Selling a Property with Tenants

Whether you are a landlord looking to release equity from your assets, or an investor wanting a hassle-free, fast house sale, knowing the rights of tenants and your legal obligations for selling tenanted property can make a big difference to the efficiency of your sale.

In this guide, our experts cover everything you need to know about selling a house with tenants. Whether you choose to sell to another landlord, list at auction or offer your property privately, this comprehensive guide will help you make informed, confident decisions, and ensure your tenants’ rights are safeguarded too.

Can You Sell a House with Tenants in it?

Yes, a landlord can sell a property with tenants in it. These tenants are referred to as ‘sitting tenants’ or, less frequently ‘tenants in situ’. If a landlord decides to sell, the sitting tenant has the legal right to remain in the property under an existing lease or tenancy agreement, even after ownership changes hands, but the landlord is also well within their rights to sell the tenanted property.

Selling tenanted property is very common, especially amongst buy-to-let investors. It can make the house sale a little more complex, and can also lessen your pool of willing buyers – but is completely doable.

If you are planning to sell a property with tenants, remember to:

• Review the tenancy agreement to understand your legal obligations.
• Communicate transparently with your tenants about your wish to sell (in some cases, your sitting tenant may even wish to continue living there and could buy you out).
• Consider the buyer’s perspective: many buyers opt for vacant properties which they can either move into themselves or ‘flip’ and sell on, while others may prefer tenants in place to generate a rental income. For more on how quickly you can sell a house after buying it, see our guide.
  

Auction House London specialise in selling properties with unique needs; from having sitting tenants, to property with lis pendens or even Japanese knotweed.

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Does a Sitting Tenant Have Rights?

Yes, if a landlord decides to sell a house with tenants, they have rights which must be adhered to.

Sitting tenants’ rights include:

• The right to remain in the property under current tenancy agreement. A change in ownership of the property does not automatically end tenancy. Tenants’ rights continue with the new landlord (Housing Act 1988).
• Landlords or agents must give at least 24 hours written notice before viewings or inspections. Tenants have the right to request another time, if the landlord’s proposed time is not suitable.
• The right to know the name and new address of the new landlord (Landlord and Tenant Act 1985).
• Tenants’ deposits must remain protected in a government-approved tenancy deposit scheme. It must be transferred to the new landlord, who is then responsible for returning it at the end of the tenancy (Housing Act 2004).
• Tenants cannot be evicted without proper legal notice and process. Most tenants must receive a valid Section 21 or Section 8 notice before eviction proceedings can begin.
• The right to live in the property without harassment or unlawful eviction. The Protection from Eviction Act 1977 makes it a criminal offence for any landlord – old or new – to try and force tenants out without following the correct legal steps.

Landlords’ Rights When Selling a House with Tenants In

Equally, landlords also have protections and rights throughout the process of them selling their tenanted property.

Landlords’ rights include:

• The right to sell the property at any time. A landlord is legally entitled to sell their property, regardless of whether it is tenanted. If there is a sitting tenant, the new owner becomes the landlord and must comply with their legal obligations, such as registering as a landlord.

• Landlords of tenanted properties have the right to arrange viewings, provided they give at least 24 hours’ written notice. Tenants can request an alternative time, but cannot unreasonably prevent access to the property.

• If a landlord prefers to sell the property without tenants, they have the right to serve a Section 21 notice, so long as all legal conditions are met. Landlords can use Section 21 notice to evict their tenants after a fixed-term tenancy ends (when there is a written contract) or during a tenancy with no fixed end date, also known as periodic tenancy. Serving this notice gives the tenant a minimum of two months to vacate the property. A landlord can apply to court to evict tenants after a section 21 notice ends. This starts the next stage in the eviction process. 

How to Sell a Tenanted Property

If you own a buy-to-let property and are looking to sell, whether to release equity, reduce your portfolio or simply to move on entirely, you have two options: sell the property with sitting tenants (as a tenanted investment), or serve notice and sell it vacant.

Both are viable options; selling with sitting tenants is likely to appeal to landlords seeking immediate rental income, whereas selling it vacant often attracts a wider pool of buyers. Take a look at our step-by-step guide on how to sell a tenanted property to sell with ease.

1. Review your tenancy agreement
   Check the type of tenancy and the terms of the tenancy so that you understand your legal obligations, as well as the rights of your tenants.

2. Decide whether to sell with tenants or without
   There are pros and cons to both options, but if you do decide to sell with the tenant, remember that your tenants will need formal notice which will lengthen the process.

3. Communicate with your tenants
   Keeping your tenants well informed means they are more likely to cooperate and make access for viewings easier. This can speed up the process of selling your tenanted property.

4. Choose how to sell
   Choosing to sell your property with tenants via estate agent, auction or privately should be considered at this stage. Whichever sales route you decide to go down, we recommend working with a specialist in tenanted property sales who can guide you through compliance, buyer vetting and communication with tenants. If you are interested in selling your property via auction, make sure to read our guide for helpful, expert advice.

5. Prepare the property for sale
   Even if tenants are currently living in the property, presentation of the property still matters. Work with the tenants to ensure that the home is well-maintained (including curb appeal as a consideration), tidy for viewings and that any urgent repairs are addressed. See our guide for expert advice on what not to fix when selling your home. A property in good condition is more attractive to buyers and can speed up the selling process.

Can You Auction a House with Tenants?

Yes, you can auction a house with tenants, and it is often a preferred method for landlords looking for a fast, reliable sale. Selling a tenanted property via auction can appeal to many buyers, whom the ready-made tenant and rental income would be beneficial to.

Remember that the tenancy agreement remains legally binding after the sale, meaning the new owner takes over the role of landlord with the tenant in place. Selling a tenanted property via auctions also offers fixed completion dates and less risk of fall-through, making them an efficient option.

To auction a property successfully, the tenancy details must be included in the legal pack. This includes documentation such as rent schedule, deposit protections schemes, a copy of the tenancy agreement, proof of the tenant’s right to rent (if applicable), and any notices served or received. Having this information in the legal pack helps attract serious buyers and ensures compliance with auction requirements.

Get a free valuation on your home today to see if selling via auction is the right route for your property, and if you accept the offer, we can set a completion date that suits your needs.

If you are looking to sell your tenanted house and are not in a position to wait for a future house auction, you may wish to consider a cash offer. Cash offers allow sellers a faster and simpler way to sell.