If you want to sell your rental property, you have two options available – sell with vacant possession, or sell with the tenants in situ.
Selling with vacant possession
Selling with vacant possession means that the property is empty on completion day. The tenants have been given notice, moved out and the property is no longer occupied. The new owner can then move in or find new tenants.
If you want to go down this route, you could serve notice on your tenants straightaway. This makes viewings a lot easier, as you can have the estate agent show up at any time of day, without having to keep disgruntled residents in the loop. However, it also means that you won’t be drawing any rental income. If the property doesn’t sell straightaway, this could prove costly, as you’ll need to pay the mortgage and bills from your own pocket.
Therefore, you could tell your tenants that the property is on the market, ask them to co-operate with viewings, and serve them notice once an offer is accepted. The problem here is that the buyer might not be willing to wait. A notice period is typically two months, but if a new contract has recently been signed, it could be longer. Also, there is nothing stopping the tenants from moving out before you sell. Again, this could put you in a vulnerable position.
Selling with tenants in situ
So, how about selling with tenants in situ instead? This means the tenants continue to live in the property. You sell the property to the buyer and transfer the tenancy agreement and deposit. Otherwise, everything else remains the same. This can be a win-win situation for everyone. The new owner immediately has a rental income, the tenants still have a home, and you have sold your property.
Nevertheless, there are a few things to be wary of. Most notably, you are significantly narrowing your market by selling a buy-to-let property. This may or may not be an issue. Chances are that if you own a buy-to-let, the property has proven rental value and will be an attractive proposition to other landlords. On the other hand, it could increase the amount of time it takes to sell, especially if the rental market is slow. This might make you think twice if you are looking for a quick sale.
Selling a property with tenants in situ also requires good negotiating skills. Firstly, the tenants might not take kindly to the news that you plan to sell. Yet it’s vital to have them on board – otherwise they may up and leave, meaning you end up selling with vacant possession anyway. Be sure to arrange viewings at times convenient to your tenants. Also, assure them that their current tenancy agreement remains valid, even once the sale is complete.
Secondly, you need to convince a potential buyer that your tenants are ‘good’ tenants. An interested buyer may want references, credit checks and other proof that those living in the property are solvent and pay their rent on time. These are steps that any prudent landlord will take, so any problems will be quickly identified. If you do have trouble with your tenants, this could impact the sale.
How to sell with tenants in situ
Selling a property with tenants in situ begins much the same way as any other property sale. You inform the tenants of your intentions, put the property on the market (stating it comes with sitting tenants) and arrange viewings. However, things become a little more complicated once an offer is accepted. That is why you need to find a conveyancing solicitor with experience in these kinds of transactions.
While standard conditions of sale typically stipulate ‘vacant possession’, you will need a contract that permits the sale with sitting tenants. You will also need to navigate the other logistics involved when selling with tenants in situ, such as the transfer of the tenancy agreement and the deposit. A conveyancing solicitor from our team can handle this on your behalf, ensuring a smooth transition for all the parties involved.
To find out more about selling your buy to let property, please contact us at Garner & Hancock Solicitors for a free consultation. Call us on 020 3870 3676 or fill in the free online enquiry form and we will call you back.