will remain in the property after the sale is completed, and they will then start paying rent to the buyer and keep it as a BTL.
  • Complete sale after possession (i.e. eviction)
    In this case, you will need to terminate the tenancy before the sale is completed, so the property is vacant/untenanted.

Think! Do you actually want to sell a tenanted property?

You’ve heard the cliché, right? How buying and/or selling a house is up there as one of the most stressful processes in life. It’s right up there with dealing with bankruptcy, discovering your spose’s porn addiction, and giving birth to a freakishly large 20lb baby.

Well, you can only imagine how much more potentially stressful the process of selling can be with a tenant in occupancy – it’s extra weight to consider during the slog. Of course, that’s not to say there aren’t advantages of doing it.

So, I’m not saying you should or shouldn’t do it, but I am recommending to take a whiff of the following points before pulling the trigger…

Smaller market
With the UK currently suffering from a major housing crisis there is certainly no shortage of buyers trampling over the tire-kickers, whether they be landlord or home-buyer. Heeeeeeeellll, if someone likes your property enough they may even have no qualms with making an offer even if they have no intentions of being a landlord (i.e. they’ll give notice to the tenant when legally possible).

But the reality is, the market for a tenanted property will appeal to a significantly smaller market, so there’s a chance it won’t shift as quickly as an unoccupied version. But that’s not to say that will always be the case, because selling a house successfully often largely intervenes with fate- the right buyer being in the market at the right time.

Complications of viewings
Yeah, taking viewings with tenants in situ can be a right royal pain in the ass at the best of times, and the horror is only amplified if your tenant isn’t pleased with what’s happening (which wouldn’t be terribly unsurprising, and understandably so).

It’s more expensive to sell when vacant
Most landlords prefer to sell their property while it’s tenanted because it’s generally cheaper. Potentially, a shitload cheaper (or more expensive, whichever way you want to look at it).

Bear in mind, if you legally repossess your property from your tenant and then try to sell, you’ll no longer benefit from rental income, which means you’ll have to dig deep into your own grubby little pockets to pay the mortgage. That can become incredibly expensive if the property remains unsold for several months.

This is by far the most common incentive for selling the property while it’s tenanted. Not a bad incentive either.

Condition of your tenant in situ
Let’s consider the laws of probability for a moment, alright?

If you’re selling a tenanted property, the odds are you’re going to attract ‘experienced landlords’, and let me tell you, they’re no fools (well, mostly), which means they’ll throw your tenant under the microscope for thorough probing and referencing before making any serious offers.

So if selling is part of your extreme and flamboyant exit-strategy to unload a rogue tenant that’s disruptive and/or in fallen into rent arrears, the truth will almost always rear its ugly little potato head. On the flip-side, a good tenant will make your proposition a hell of a lot more desirable.

Point is, any serious buyer will care about the condition and quality of your tenant, and selling with a rogue tenant will usually do more harm than good. You’ll have better luck shifting a property that’s subsiding at a 45 degree angle.

Legally repossessing your property

If you’ve decided that getting rid of your tenant before selling is the best move (for whatever reason), the usual rules applies, and you’ll need to legally terminate the tenancy, which may mean you’ll have to get comfy and wait several months for the process to complete.

Notifying your tenant of the sale

If selling with tenants in situ is still Plan A, diplomacy and courtesy will be key to a smooth transition.

Don’t be naive enough to believe you hold all the chips- the tenant is definitely sitting on the same table as the board of directors! While they may not be able to completely stop the process, they will have the ability to make the process unbearably painful or relatively painless (selling is never totally pain free). You’d be wise to play nice in order to minimise the pain.

1) Offer your tenants first dibs
Purely out of courtesy, even if you know they’re in no financial position to be serious contenders, you want to give your tenants the opportunity to buy the property before going to market.

2) Explain reasoning BEFORE marketing/selling
Being abrupt in these situations can be profoundly damaging, and that includes marketing before discussing it with your tenants and/or doing it without providing an explanation.

