What is a tenanted property?
If you are the freehold owner of a house or flat, meaning you outright own the building and its land, but someone else pays you a monthly or annual rent or other fee to live in the home for a specific amount of time, you own a tenanted property. The person living in that home is your tenant, and the agreement you make for letting them live there will be legally binding.
Tenanted properties might be for just one person, a group of friends, a married couple, a family, or many other arrangements. You have the right as the freeholder to conduct interviews and background checks or seek references for the people that want to live in your home. Your goal should always be to find a tenant or tenants that will treat your property with respect and pay their rent on time.
As the landlord of a tenanted property, you can expect to have certain obligations that should be specified in the rental agreement. For example, you will be responsible for any major repairs to the property – such as addressing any dry rot or subsidence – as well as responding to problems that might occur such as plumbing blockages.
But the tenants will also have certain duties in their rental agreement, such as keeping the property in a good condition and often paying the utilities, such as the electricity bill.
It’s not impossible to sell a tenanted property, and as this guide describes, there are several options available for you to decide how to approach a sale. You might experience some additional hurdles to selling compared to trying to find a buyer for a non-tenanted home, but depending on how you choose to sell, you’ll still be able to do so fast.
Selling your home if tenants have moved out
One way to sell a tenanted home is to wait until the current renters have moved out. This frees up the property for you to make any changes that you’d like and to enhance the value of your property before selling, and also avoids any potential legal complications with transferring an existing lease.
This is perhaps the best approach in an area with very high demand for home sales, because an empty house or flat will be more attractive to a larger potential group of buyers.
Selling your home with tenants still living there
Most people who are trying to sell a tenanted property will be doing so while the lease is still in place, and likely has several more months or even years to run. If you are selling a regulated tenancy property there may be many years remaining on the lease.
The simplest way to sell your home fast would be to give your current tenants the right of first refusal on buying your property. Regardless of whether you think they would want to, or could afford to, buy your house it’s a gesture that can make the overall sale process smoother.
If they don’t want to buy the home but do want to see out the remaining terms of the lease, you should calmly and in detail explain how the sale will work – that you expect whoever buys the property will honour the existing rental agreement and that little should change for your tenants. Having this kind of reassurance in place is something almost all tenants will want.
But if you want the tenants to vacate the property, or if this is a requirement from a potential buyer, then you will have to serve what’s called a Section 21 notice. This gives the tenant two months’ notice that you want to reclaim your property and that they need to move out. It doesn’t mean necessarily that the tenant has done anything wrong, it simply means you are giving them the legally required amount of notice for them to move out.
Many tenants will comply with such a notice, but you might be unlucky and have tenants who decide to ignore the notice. Under these circumstances you might have to evict them. While evicting a tenant is always considered a last resort, there are guidelines on exactly how to go about these. The website of the independent Property Ombudsman has examples of incorrect notices, to help you avoid potentially costly mistakes when serving notice.
Methods available for selling your tenanted house or flat
Once you are prepared to sell your investment property, the next step is figuring out which method of selling to use. The choices are generally selling with an estate agent, selling with an auctioneer, selling on your own, or selling to a fast home buyer. There are benefits to each approach, although some of the choices also have potentially large disadvantages.
Selling the property with an estate agent
This is often the slowest way to sell your tenanted home, as it might take many months or possible even more than a year before you receive a serious offer. And even after receiving an offer, there’s always the danger that the sale falls through. Unfortunately, an offer is not legally binding until the point of exchanging contracts, which happens very late in the process.
The estate agent takes care of creating a listing for your home, featuring descriptions of its main features, such as its total square footage and number of bathrooms, and photographs of the interior and exterior. They will advertise this listing online, in their office, and in local newspapers, and arrange viewings for potential buyers to come and tour the property.
When you use this method of selling, you will have to pay estate agency fees for the work that the estate agent does. The rate of commission that an estate agent charges will often be based as a percentage of the final sale price for your home.
Beware that some estate agents might try to elevate price quotes for selling your home, in a bid to secure your business so that they can charge you commission. You can avoid this happening fairly easily by asking multiple estate agents for quotes, and also looking on home sales websites like Zoopla to compare the current and past sale prices of tenanted houses of flats like yours in the same neighbourhood. Calculate the average of all these values and you’ll get a much more accurate estimate of your home’s price.
And some estate agents might also have no experience with selling tenanted properties that still have people living in them, which may mean that they’d struggle to know how to market and find a buyer for your flat or house. You should ask specific estate agents about their past success with selling tenanted properties, and avoid any companies that have never sold one.
Selling the property with an auctioneer
Auctioneers do a lot of work in trying to sell your home, as they will be responsible for putting together the listing, advertising it, and hosting the auction. In exchange for this effort they will charge sellers commission. Some auctioneers might let you pass on the duty to pay certain fees to the buyer, so it’s always worth asking whether this might be possible.
