Buy to let investors, landlords (and ladies) along with accidental landlords will at some point want to sell their investment property, but what if the tenant is still in residence? This is the type of question our auctioneers get asked, so we’ve decided to detail exactly what happens, what your options are and which would be the better option to consider when selling a rented property in UK.
Can a Property be Sold While the Tenant is Still Living Inside
The simple answer is YES you can sell a property with sitting tenant, they could be within their original Assured Shorthold Tenancy (AST), or holding over / periodic tenancy paying rent month to month, as this doesn’t really matter, occupied property can be sold, quickly and easily as well.
How to Sell a House with a Tenant Still in the House?
Occupied house can be sold by auction, and throughout United Kingdom this is rather popular and common way to sell any property with tenants still living in the dwelling.
Benefits of Selling a Rented Property by Auction
- Auction sale is fast and with fixed completion, the tenant doesn’t have time to become unsettled or start looking for somewhere else to live
- Rental income is retained right up until the sale completes, you do not lose any income or have to cover mortgage costs out of your own pocket
- The lessee continues to maintain the property and pay council tax, less risk than with vacant property that could be broken into
- Auction landlord buyers are experienced and will not insist on viewing the property and disturbing the tenant, this is a much pleasant experience for you and also the renting tenant
- Sale goes through faster without the hassle of the tenant leaving the premise
- The renter gets to stay in the property without needing the find another rental property to live in
- The buyer gets to keep the paying tenant who is a good tenant
- You just sold your rental property with tenants still in place, and done so smoothly without any worries
Other Ways to Sell a Rented Property With Tenants Still Inside
Now think of selling the same property without using an auction, perhaps on the open market while the sitting tenant still within the property.
First, before anyone will show interest, you have to get the estate agents inside the premise, this means, disturbing and unnerving the current tenant, not a good experience for the occupant having strangers traipsing round their home looking around, measuring up, taking pictures, and then putting a for sale sign up with potential buyers staring through the windows, and knocking on the door asking if they can view the property because potential buyers assume the occupant is the homeowner who is doing the selling.
Then, consider the difficulties of arranging access for viewings, rarely will a tenant allow access when they are out, and why would they, would you? So it boils down to arranging a time that suits the viewer and tenant. How clean and tidy will the house be? The tenant isn’t as fussed as you might be. Then there’s the awkward conversation from the viewers “so Mr. Oliver, how soon can you move out?” Because most buyers coming through UK estate agents are looking for a property to live in themselves. The fact that a tenant still is in place living there, puts most buyers off before they’ve had a chance to view the property. What if the tenant refuses to move out? UK laws are very strict indeed, and the process of evicting a tenant can be lengthy. You may be guilty of harassing or illegally evicting your tenants if you don’t follow the correct procedures.
Legal Implications of Selling a Rented Property Can Not Be Ignored
Naturally, sale of a land or property in UK has legal aspects, especially when you need a survey or mortgage. Surveyors will note in the valuation report that the property is occupied by persons other than the seller, and this carries added risks and complications. Is there a proper tenancy agreement in place? What assurance is there for the tenant moving out? Will the buyer be left dealing with the current tenant and serving notice? Do you really want to be responsible for forcing someone out of their home?
If you need a mortgage, and are buying for the purpose of living in the property yourself, then you simply cannot buy the property until the tenants have vacated, typically a landlord has to serve 8 weeks notice, that means additional 8 weeks delay before you can proceed with the purchase.
Why? Mortgage lenders will not release the mortgage offer until they know you have vacant possession first. Most property lawyers will advise against any owner occupier buying a rented property.
There simply is no guarantee of vacant possession on completion day, imagine this scenario “you’ve moved out of your old place, packed up, driven to the new house only to find the tenant has lost their new rental property, and now are forced to stay in what should be your house, they would otherwise be homeless, but now you are instead” this actually happens more often than not in real life, due to poor legal advice, lack of thought and poor planning.
Selling any property private treaty on the open market is hard enough, selling one with a tenant in place requires additional time, patience and compassion. After all, you may be forcing someone to move out of their home, what about children involved, schools, work, friends, it’s a nightmare for the tenant because of considerable strain placed on them such as emotional, financial and time wise.
The landlord also stands to lose in this equation, because the sale of the property will take longer, loss of rental income, incurring additional costs, what if the tenant vacates and the property does not sell. No rent, extra costs, risks, insurance, it can quickly turn sour and it’ll feel like you are left holding on to a property which may seem like holding on to a burning burning coal which you can’t let go.
My Tenant is in Arrears?
When selling at auction this is not a problem, your problem tenant becomes the buyer’s problem tenant, and the new buyer will pay the tenants arrears if they are detailed in the special conditions of sale. So you not only sold the property, the arrears are paid without needing to go to court to chase the arrears or evict the tenant.
Property in Need of Repair?
As a landlord, you are aware that a rental property may require regular repairs, this dilutes the yield and having had a number of good months without issues, perhaps now is the time to sell. Selling by property auctions allows you to sell the property as is, sold as seen. It could even be the Local Authority have served a Housing Act 2004 Schedule 1 Part 1 notice, or a Housing Act 2004 section 11 and section 12 (category 1 & 2) improvement notice, or a Housing Act 2004, section 239 or a Housing Act 2004 section 49. These notices will force the Landlord to carry out repairs, but if acted upon quickly, the property can be sold at auction and will be the new owners responsibility.
Selling buy-to-let investment property through an auction eliminates the hassle, costs, lost rent and risk along with protecting the life style of the tenant and providing an off the shelf investment for the new owner with tenant still in place, and thus rental income from day one. There really is No better way to sell a tenanted property in UK other than by auction.
However, there is one caveat and this is why anyone thinking of selling needs to deal with highly experienced property professionals such as Sell By Auction because there are a rare situations where the property is better being sold vacant, only a skilled, honest and professional firm such as ours will be able to quickly identify and advise you when you should sell with vacant possession and serve notice on the tenant before marketing for sale.
Another point to consider is the process of selling a property through London auction as opposed to regional auctions, the difference can be very important to maximise your sale price. And once again, only an experienced company can better advise you as to which route is the best option to follow for you.
Our professional and experienced advisors are ready to answer all your questions and provide you with no obligation free of charge property valuation along with sound advice. Basically, we want our valued customers to maximise their profits, and also sell your rented property without losing out financially.
To learn more about best options for selling buy to let tenanted property, talk to our experienced team of advisors waiting to answer all your questions, simply call us on 0800 302 9441 or use the form below
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