Take the time to talk to your tenants and explain why you are selling. Make up a sob story if you think it will improve your position (e.g. you’re having financial difficulties, so you either have to sell your kidneys, or your house).

3) Be reassuring
Since you have made the decision to sell with tenants in situ, you have the opportunity to spin a story which reflects the tenants best interests (even though you’re probably doing it to minimise the impact on your bank balance).

Reassure the tenants and explain what your decision means:

  • You’re not kicking them out, because you don’t want them to lose their home as they’ve been good tenants (I’m assuming they have been)
  • The T&C’s of the tenancy still applies (more about this below)
  • Another landlord will most likely buy the property, so their occupancy is most likely safe

Can you demand more money for your property with tenants in situ?

It’s entirely possible.

But, while it may seem logical that a tenanted property should fetch a premium, it’s not always as straightforward as that. As discussed, it will depend on the quality of your tenant, but more crucially, the rental yield the property can achieve. In other words, the ROI (Return On Investment), which will specifically take into account the rental income over the initial cost of buying the property. Plus, and needless to say, there needs to be demand for the property.

A good agent will be able to provide assistance with the numbers.

Can you use a normal estate agent to sell a tenanted property?

Technically, you don’t need to use an agent at all. I mean, in the sense that you don’t need to knock on the door of your local high-street agent. But at the very least, you’d be a total donkey not to use ‘some kind of agent’ to help market your property across the UK’s biggest property portals like Rightmove & Zoopla to generate the leads from prospective buyers. And then, you can take on the task of processing, scheduling and conducting all the viewings if you want to. However, in this very particular scenario, I would avoid going ‘lone wolf’, purely because it’s a buttload more convenient to get a mule on the payrole to liaise with your tenants and schedule the viewings. Doing it any other way can easily result in diminishing returns.

In any case, you don’t need any special kind of estate agent to sell a tenanted property, but fetching one experienced in doing so would be particularly beneficial. As said, it’s a pretty common scenario, so you won’t be throwing any curve-balls to any competent agent. So as long as you abide by the regular rules of thumb when choosing an agent to work with (e.g. make sure they’re regulated, shuffle through reviews etc), you should be in safe hands (relatively speaking, of course! We are talking about estate agents after all. Enough said!).

How to sell a tenanted property…

The usual methods are relevant, but I’ll quickly run through them in case you learn something new…

Option 1: use your local high-street estate agent

Presumably, there’s little to be said here. Just approach your local agents and see what they say.

Option 2: use an online estate agent

I’m not going to get into discussion of what is and what isn’t an online estate agent, because I’ve already done that in my supreme guide to online estate agents.

So I’m going to commence on the basis that you, at least, have a grasp of how they work (and how much money they can save you compared to traditional high-street agents!).

To be honest, I wasn’t entirely sure how well equipped online agents were to deal with selling tenanted properties, so I put out feelers to find out. The marketing folk at Yopa (currently the 2nd biggest online estate agents in the UK) were quick to respond with a bold response: we are both experienced and successful in dealing with selling tenanted properties.

Right, got it!

Someone remind me, what’s the difference between confidence and arrogance?

No, I’m joking.

Technically, I’m not recommending Yopa (although these people on TrustPilot are), I’m just the humble messenger. However, I am saying that if you want to use an agent that is experienced in what you need done, and at a cheaper rate than your local agent, perhaps they’re not a bad option, especially since they offer a free no obligations in-person valuation.

Estate AgentRatingDurationIncludes / NotesPrice
Rating
4.6
TrustPilot Reviews
Duration
12 Months
Includes / Notes

Pay Now Core package
  • 12 Months marketing on Rightmove, Zoopla + more
  • Rightmove listing
  • Photograghs
  • Floorplan
  • Negotiation
  • For sale sign
  • In-person valuation

*Selling fee of £1,499 in a few specific London postcodes.

