Selling a Tenanted Property: A Landlord’s Guide
Selling a rental property with tenants requires careful planning. This guide covers key considerations like lease agreements, tenant rights, and attracting buyers, ensuring a smooth and legal sale.
Is it time to sell your rental property? If so, you may be wondering what the process entails. Selling a rental property follows many of the same steps as selling your primary residence, with the key difference being whether the property is currently tenanted.
Understanding the Process of Selling a Tenanted Property
To better understand the process of selling a tenanted property, we will need to consider your tax position, the current tenancy agreement, and, of course, your tenant. Many factors can impact selling a tenanted property, and this guide will help you navigate the process.
Tax
If you are considering selling your rental property that has not been your main residence, you may be liable to pay Capital Gains Tax (CGT) on this profit of the sale. However, if your rental property has been your principal private residence at any time, you may be entitled to some private residence relief. The Government website also gives helpful advice on how to work out your gain.
The Tenancy Agreement
What is a tenancy agreement? Simply put, it is a contract between the landlord and tenants. Just because the property is being sold, the tenant does not necessarily need to leave; the new owner can become the landlord. Considering the benefits and drawbacks of selling your property with the tenant in situ or completely vacant is essential.
Landlords can evict a tenant to sell the property, and guidance varies depending on where you live. In England, you can issue a Section 8 or Section 21 to tenants with an assured shorthold tenancy (AST), which is the most common tenancy contract for selling your property. However, written notice is mandatory.
The Tenant: In Situ or Vacant?
Selling your property with tenants in situ has the benefit of continued rental income while the conveyancing is ongoing. The utilities and, if applicable, mortgage payments will continue to be covered until the property is sold. If the property is to continue to be buy-to-let, having tenants in situ is appealing to other landlords looking to expand their portfolio.
It is important to consider the tenants’ rights when marketing the property, especially when viewings are taking place. Check your tenancy agreement to determine if prior notice is needed. If not, you will be reliant on the tenant’s goodwill, so it’s a good idea to give sufficient notice that viewings will be taking place.
By vacating tenants from your property, you open the possibility to renovate before the sale, which can increase the value of your property. Selling your property vacant has the potential to draw a broader range of buyers. Think of this as a blank canvas; buyers can get a real sense of the property being sold without the tenants present. However, this is mainly dependent on your local market, and with a shortage of properties on the market now, you won’t be limited to selling your property in either case.
What are Tenants entitled to?
As mentioned, tenants are entitled to ‘quiet enjoyment’ of the property, which means they are entitled to deny access to the property for viewings or otherwise. The landlord must provide written notice before an inspection or viewing at a reasonable time of day to be able to access the property. If your property is being sold to a new landlord, the new owner cannot simply tell a tenant to leave; they must take legal steps to end the tenancy; otherwise, it is an unlawful eviction.
Dealing with a problematic tenant?
It’s not uncommon to have a tenant who can be challenging to deal with, and this can impact both the speed and success of selling your tenanted property. Here are some tips if you find yourself in this situation:
- Offer to sell the property to the tenants first (before putting it on the market). Although they may not be in the position to buy the property, it shows consideration for the change in circumstance.
- Some landlords offer a helping hand to tenants being evicted. For example, discounted rent in the final months or paying the deposit in advance to help with moving costs.
- Providing a character reference can go a long way to help your tenant secure a new place to live.
The Benefits of a Fast House Sale
- A quick house sale comes with various benefits when selling a tenanted property:
- Cash purchase so you will not have to worry about chain breaks.
- Fast sale, avoid ‘holding costs’, such as ongoing council tax payment.
- No hassle with the open market.
- We will buy the property with physical or structural problems.
Selling a tenanted property can be seamless with proper planning and tenant communication. Whether you sell with tenants in situ or vacant property, a smooth transition benefits you as a landlord and potential buyers. If you want a quick and hassle-free sale, We Buy Any House offers a fast, guaranteed process without needing real estate agents. For more information, get in touch with one of our property experts today. Let us guide you through every step of the journey for a quick and hassle-free sale so you can move forward confidently.
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