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Can I sell my property with the Tenants in place?

Friday, 22nd October 2010

Categories: Lettings Property Management

Author: Peter Barry

Of course I can, it’s my property! That’s true, you can sell your property with a tenant in place, but as always there are a number of things to consider.

Firstly you must establish what type of tenant you have, a sitting tenant who has long term rights or a tenant on an Assured Shorthold Tenancy (AST). This will make a big difference to the possible outcome for you and your potential buyer.

A sitting tenant will have lived in the property prior to 15 January 1989 and their tenancy will be governed by the Rent Act 1977. If you have a sitting tenant in the property that you wish to sell you should take proffessional advice on how the value of the property is likely to be affected.

Now if you rent out your property on either a fixed or periodic Assured Shorthold Tenancy Agreement, life is much simpler, but it is still advisable to prepare carefully.

Selling a property with a good tenant in situ can work as a plus for investment Landlords, to know that they will receive a rental income immediately on completion can be very reassuring.

Being practical the first person to get on board is the tenant. You may feel this is my house I can do what I like, but remember, this is their home, and they are the ones who will either keep it tidy, showing well and give easy access for viewing, or on the other hand they could if really upset, keep the house in an untidy state, imply that the neighbours are difficult, suggest problems they have had with the house, all things to send your prospective buyer running.

So how do you get your tenant on side?

  • Firstly give them plenty of advance notice of your intentions
  • Go and discuss it with them personally if you are able
  • Find out what their intentions are, would they be hoping to stay for a long time in the house whether you own it or not; maybe they are getting ready to move on.

If they want to stay and you need them to leave how disruptive will this be

  • Are you able to offer them free relocation assistance
  • Would you consider covering their moving costs
  • Help them find a new property for nothing
  • Maybe offer a financial incentive

All these things have to be considered, the greater your need to sell the property, the more you will need your tenants co-operation.  You must not bully or harass them, make sure they are introduced to your sales agent, agree a viewing schedule and make your agent stick to it. Keep them in the loop, the more they know the more secure and cooperative they should be.

If none of that works, you may have to bite the bullet and delay putting your property on the market until you have vacant possession, this can take some time. If you have to sell with vacant possession remember don’t exchange and complete until you have vacant possession and know the tenant has left.

It can take months going through the courts to get possession even on the accelerated path and you could end up in a lot of hot water with your buyer if he can’t take possession when he should.

The basic rules for serving notice if you have an Assured Shorthold Tenancy agreement in place, are that a Landlord cannot give notice for possession to the tenant to terminate before six months of the tenancy have elapsed. The Landlord must give two months notice to bring the tenancy agreement to an end. If the tenant  does not leave you can start proceedings. If your tenancy agreement and notices are in order, you can then go for accelerated possession where you should get a court hearing within six weeks. Assuming you win an order for possession, the court will normally delay the possession for a further month to give the tenants time to move. At the end of a month you can then apply for an eviction date from the bailiffs, this could be another month, they will then contact the tenant and arrange to clear the property, depending on how busy they are this could be another fortnight to a month.  In reality if your rented property is situated in a congested area and the courts are busy, you would be lucky to gain possession of your property in under 4 months it could be as much as 6 months.

Remember, if the Tenancy agreements and notices are not correctly drawn up in the first place, the process of getting vacant possession of your property can be very lengthy and expensive.