Selling A Tenanted Property: Problem Tenant
Selling a tenanted property can be a challenge, especially if you’re dealing with a problem tenant. From non-payment of rent to disruptive behaviour, navigating the sale while managing these issues requires a strategic approach.
Selling a House with a Problem Tenant
Selling your rental property is challenging enough, but when you have a problematic tenant in place, the process becomes even more complex. Whether they are refusing to pay rent, causing damage, or simply being uncooperative, navigating a house sale under these conditions requires careful planning and legal knowledge. Not to worry, though; we will explore your options as a landlord, discussing the best strategies to achieve a successful sale while minimising stress and financial loss.
Understanding Your Legal Position
Before proceeding with the sale, it’s crucial to understand your legal rights and responsibilities as a landlord. The UK has stringent tenant protection laws, meaning you cannot simply evict a tenant whenever you want. Failure to adhere to these laws can result in legal action against you, potentially delaying the sale and incurring additional costs.
Review the Tenancy Agreement
The type of tenancy agreement you have in place will largely determine your options. Most residential tenants in the UK are under an Assured Shorthold Tenancy (AST). If the fixed term has expired, the tenancy may have become periodic, operating on a rolling monthly basis.
- A Fixed Term is a period of time that has been agreed upon. For example, if your rental agreement was a 12-month contract, the 12 months are the ‘Fixed Term’.
- A periodic tenancy is the legal name for a rolling tenancy with no fixed end date.
Section 21 vs Section 8 Evictions
If you need to remove a problematic tenant before selling your property, you will likely rely on one of two legal routes:
- Section 21 Notice: This is a “no-fault” eviction that allows landlords to regain possession without needing to prove tenant wrongdoing. However, recent legislative changes require compliance with deposit protection rules, energy performance certificates, and other conditions for the notice to be valid.
- Section 8 Notice: This option is used when a tenant has breached the terms of their agreement, such as not paying their rent or property damage. A Section 8 notice requires a court order if the tenant refuses to leave, which can be time-consuming and costly.
Selling with a Tenant in Place
If eviction is not a viable option, you can still sell the property with the tenant in situ. This route has advantages and disadvantages:
What are the Advantages of Selling with a Tenant in Situ?
- Attractive to Investors: Some buyers, particularly landlords, may prefer a property with an existing tenant as it provides immediate rental income.
- No Voids or Additional Costs: Keeping a tenant in place avoids potential loss of income while you find a buyer.
- Less Hassle: Selling with a tenant saves the stress of legal proceedings and possible disputes.
What are the Disadvantages of Selling with a Tenant in Situ?
- Limited Buyer Pool: Many buyers, especially owner-occupiers, want a vacant property.
- Lower Offers: Investors may negotiate for a lower price, factoring in potential tenant issues.
- Access Issues: Difficult tenants may obstruct viewings, making the sale more complicated.
Managing a Difficult Tenant During the Sale
If your tenant is uncooperative, there are several approaches you can take to address the situation effectively.
Open Communication
Engaging with the tenant professionally and openly can be reassuring for you both! Explaining your intention to sell and reassuring them that their rights will be respected can often ease tensions and give you confidence in managing the situation. Also, giving the tenant the first right to purchase the property is a show of respect. Even if they are not in a position to buy, the offer can go a long way.
Incentivise Cooperation
Offering financial incentives can encourage a tenant to cooperate with viewings or move out early. For example, paying back their deposit early can help cover moving costs or secure a new place to live. You could also offer to reduce the rent for the last few months of the tenancy. These incentives can make the tenant more willing to allow viewings or leave the property sooner, helping to speed up the sale process.
Use a Cash Buyer
If your tenant is actively obstructing the sale, a cash buyer or property investment company might be a viable solution. These buyers often purchase properties quickly, even with problematic tenants in place, though they may offer below-market value. At We Buy Any House, we have experience purchasing properties for problematic tenants. To read more, click here.
Legal Steps if the Tenant Becomes Hostile
If your tenant refuses access for viewings, causes damage, or otherwise complicates the sale, you may need to seek legal intervention to resolve the issue.
Enforcing Access for Viewings
The tenancy agreement should specify access rights for inspections and viewings. However, a tenant has the right to “quiet enjoyment” of the property, meaning they can refuse access if it disrupts their normal use of the property. This includes the right to privacy and freedom from disturbance. Persuasion and negotiation are preferable to legal action when dealing with this issue.
Taking Legal Action
If tenants are causing serious problems, you may need to pursue a possession order through the courts. This should be a last resort, used only after trying other solutions like talking to the tenant or mediation. A possession order legally allows you to regain control of your property by evicting tenants who are not following the terms of the tenancy agreement. While this process can take time and cost money, it gives you a formal way to remove tenants who are causing major issues, ensuring you can take back your property and resolve the situation.
Finalising the Sale
Once a buyer is secured, you are nearly there! Ensure all paperwork is in order. If the tenant remains in place, the new owner must be informed of the existing tenancy terms. If the property is sold vacant, confirm the tenant’s departure date and inspect the property before completion. This final step brings a sense of relief and closure to the process.
Conclusion
Selling a house with a difficult tenant in the UK presents challenges, but with the right approach, it is entirely possible. Understanding your legal position, maintaining professionalism, and exploring all options can help ensure a smooth sale while protecting your financial interests.
If you want to sell your tenanted property and know more about how We Buy Any House can help you, contact us today! We can provide you with a free cash offer and more information about how we can help you achieve your sale in a timeframe that suits you.
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