Price* £999Inc VAT Visit WebsiteBook Free In-Person Valuation

Option 3: use a cash buying company (good for anyone looking for a super quick cash sale)

I’d be remiss if I didn’t mention “cash house buying companies” (also known as ‘We buy any house’ companies), even though the industry is notoriously shark invested. You really need to be careful about who you work with if you venture down this route! But I think mentioning cash buying companies make sense in this case, because selling fast for cash seems like it could be a good solution for a landlord that’s wanting to sell a tenanted property, especially for those willing to accept an offer 10-20% below market value.

No, the sale price won’t be ideal, but the process will be quick.

I know many cash buying companies do buy tenanted properties, and those that don’t are usually prepared to buy the property as soon as the tenant’s vacate, which means you won’t need to wait around for a buyer.

If this is a solution you want to know more about, I recommend reading my full guide on Quick House Sale / Cash Buyer Companies; I go through some of the scams to be wary of, and list some companies that are regulated and have good reputations in the industry.

Scheduling & Arranging Viewings

Regardless of whether who is responsible for the viewings – whether it’s you or an agent – there are a few statutory rights protecting the tenant that should be respected.

  • The tenant should be given 24 hours written notice before a viewing
  • The tenant must give consent to each viewing at a convenient time for them
  • Constant disruptions might breach their statutory right to live in quiet enjoyment.

It’s crucial to knowledge that viewings are particularly stressful and disruptive to tenants during in this situation, which a good landlord/agent will appreciate and fully understand. So to minimise the pain, I would recommend organising block-viewings (just like I do when conducting regular tenancy viewings), as opposed to scattering the viewings throughout the week. It may also be wise to ask the tenant which days are most convenient for them, and stick to those days. Communication and compromising is key, just like any healthy relationship.

Paperwork / Changing the tenancy agreement contract

As the seller, you don’t really need to be concerned with the legalities of the tenancy after you’ve wiped your little hands clean of the property. It’s the buyer’s responsibility at this point. However, if you really do have a conscious and care for the fate of your tenant, the following information may be of importance (and useful to relay to your tenant during the ‘reassuring’ phase I covered):

  • After contracts have exchanged and the property is officially sold, the new owner will automatically become the landlord of the tenants. The text books describe this as saying that he ‘stands in the shoes’ of the vendor. You will no longer be the landlord and therefore you will be dismissed from duty. Congratulations.
  • The tenancy agreement contract will remain valid even though the landlords name is out of date.

Transferring the Tenancy Deposit

OOOOH SHHEEEEEET. What about the tenancy deposit?

Ok, so if you have a shred of common sense and you’re worth more than a dollop of dog excrement, then you have complied with the tenancy deposit legislation by securing your tenant’s deposit.

Typically, you don’t need to worry about the deposit, because your conveyance solicitor should help arrange for the transfer of any tenant’s deposit. Bear in mind, you’ll be “transferring” the deposit, and not getting it returned, so whether you want to account for that in the ‘asking price’ is your call.

On that note, may I recommend using a Conveyancer that has experience in selling tenanted properties?

You may also want to contact the deposit scheme directly and discuss the transfer of ownership, as they may have their own guidance and suggestions. Either way, it should be relatively easy.

Completion & apportioning rent

To make the transfer of tenancy easier to cope with, completion is often arranged to take place on a rent payment date, so there’s no need for the rental income to be apportioned between the buyer and seller. However, if that’s not the case, arrangements should be made between the buyer and seller so the appropriate amount of rent is credited to the buyer (assuming that the tenant had paid rent in advance, which is usually the case). Again, your conveyance solicitor should be able to assist with this matter.

Good luck, and happy selling, folks!

18 Join the Conversation...

Guest Avatar
Jenny 16th July, 2017 @ 12:41

Hi, my landlord has sold the property i'm living in and is STC. My agreement runs out in January. He has sold to a new investor.

I now want to end my tenancy agreement early as I have found somewhere else to live. But my landlord is saying he can't end the contract early whilst the sale is going through.

