Are you thinking about selling a tenanted property?
Well, following big reforms to the buy-to-let sector, more and more landlords are deciding to sell. In fact, a recent survey from the National Landlords Association suggests that around 20% of landlords plan to reduce their number of properties over the next year.
However, maybe you don’t own a portfolio of properties and have just decided it’s time to sell your buy-to-let. If so, selling your rental property, especially if it’s still tenanted, could be a tricky process. Here’s a quick guide to selling a property with tenants in residence and what to look out for.
Firstly, refer to your tenancy agreement
Providing you’ve done everything by the book, your tenants have signed a standard Assured Shorthold Tenancy (AST) and you are storing their deposit in a deposit protection scheme, you are obliged to serve your tenant at least 60 days notice. However, as most tenancy agreements have a fixed term of 6 or 12 months, you will usually need to wait until their fixed term is over before serving notice.
Once you know where you stand, your options are:
Keep your tenants and sell to another landlord
This way everyone’s happy, your tenants get to stay where they are. Selling a property is costly at the best of times so this way you’re not losing out on any rental income too, and neither will your buyer. When you sell to another landlord the tenancy agreement will still stand until the end of the fixed term, although the new landlord may want to draw up a new one. However, to get to that stage you’ll need to make sure viewings are possible (more on that below).
Serve notice to your tenants
Providing your tenancy agreement allows it and you’ve served at least 60 days notice to your tenants, they should move out at the end of the tenancy. The great thing about doing it this way is that you’re free to sell to either another landlord or a regular buyer.
If you’re lucky you might be able to complete just after your tenants move out, however nothing’s guaranteed in this game so you need to be sure you’re comfortable with losing out on rental income should they move out before that.
The other problem with this option is that if your tenants won’t move out, you may need to take them to court, a good reason for keeping a good relations with your tenants.
Viewings can be tricky when you’re selling a tenanted property. Firstly you need to check whether your tenancy agreement allows viewings at all, if it does, remember that you’ll always need to give at least 24 hours notice. When selling your own home, you have control over presentation for viewings, but that’s not the case here, by having a good relationship with your tenants though, they’re more likely to cooperate and have the property looking ship-shape for potential buyers.
Tip: You might want to get your tenants onside by compensating them and offering a reduced rent throughout the viewings process.
Don’t rule out asking your tenants if they want to buy
It may be a long shot but you never know what situation your tenants are in, they may have been saving up to buy and could be looking for a property just like yours.
There are of course some obstacles to navigate when selling a property with tenants in residence, but with some careful planning and good relations with your tenants, it may not be the troublesome experience you might expect.
Invite Agents is a brand new platform created to help homeowners find and compare trusted estate agents in their local area. Using our unique platform, you can request bespoke fee proposals from various agents and compare them using a range of tools/metrics, all from the comfort of your sofa.
Sign up to be first to hear about our launch and get more tips, advice and local property news.