As a landlord, you will be subject to certain responsibilities and will have a duty to your tenants. This is undeniable and should go without saying. However, you are only a human being, and if you decide that you want, or even need to sell your property, then it is well within your rights to do so. It can often be a sticky situation, however, when you wish to sell a property that has is currently being occupied by active tenants. Here, we’ll discuss a few of the more pertinent factors surrounding not only your decision to sell before your tenants’ lease is up, but the legalities of doing so and how you should go about going through with the sale with the least possible hassle and heartbreak.
Why Are You Selling?
There are many factors that might have had a part to play in your decision. More often than not, the most obvious reason is if you are currently going through financial difficulties or are in debt, and require the instantaneous cash boost that a property sale would grant. A change in circumstances might also have led to this decision. For example, if you and your partner were dual landlords of the property and you have now separated, if you partner has recently passed away and you don’t wish to carry on without them, or if you’ve decided to move abroad and liquidate your UK assets.
There’s also the possibility that you might simply have grown tired of being a landlord, either due to bad tenants, broken chains, or simply because you have reached retirement age and/or fancy a change. Of course, the actual reason behind the decision is inconsequential, but it’s good to have your reasons underlined and on hand so you can discuss them with your tenants, who might actually be more understanding than you’d think (if you’re particularly lucky and/or persuasive).
Can You Sell a House with Tenants Living In It?
The short answer is; yes, but it’s always an easier process if you can find a buyer interested in taking on the property as an investment rather than as their own home. This means your tenants can stay put and the only thing that will change as far as they’re concerned is where their rent money in going. Estate agents should be able to help you here if you don’t know anyone yourself who might be interested, and prospective landlords often like the idea of buying a property with existing tenants, as it means a lot of the ground work has already been done for them. This is also the best option for you, as you will continue to get rent payments right up until the deed is signed over. If, however, you wish to sell to someone who wants to live in the home themselves, you will need to give your tenants the necessary notice originally stipulated in your tenancy agreement, and take into account that they might not go quietly into the night if they have made a comfortable home for themselves.
The Legalities of Selling Your Property When You Have Tenants
This will depend on the tenancy agreement you both agreed on, so you should always think ahead when putting it together, if you think you might want to sell in the future. In no circumstances will you legally be allowed to simply turn up at the door and tell your tenants to pack up and leave, as this would be both legally and morally underhanded. If your tenants are under an assured short-hold agreement lasting less than a year, then we’d suggest you hold off on even thinking about selling the property until that lease is up. If you have a long term agreement, however, and there is no break clause in that agreement, then it can be more complicated. Especially if your tenants don’t want to move. This can be a drawn out and expensive process that will last as much as 5 months, and the tenants might be uncooperative, not allowing viewing to visit the home and refusing to keep the home in a fit state. They could even accuse you of harassment. As such, it’s always in everyone’s best interests to make sure both parties are happy, and from this point onwards, that’s exactly what we’re going to help you with.
How to Sell Your Property When You Have Tenants
You should always give your tenant first refusal on the property before you take it to the open market. This simply makes the most sense, as there is no reason to foster any bad will, and it will make the tenants feel less like they are being forced out of their own home. Regardless of who you sell the property to, you should also remember to keep the tenants informed at every step of the sale. To keep them sweet you might want to consider lowering their rent during the process, as their cooperation will prove vital. It goes without saying that, if they want to remain in the house for as long as possible, you should allow them to do so whilst the sale process is going ahead. If you keep them sweet, they might even be willing to help you out by clearing out of the house when you have a viewing, though you should always give them 24 hours notice. In fact, there might be a clause in the tenancy agreement that makes this mandatory.
Who Should I Sell To?
There are many different solutions here that you could consider, and here we’ll outline the most common and the most convenient.
If your tenants have been living in the property for a while and are perfectly happy with it, then they might be interested in buying it from you on so they can continue living in the property as owners or they can become landlords themselves. As you are legally obligated to offer first refusal to the tenants anyway, this might be a pretty straightforward and painless process, unless they can’t afford the property or can’t get a mortgage. Conversely, you might also want to consider friends or family members who themselves have considered becoming landlords.
A Fellow Landlord
If you’ve been working as a landlord for a while, chance are you’ve made some connections with peers who are also in the profession. In this case, you could ask around and see if any of your landlord friends or associates might be interested in taking the property off your hands. You might want to ask the tenants themselves if they know any landlords who they think might be interested.
An Independent Company
By this we mean a company who specialise in buying and selling homes. This option is always great for quick sales, and you might actually be surprised at the offers you’ll get, especially if you go with a reputable home buying company.
At An Auction
If you have sitting tenants that are kicking up a fuss this might be your best bet, as at auctions, many investors are willing to buy properties unseen.
This should probably be a worst case scenario, but there is always the option of selling to housing associations or local authorities that are in desperate need of housing in order to fulfil their legal obligations.
If you have taken nothing else away from this, it should be that creating a decent relationship with your tenants should be at the top of every landlord’s agenda, especially if you think you might ever want to sell your property. So keep your tenants on your good side. Take them out for a beer every once in a while, don’t nag them for rent and NEVER drop in unannounced. Abide by these rules, and hopefully, should you ever wish to sell your property, you should be able to do so with minimal fuss and no tears.