The only clause in my agreement with me ending the agreement early is if a new agreement hasn't been signed and it's a rolling month by month basis then I have to give a months notice. I signed a new 12 month agreement in January so this does not apply to me.

The other clause there is: if I choose to end my agreement early then I would be liable until another tennant is found. However the landlord has sold the property.

There are no other clauses on me terminating the agreement early or anything about if the land lord sells the property.

The lady who I think is buying the property is planning on living in it herself so I don't think it matters if i'm in the property or not.

I thought my agreement is with my landlord until the contracts are signed with the himself and the new buyers.

There is a chance I will lose this new property as he wants me to move in within 4-6 weeks.

It feels like i'm being made to stay in a chain until this sale has gone through when in reality the sake of the house has got nothing to do with me (I don't think)

Do I have the right to end my tenancy agreement early?

1
The Landlord Avatar
The Landlord 16th July, 2017 @ 16:43

Hi @ Jenny,

You are bound by the T&C's of the tenancy even if the landlord sells, so no, you can't end early.

"But my landlord is saying he can't end the contract early whilst the sale is going through." - I'm not entirely sure what the context of that statement is. But you can both mutually agree to terminate the tenancy.

On another note, you said the new owner is a investor, but then go onto saying they may wish to live in the property. But either way, the new landlord won't just be able to kick you out even if they plan on moving in after the sale completes.

2
Guest Avatar
lucille volaski 13th October, 2017 @ 22:59

my landlord is thinking of selling the house i have been living in for 24 years iom retired have a good rent but have no money to move out what are my rights can my landlord pay me to move out for expenses

3
Guest Avatar
Malcolm 31st March, 2018 @ 14:00

My landlord of 21 years has decided to "auction" the two houses he rents out. He informed us all by text that it will happen probably within a week. If somebody buys the house and wants us all to move, how long legally do they have to give us before they can force us to leave. Being on a zero hour contract makes it very difficult to find somewhere else and I'm probably going to have to downsize. Finally, my Landlord is actually been good in the 21 years I have rented off of him, but it will be the new owners I'll have to deal with.

4
Guest Avatar
Sharon Quinn 6th August, 2018 @ 18:15

If I sell my property with my tenants, do I have to issue the tenants with any official notices or time scales of sale etc

5
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Nicky 20th December, 2018 @ 18:06

We have been tenants for 10 yrs now, our landlord has sold the flat and the new landlords are asking for an increase of £175 per month. No work has been done to this property for years. Is that legal.

6
Guest Avatar
Lysy 3rd April, 2019 @ 01:10

The house I'm living in was on the market selling before renting, when I was signing the contract I told the agency I need long term lettings so they gave me one year,after I moved in two weeks they came with some people for viewing and from then almost every week they'll come for viewing sometime twice a week. And I'm only 4 months in the house. Please what should I do?
Thank You.

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Guest Avatar
Joanne oconnell 12th July, 2019 @ 11:51

I would like to know if you buy homes for tenants that are on program

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Guest Avatar
Lisa Maddaford 28th October, 2019 @ 07:45

I let my tenants know about 4/5 months ago that the house will be going on the market they are now refusing to let me in with an estate agent to take photos i have been asking now for 2 months still refusing what can i do ???

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Guest Avatar
ItDoesn'tMatter 26th January, 2020 @ 00:58

You lost me here ... otherwise ok.

"The truth will almost always rare its ugly little potato head"

10
The Landlord Avatar
The Landlord 26th January, 2020 @ 10:54

@ItDoesn'tMatter,

Ha, I laughed at my own line, "ugly little potato head"

I'm not sure if I lost you because of the typo, or for some other reason. But thanks for pointing it out anyways. It's been corrected :)

