It’s perfectly possible to sell a property while it’s being rented to tenants, but is it a good idea? We look at the pros and cons.
For landlords who want to sell, whether or not to give the tenants notice can be a big decision.
Selling property with tenants in situ
If you choose to try and sell the property with tenants in it, you will firstly need to check the terms of the lease agreement and see what arrangements are specified in respect of viewings. If the lease doesn’t mention viewings, then try and arrange things amicably with the tenants, making sure that viewings are at reasonable times that suit them.
If the tenants find things difficult, they may leave, taking the decision out of your hands. So, it pays to try and keep them happy if possible and keep them in the loop about progress of the sale as much as you can. Reassure them that a new buyer will still be bound by the lease they have signed and that their deposit will be protected.
Keeping tenants while a sale goes through means a continued source of income. If you choose to evict the tenants, it could be some months before a sale is completed, during which time no money is coming in.
Conversely, if the lease requires a lengthy notice period before the tenants leave then selling with them in situ could speed things up. It may also be hard to evict them if they have a protected tenancy.
If the sale is to a new landlord, then having tenants already in place is an attractive proposition. It means the new owner won’t need to engage a leasing agency, nor will they need to refurbish the property. They start from day one with a regular income.
Selling a vacant rental property
By selling the property with vacant possession you are inviting offers from a far bigger market.
You will avoid the need for providing extra paperwork to your solicitor, such as a copy of the lease, evidence that the rent payments are up to date, gas, electricity and fire safety certificates and evidence that the furniture is fire retardant.
Once the sale is agreed, the tenants will need formal notice of the transfer of ownership and their deposit will need to be passed to the new landlord and protected by way of an insured or custodial scheme.
If you do decide to sell with tenants in situ, it is advisable to use a lawyer who is familiar with the process and understands the paperwork required.
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