When it comes to selling your rental property, you have two choices – to sell with vacant possession or to sell with tenants in situ. Each option comes with its advantages and disadvantages, and it’s a personal decision which one is right for you.
Selling Your Property With Tenants In Situ
This entails selling your property while your tenants continue to live in it – you sell to the buyer and transfer the existing tenancy agreement to them. Any deposit may need to be repaid to you on completion and an allowance made from the sale proceeds to reflect this; the Buyer will need to submit the deposit to the deposit holding body following completion.
Selling with sitting tenants can work well for everyone involved in the transaction. Your buyer has a rental income from day one, your tenants continue to have a home, and you sell your property.
However, you may reduce the marketability of the property by selling your property as a buy-to-let as although it may be attractive to other landlords it could take a while to sell as many traditional buyers who wish to occupy will be put off.
How To Sell With Tenants In Situ
The first thing you need to do is let your tenants know what the plan is – that you’re selling the property and transferring the tenancy agreement across to the new owners. If they’re on board with it, be sure to arrange viewings at a convenient time for the tenants too.
When you put the property on the market, make it clear it’s being sold with sitting tenants.
Up to this point, the process is fairly straightforward. However, when you accept an offer, the legal aspects of the sale are complicated by having tenants in situ and you should use the services of a professional conveyancing solicitor with experience of handling this type of transaction.
The contract must allow the sale of the property with sitting tenants, and as part of the process both the tenancy agreement and deposit need to be transferred to the new owner. A specialist solicitor will ensure all the paperwork is completed accurately and on time. In some cases, the Tenant may have a right of first refusal to buy the property; this depends on the type of tenancy and the configuration of the property. Speak to your Solicitor about this at the outset. In addition, if the property is a house in multiple occupation (HMO) and is licensed or licensable, advice should be obtained from your solicitor on any issues arising.
Selling Your Property With Vacant Possession
When a property is sold with vacant possession, it means the property is empty on the day of completion. The tenants have been served notice and moved out, leaving the property unoccupied.
There are advantages to selling your property this way – your market size is far bigger, and viewings are easier to arrange as the estate agent is free to go into the property at any time to suit potential buyers. The downside is you could lose rental income. It may be advisable to obtain vacant possession before you exchange contracts for the sale.
To reduce the loss of rental income, you can inform your tenants that the property is on the market but only serve notice to quit when you accept an offer. This is risky, though, as not all buyers will want to wait for the duration of the notice period to run down, which is often 2 months or longer. Also, your tenants could decide to simply move out before you sell, leaving you financially exposed.
Helping You With The Sale Of Your Property
Whether you decide to sell your property with tenants in situ or with vacant possession, our experienced conveyancing solicitors are here to help you, to ensure that the process is smooth and efficient.
Your conveyancer will take care of all legal aspects of selling your property with or without sitting tenants, providing you with the peace of mind that the sale will be carried out in the best possible way. You will be kept informed throughout and any issues that arise during the process will be handled professionally and positively by your conveyancer.
Speak to HLF Berry
To speak to one of our conveyancing solicitors about selling your property with tenants in situ or with vacant possession, please contact us at our Chorlton office on 0161 860 7123 or email email@example.com or at our Failsworth office on 0161 681 4005 or email firstname.lastname@example.org