11
Guest Avatar
Debbie 2nd March, 2020 @ 12:00

Hi i am thinking of buying a property the tenant has been served notice but has asked if they could stay on as are unable to find a suitable property i am okay with this but would want to increase the rent as tenant currently pays 950.00 per month but going rate is £1200.00 i propose to charge £1000.00 per month for the first year
What do i need to do get a new tenancy drawn up to start the day i buy the property ? Would i also need to do credit checks etc to comply with my rent guarantee insurance
Any info would be appreciated so I don't have any problems later

Many thanks

12
Guest Avatar
scap yard 30th July, 2020 @ 11:03

A friend of mine has been on the same property for over 10 years recently. He was given a 30 day eviction notice by the new owners of the property. Fact being his landlord sold the property knowing his mother was suffering sad to say he just lost his mother On 7/27/2020 and only has until the 8/1/2020 to be off the property. What can he do for help?

13
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Lizzie 18th September, 2020 @ 15:36

I wish to sell my property. The property has tenants and I intend to give six month notice as required now by law. I don't know what to do for the best. Whether to sell with tenants still there or sell once vacant. The property is extremely cluttered and the front garden is a total mess so has no curb appeal. I feel anyone viewing it would be put off.

14
Guest Avatar
Annoyed Tennant 9th November, 2020 @ 18:03

Perspective of a tenant during Covid.

I gave 60 days notice Oct 31. I rent now and purchased a home. I take possession Nov 26, but have possession of rental home until Dec31.
I asked my Landlord to wait until Dec 7, then Show a vacant home, without refunding me any of my last months rent. I would also have been open to Dec 1 showing, even starting Nov 26 if insisted upon.
She was completely inflexible. She may have read your post as she sent me a crying poor sob story even though I see her IG and know she bought a house boat this summer.
I tried to explain that an empty house will sell for more than a house with me in it, insisting I am home for all viewings and refusing to wear a mask in my own home. No dice.
My landlord was also very angry that I choose to not allow pictures of my unit with my possessions inside, as is my right. She was not smart enough to take any in the past and the reality company she tried to sell the home with years ago will not give her their pictures they have on file. Lol.
I also did not sign the covid waiver, so the realty company has to disclose that to all viewers.
Opening week only 2 groups of people came to view the house and zero offers were received.
Now she has lost the opportunity of a new listing creating a bidding war, which has typically been the case in this current hot market.
Today I am taking all the perennial flowers out and giving them to friends, and removing lattice from my front deck that I had installed.
I am contemplating playing pornography on all 3 tv’s during showings.
I see no reason to co-operate when no one will to accommodate me in any way.
I think the realtor is under the impression that once I move my things Nov 26 or Dec 1 I will be more accommodating. I am going to be a pain in the ass all the way until Dec 31, unless a proportion of my rent is returned for Dec and also only if the landlord assumes the utility bill b4 Dec 31.
Opening listing day the realty company had internet issues and could not list pictures. I had google street view blur my rental home’s image.
I could people stopped while I was in my porch and I informed them if the many problems including a basement leaking in multiple spot, showed them newly crumbled foundation issues and informed them of electrical issues.
I put a sticker on my coffee maker plug which is duct taped to hold it in saying “do not remove”. Making potential buyers wonder why.
I have removed rugs that cover holes in a couple ceramic tiles.
I may also leave a bunch of empty, uncleaned sardine cans in the attic and in the vents.
Learn something from my landlord not being accommodating. Waiting 1 month to list, or even 2 should not be too much to ask

15
Guest Avatar
Joe Gallagher 21st March, 2021 @ 10:44

Hi,

I have a NHS NWAS paramedic living in a house I own(she has NOT paid rent since Nov 2019) and is going through the section 8 process at present. Can I sell the house before it goes to court?

16
Guest Avatar
Eric 21st March, 2021 @ 16:05

Joe,

You can, but you'll probably struggle to sell a house with a tenant in arrears that's been served a S8. Who would want to buy a house in that situation? And how are you going to take viewings?

17
Guest Avatar
Chloe 15th April, 2021 @ 15:18

We have given our tenants notice to move and they are refusing to let our estate agents to take photo of the property. What are our rights.

18
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