You can expect this method of selling to take at least a couple of months, starting with a wait of a few weeks between the day on which you list your home for sale and the day on which the auction occurs. And even if your property manages to find a buyer at the auction, the buyer will have an average of 28 days to complete the next required steps to complete the purchase.
When you sell at an auction, you’ll be asked to decide on a reserve price. This is the lowest amount of which you are willing to sell your home. Even if your home gets just one bid, that is deemed a legally binding agreement to purchase the property and the buyer could sue in order to enforce it.
You could be asked to decide between using the traditional or modern method of auction. With the traditional method, your property listing will be advertised for several weeks until the date of the auction, when bids will be placed on it. With the modern method, your listing will last for a set amount of time and people can place bids 24 hours a day, seven days a week until it ends.
Selling the property on your own
This can be a stressful way to sell your property, because doing so on your own will make you entirely responsible for every step of the process – everything from creating and advertising the listing for your home through to organising and hosting viewings, considering offers from buyers, and overseeing the exchange of contracts and receiving the proceeds.
It will usually require a lot of time, money and effort that might not be available if you have a full-time or even part-time job. This method of selling is often only recommended for those people that either have plenty of experience with the sale of properties, or that know friends or family members who know how to sell a tenanted home and are willing to help you with finding a buyer.
The only major benefit of selling this way is that you won’t have to pay any commission to a third party, so you are guaranteed to receive all of the sale profit.
Selling the property to a quick buyer
LDN Properties and other fast home buyers have the financial resources to buy your tenanted house or flat immediately, as they usually don’t have to wait to get approval for a mortgage to fund the purchase. This means they’re able to complete all the steps of buying your home, including paying you the proceeds and exchanging contracts, within a few short weeks.
Another great benefit of using a quick property buyer is that the reputable companies will never charge you any fees, unlike the commission you’d have to pay an estate agent or auctioneer. So you’re ensured to receive the full sale proceeds from whatever price the quick buyer offers for your property, which is ideal if your top priority when selling is to make as much profit as possible.
Fast home buyers are also known for being able to give homeowners competitive and speedy offers for selling almost any type of freehold or leasehold house or flat. That means a quick buyer won’t lose interest in making an offer to buy your property just because it has tenants.
And you can get additional peace of mind about the merits of selling your home this way thanks to an organisation called The Property Ombudsman (TPO), which writes policies that are crafted to shield homeowners against falling for scams in the quick buying sector. Every member of TPO must follow those regulations, which provides extra protection for homeowners.
If a quick home buyer either cannot prove that it is a member of TPO, or the company tells you that it refuses to join the organisation, you should be wary of selling your property to them because it could be a fraudulent business. It’s fast, free and simple to find out whether a business is registered with TPO by visiting the organisation’s website. On the left side of the main page, click on the “Find a Member” tab and then type in the name of a specific fast buyer. If they’re truly registered with TPO then you will be able to see their full membership details.
Selling a tenanted property: three frequently asked questions
At LDN Properties, we’ve worked with many homeowners to buy their tenanted houses and flats without incurring any estate agent fees. We understand that you might have questions about many aspects of selling your property, and that’s why we’re providing the following frequently asked questions, along with our answers to help explain the process of us buying your home.
It can cause the sale price of your home to be lower, however in some cases, it might even help to increase the value. If a buyer knows there is a current tenant with a lease and rent that they’ll take over, this can take the uncertainty out of a purchase.
You don’t have to, and as described above it can sometimes help your sale prospects by having tenants in the property. But if you want to wait until the home is empty, this gives you the chance to make upgrades that might further boost the value of the property.
This is rare, but it can happen, so if your tenants refuse to leave by the legally agreed upon move-out date then you will have to start eviction procedures. Consult with a solicitor before launching this process, as it should be a last resort.
Possibly, depending entirely on the approach you use for selling. If you opt for using an auctioneer or an estate agent then you can expect to pay commission, which will be deducted from the sale proceeds and therefore lower your profit. But if you use a quick home buyer like LDN Properties, you will pay zero fees.
Generally, using a quick home buyer such as LDN Properties is typically the fastest way to sell your home. These companies have the funds available to buy your property immediately, so the entire process usually takes just a handful of weeks. Selling by auction will often take at least a couple of months, and it might take a full year to sell using an estate agent.
You can find out whether a fast property buyer is trustworthy by asking whether they belong to The Property Ombudsman (TPO), which is an organisation that publishes rules to protect owners against fraud in the quick buying sector. You should be wary of trusting a speedy home buyer that either refuses to become a member of TPO, or that cannot prove its membership status.
