Selling a property with tenants in place can be a complex process, but with the right approach, you can achieve a smooth sale and an ideal outcome for both you and your tenants.
If you’re a landlord considering selling a property that has tenants in situ, it’s important to keep some important steps and considerations in mind. Here's a guide to help you through the process.
Can a home be sold if there are tenants?
A home can absolutely be sold with its current tenants in place to a new landlord or investor.
The marketing of your property will need to inform potential buyers that the tenants will remain, and once the sale is completed, rental payments will be directed to the new buyer.
On the other hand, you can also choose to terminate the tenancy and sell the property vacant if selling it with tenants does not seem like a suitable option. Bear in mind that selling with tenants will limit your pool of buyers and may impact your asking price. After all, buy to let landlords are looking to turn a profit so be prepared to negotiate on price.
How to sell a property with tenants?
Check your tenancy agreement
The amount of notice you will need to provide your tenants will largely depend on the terms of your tenancy agreement, so make sure to read through it first and seek professional advice.
Find out whether your tenants are on a fixed-term tenancy or a periodic tenancy, as this will determine how much notice you will need to provide them before the property is sold.
If your tenants are on a fixed-term tenancy, you cannot evict them before the end of the fixed term unless they breach the terms of the agreement. However, you can sell the property with the tenancy in place. If they are on a periodic tenancy (rolling month-to-month), you'll need to provide at least two months' notice for the property's sale.
Finally, check for any clauses related to selling the property and how they may affect the tenants. Most standard tenancy agreements should allow for the sale of the property during the tenancy, but it's essential to understand the specific terms.
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Communicate with your tenants
Open and clear communication with your tenants is vital throughout the process. As soon as you decide to sell, inform your tenants about your intentions. Explain the selling process, reassure them about their rights as tenants, and answer any questions they may have.
Appoint a reliable estate agent
Choose an estate agent experienced in selling properties with tenants in situ. They will understand the specific challenges and can help attract potential buyers who are open to purchasing a property with tenants.
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Schedule viewings thoughtfully
Coordinate property viewings with your tenants to minimise disruption to their lives. Provide sufficient notice and try to schedule viewings at mutually convenient times.
Provide relevant documentation
Make sure to provide potential buyers with all necessary documentation related to the tenancy, including the tenancy agreement, deposit protection details, and an inventory report.
What are the advantages of selling with tenants in situ?
A property that already has tenants in place can be an attractive selling point for other landlords and investors, as the home offers a guaranteed rental income right away. It will also cut out the immediate hassle of finding new tenants.
Another huge advantage is the property won’t be vacant during the conveyancing process, which means you won’t need to cover costs of running the property while you’re selling.
What are the disadvantages of selling with tenants in situ?
It can take longer to sell with tenants in situ, as the pool of potential buyers may be much smaller than a vacant property. Low demand for this type of property can also result in a lower sales price.
For buyers of the home, the tenancy agreement cannot be altered without the tenant’s consent, and lack of control over the terms could lead to delays in the sales process.
Selling a property with tenants: five tips for success
Be willing to put in some legwork from the get-go will prepare you for the sale and speed up the process.
Foster a good relationship with your tenants. This may minimise disagreements later down the line.
Ensure you have a current and signed tenancy agreement that could stand up in court of law if necessary. If there are any disputes, you’ll need to make sure all the prescribed documents were served correctly at the beginning of the tenancy.
Demonstrate that any deposit was registered within a government approved scheme.
Finally, you will need proof that your tenants signed for having received all of the documents.
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