What is a tenanted property?
A tenanted property is a house or flat that you own outright but that someone else is living in. They will usually have initially agreed to a short-hold tenancy agreement setting out the various terms and conditions of their tenancy, including the duration and monthly rent they will pay.
Most tenanted properties that are put up for sale are done so when the owner needs to sell for whatever reason but is still on good terms with their tenants and the agreement is being met.
However, there are instances of “in situ” tenanted properties, which commonly refers to a problem tenant. This might be someone who has fallen behind on rent payments or outright refuses to pay, or that you have tried to evict from the property with no success.
Is it possible to sell a tenanted property?
Regardless of whether you own a tenanted property with a good relationship with the people living there, or whether your tenant is in situ, it is still possible to proceed to sale. There are two main ways that you can sell such homes, both with pros and cons.
Selling your property and keeping the tenancy agreement intact
If you choose this approach then you will simply sell the investment property and the buyer will agree to take on the tenancy agreement until it runs its legally binding course. This can be a beneficial approach because it provides for a simple transfer of the home to the new owner without causing any significant disruption to the tenants.
One benefit of selling this way is that you’ll be able to continue collecting rent from your existing tenants, rather than trying to sell an empty home. If financial considerations are your most important, you might want to try selling this way.
A drawback of this option is that you will have to try attracting buyers while you have tenants actively living in the house. This can complicate holding viewings for potential buyers to see the property, and if your current tenants do not keep the home in a good condition then that could turn off any prospective purchasers.
Ending the tenancy agreement before selling
Under this approach you would wait until the home is vacant before selling, and would do this by ending the tenancy agreement – either waiting until it reaches its legal end, or waiting until you have successfully evicted an existing tenant.
If you sell the home while it’s vacant, hosting viewings and cleaning the property to make it more attractive for sale will be easier than with tenants living in it.
There’s one major downside of selling this way; you won’t be earning any rent from your vacant property, and depending on the route that you sell you might not have a buyer for many months. Again, if financial concerns are prompting you to sell, you might find it more sensible to try finding a buyer while tenants are paying you rent.
And if you have a problem with an in situ tenant that you need to evict, you’ll have to start a complicated process to give them a Section 21 notice to leave. If they refuse to vacate your home this could mark the start of a costly and time-consuming legal fight. Further details of this process can be found on the Evicting Tenants section of the UK government website.
What’s the best way to sell a tenanted property?
Just as you have options for whether to sell a property with your tenants in it or after they’ve left, there are also different choices for how you actually sell your home.
Quick property buying companies – These businesses focus on making cash offers to buy houses and flats of all types, including tenanted properties. They won’t typically charge fees, and they can help you to arrange a speedy sale at a generally competitive purchase price.
Auctioneers – You’ll get a definite sale date with this option, because a successful bid on your property on auction day is a legally binding purchase. Be aware that auctioneers will charge you fees for selling, but you might be able to pass these on to the buyer.
Estate agents – If you decide to sell this way, try to find an estate agent whose speciality is selling tenanted properties. A perk is that they’ll take care of viewings for you, but it can take a long time to sell through an estate agent, and they will also charge you fees.
Questions we’re often asked about selling tenanted properties
Many homeowners who have tenants living in their properties have asked us for advice on selling, and these are three of the most common queries we receive:
You can get a quick and easy initial rough price by searching on property websites like Rightmove or Zoopla that allow you to enter your postcode and get an idea of how much similar homes in your area have sold for recently.
Everyone’s situation is different, but generally speaking if you have good tenants in your home on a valid rental agreement then you can have the benefit of receiving rent payments while you seek a buyer for your home.
No. Indeed, other options might be faster and achieve you a better profit, including selling to a property buying company such as LDN Properties that make swift cash purchases of homes, or trying to sell it at auction and hope that it generates a number of bids on the auction day.
