If you own a property that you rent to tenants, selling it might take a little extra effort. As well as finding the perfect buyer, you need to make allowances for the people renting it and decide whether to sell the property to another landlord or someone who wants to use it as their home.
Luckily, things don’t have to be complicated – and sometimes selling with tenants can be a good thing. This short guide should set you on the path to a smooth sale.
Selling to another landlord
If you have a fixed tenancy agreement and your tenants don’t want to move out, you can still sell your property to another landlord. In fact, having a tenancy agreement in place could make your property more attractive, as it’s already a guaranteed source of income.
The selling process works in the same way as usual, except that the renting documents, including the tenancy agreement, will need to be given to your solicitor and the buyers’ solicitor. There are a few more upsides, too:
1.Your tenants won’t have to move
If you sell your property to another landlord, your tenants won’t need to move out. This solution is a win-win situation, as there’s minimal disruption for everyone. In this scenario, the tenancy agreement is transferred to the new landlord and all the terms stay the same for the remainder of the tenancy agreement.
2. You won’t lose any income
If you own a property with tenants, you don’t need to ask them to leave. It makes much more sense to both the seller and buyer to keep renting it out – and it means you won’t lose any of your income up to the date of completion. The buyer will also start earning an income straight away, and they don’t have the worry of advertising for new tenants or losing out on rental money.
Selling to other types of buyer
You don’t need to sell your house to an investor or landlord. When your property goes up for sale, it’s on the market for everyone.
If you sell to someone who’ll live in the property themselves, the process is a little more complex as it means that your tenants will need to leave. If your agreement is a shorthold tenancy, you can give notice to your tenants at any time. This kind of notice is a 60-day Section 21 notice. When this notice has been given, you can market your house for sale and tell buyers the house will be empty when they move in.
Tenancy deposit protection
All landlord must put their tenants’ deposits in a government-backed tenancy deposit scheme, so returning the deposit should be fairly straightforward. These schemes ensure that a tenant’s deposit is kept safe; simply return all the deposit they’re owed when they leave the property. It’s an easy task, but an important one to put on your to-do list.
Organising viewings
Some tenancy agreements state that, if you put the property on the market, the tenants must reasonable accommodate viewings. Your tenants will still need 24 hours’ notice in writing. This should be easy to organise, but it does mean you won’t be able to conduct viewings ad-hoc, so let buyers know that this is the case.
If viewings aren’t mentioned in your tenancy agreement, you won’t be able to show prospective buyers around your house without express permission from your tenants. Although it’s not often a problem, there’s a small chance your tenants won’t be happy to accommodate these viewings. It’s important that you keep channels of communication open and work towards compromises that suit everyone. Some landlords offer incentives to smooth the way, such as reducing the rent for a month to make up for the inconvenience. The better your relationship with your tenants, the more likely they’ll work to find a solution with you.
Potential problems and solutions
If you want to sell your house to a buyer who isn’t a landlord, the property will need to be completely vacant when the keys are handed over. This could be a problem if you have tenants that don’t want to leave.
When a buyer purchases your property, they become responsible for the tenants and the tenancy agreement you created with them. However, the new buyer is not able to cancel this and doesn’t have the right to evict the tenants. Therefore, it’s highly unlikely a ‘normal’ buyer will want to complete the sale with tenants still living there.
Usually, you can only evict a tenant during a fixed term if they break a clause or if they breach the tenancy agreement – for example, by not paying their rent. Any other situation can be a complicated process so it’s best to try and get your tenants on side.
Occasionally, you may be able to sell your home to the tenant. While many people rent because they can’t afford to buy a house, it’s possible that your tenants have been saving up to buy. You may be able to negotiate some terms with a bank or building society who could offer some attractive terms to your tenants. It’s a long shot, but it’s the perfect solution for some.
If you need more advice about selling your rental property, your local Yopa agent is here to help.
