When selling a property, you generally want to appeal to as many potential buyers as possible. Whether you’re selling to a young family, a downsizing older person or a buy-to-let landlord, you want them to see the potential of the property to meet their needs. The blanker the canvas, the better.
As such, selling a property with sitting tenants can be a little problematic. It is harder for the buyer to make a clean start with the property, if there are already tenants living there.
Not only can this make it harder to find a buyer in the first place, but it can dent the figure you’re able to get from selling the property.
The number of landlords selling properties with tenants already in situ has increased in recent years. When Countrywide Residential Lettings ran the numbers back in 2015, it found that more than one in ten rental properties bought by landlords came with a sitting tenant, a fourfold increase since 2008.
With the various tax and regulatory changes introduced to the buy-to-let market since then by the government, it seems likely that this trend is continuing and landlords are increasingly finding tenant management a burden.
You would think that on the face of it buying a property with sitting tenants would be an attractive idea. The purchaser is basically picking up a ready-made business, with no set-up costs from the outset, as the tenant is already in place. You’ll also have a clear idea of just what rents the property can achieve, rather than having to make an educated guess. However, it isn’t quite so straightforward.
In truth, a purchaser taking on a property with a sitting tenant is taking a step into the unknown. Unless they are prepared to go through the tenant referencing process again, they will simply have to take your word for how good the tenant is.
You will need to ensure that the landlord has completed all of the requisite checks such as Right to rent and issued the tenancy booklet including the rent deposit certificate, prescribed information, valid gas safety certificate and EPC. You can read more about your obligations as a landlord here.
What’s more, unless the tenant agrees to sign an updated AST, then the purchaser is bound to uphold the terms of your existing agreement with them. The tenants are under no obligation to sign an updated AST, putting the purchaser in a particularly weak position.
On top of that, the purchaser may inherit a relationship with a letting agent which will then come with an exit fee to get out of.
All of this uncertainty and potential for added costs will hurt the property’s attractiveness to potential buyers, likely reducing what you will actually get for it.
The main factor of valuation will be what type of tenancy is in place and the rent generated from the property. Essentially the higher the return, the more attractive the investment may be to a property investor.
If the property has a protected tenancy where the tenant has rights to remain in the property, this will have a negative affect on the value.
Just to make things even more complicated, you may also have issues arranging viewings. These are simple enough when selling an empty property or one that you live in, but when tenants are involved it can be difficult.
They may not wish to cooperate with an estate agent, worrying that a sale could put them in a difficult position. What’s more, if you haven’t explicitly included reference to cooperating with viewings in the tenancy agreement, then they can refuse to let potential buyers in.
The law also prevents you from conducting lots of viewings, while tenants should be given notice of at least 24 hours of any viewing due to take place.
Of course, selling a property the traditional way through high street estate agents comes with its own range of costs and fees to deal with too.
Clearly, selling a property with sitting tenants can be a costly and stressful experience. It doesn’t have to be like that though.
At Open Property Group, we focus on buying all types of property especially houses and flats with sitting tenants. Just register your interest and you’ll have a no-obligation cash offer for your property within 48 hours, with no need to arrange a visit beforehand. We believe that we offer the fastest solution to selling a rented property.
There are no selling fees and we pay your agreed legal cost too. You won't be left with an empty property costing you money whilst you cover all bills and mortgage payments.
Enquire today to receive an instant offer for any type of property throughout England and Wales.
We buy property directly and you won't pay any agent's fees.