Selling a house with tenants

Is selling a house with tenants a good idea? What potential pitfalls do you need to beware of and is there a better alternative? We take a look...

Rebecca Gamble Consumer Journalist

If you’re selling a Buy to Let property, you’ll need to decide whether selling a house with tenants is the right option. We look at the pros and cons of selling property with tenants in situ, how to go about the process and whether getting short-term tenants while selling could offer the best of both worlds.

Pros and cons of selling a house with tenants

To decide whether selling a house with tenants rather than evicting them and selling with vacant possession is right for you, you’ll need to weigh up the pros and cons.

The benefits of selling a house with tenants

There are a number of advantages of selling a house with tenants including:

• No loss of income: When you’re selling a house with tenants, you’ll keep receiving rental income until the sale completes.
• The buyer gets a guaranteed yield: Similarly, when an investor is buying a house with tenants in situ they will start getting rental income from day one.
• It saves time: You won’t need to go through the process of evicting your tenants and waiting for them to move out so that you can sell the property vacant.
• You won’t need to renovate: When you sell a property vacant after you’ve been renting it out, you’ll often need to redecorate. But by selling a house with tenants in place, you can sell it ‘as is’ and save money.
• Keeps your property secure: When a property sits empty, there is more chance of it being damaged such as through vandalism or a leak going unnoticed.

Drawbacks of selling a property with tenants

However, there are some downsides of selling a house with sitting tenants that you’ll need to consider.

• Your pool of buyers will be more limited: When you’re selling property with tenants in situ, it’s likely that your potential buyers will be limited to other landlords. As a result you may get less for your property than if you sold it with vacant possession.
• Added complexity: When you’re selling a property with tenants, there are more administrative hoops to jump through. For example, the tenancy agreement will transfer to the buyer, so you’ll need to ensure the buyer gets this via your conveyancing solicitor, along with other relevant documents such as the EPC and gas safety certificate.

What is a sitting tenant?

A sitting tenant (also called a tenant in situ) is someone who lives in a rented property that is being sold.

How much does a sitting tenant devalue a property?

This will vary significantly. For example, if you have problematic tenants who refuse viewings, having sitting tenants could significantly devalue your property. But if you’ve got good tenants, the property generates a good yield and it gets a lot of interest from potential landlords, the impact could be positive.

Alternatives to selling a house with tenants

So what’s the alternative to selling a house with tenants?

Evicting your tenants and selling with vacant possession

If you’ve weighed up the pros and cons of selling a house with tenants, you may choose it’s not right for you. In order to sell your property with vacant possession, you’ll need to follow the correct process to evict your tenants. Once they have moved out you’ll be able to sell the property with vacant possession.

Can you get short-term tenants while selling?

However, selling a house with vacant possession doesn’t mean you have to miss out on rental income if you think a short-term let is possible whilst you sell your home.

Our partners at Flyp.co offer a service where they will handle the sale of your vacant property and arrange a short-term let for you at the same time. They’ll also manage all the viewings and ensure that the property is cleaned and viewing-ready at all times.

Plus, they also offer a transformation service if the property needs sprucing up or staging to help it sell (at no cost to you). Flyp’s selling service also provides access to multiple agents at a sole agency fee, so they are worth comparing against other local estate agents.

Get in touch with our partners at Flyp to find out more

How to sell a tenanted property

If you’ve decided to press on with selling a property with tenants in situ, there are different ways to go about selling.

1. Using an estate agent

You may opt to sell your property via the traditional route of using an estate agent.

By selling a house with tenants with an estate agent:

• You’ll reach the widest possible audience because most people looking to buy a property will be searching on property portals and estate agents’ websites.
• A good estate agent should have local knowledge and expertise to value your property accurately. Read our guide How much should I sell my house for?
• Plus, they should be proactive in reaching potential buyers.

However, it’s important to make sure you choose an estate agent that is experienced in selling a house with tenants. Find out what else to ask in our guide Top tips: Key questions to ask estate agents when selling. You’ll also want to make sure you don’t overpay in estate agent fees. Read our guide on Estate agent fees and how you can save.

2. Selling at auction

If you want to sell the property quickly, you may consider selling at auction instead of using an estate agent.

The process is extremely quick. If there’s a winning bid, contracts are exchanged on the day and the buyer is legally committed to the purchase.

However, you’ll limit your pool of potential buyers, so it’s likely that you’ll achieve a lower sale price. And auction fees are usually more expensive than estate agent fees.

Find out more in our guide on How to sell your house at auction. You might also consider selling via an online property auction, which work a bit differently. Find out more in our guide on Buying and selling with online property auctions.

3. Quick house sale firms

If you’re searching online about your options of selling a property with tenants, you’ll probably come across quick house sale firms offering to pay cash for your property. However, think carefully before proceeding – quick house sale firms will typically only offer 75% to 80% of your property’s value and there are other potential issues with them too. Find out more about what to watch out for in our guide on Quick house sale firms: what to beware of.

How can I improve my property with sitting tenants?

Making improvements to your property with tenants in situ before you put it on the market may be very difficult to do. Alternatively, you may choose to evict your tenants so that you can redecorate the property and sell with vacant possession. However, while you may be able to sell your house for a higher price, you’ll miss out on rental income.

But as we explain above, there may be a third way. Consider speaking to our partners at Flyp.co. By using their service, you’ll sell with vacant possession but they’ll arrange a short-term let for you at the same time so you can still have cash coming in.

Plus, by using their transformation service, they’ll make any necessary improvements to your property to help it sell faster (at no cost to you). 

What are the potential problems when selling a house with tenants in the UK?

Unless your tenancy agreement includes specific provisions, tenants aren’t obliged to allow visits for valuations, viewings, photographs and so on. However, the chances are your tenants be much more cooperative about the process if you handle it well and can show you’ve got their interests in mind:

• As a landlord, you should look at it through your tenants’ eyes: they are probably worried about the stability of their home and this can be made worse if it’s handled badly. So, tell them as soon as you can that you’re planning to sell. Ideally do this in person, although you should follow up in writing. And offer reassurance that their rights and tenancy agreement won’t be affected.

• Can you offer them first refusal to buy the property? It may be fairly rare but it does happen and it would make the process much smoother.
• You could try to aim to keep viewings to a minimum by holding group viewings and ask your tenants when is best for them.
• You could offer a reduction in rent to acknowledge the disruption and set out what you’d like in return, such as keeping the place tidy and allowing viewings. Put this in writing.

What rights do sitting tenants have?

This will depend on what type of tenancy they have. Find out more here.

My tenants are in arrears – can I sell in situ?

If your tenants are in rent arrears or if there are other disputes, it’s not usually advisable to selling the property with tenants in situ.

Selling a house with tenants: a checklist

When selling a house with tenants in the UK there is additional paperwork you’ll need to supply as part of the sale including:

• The signed tenancy agreement
• Evidence of your tenants’ right to rent
• The inventory
• Gas and electricity safety certificates
• Details of deposit protection
• Condition report and details of any repairs

Is it hard to sell a house with tenants?

This depends: if you’re selling a property with great, long-term sitting tenants, it may make it easier to get a fast sale to a fellow landlord. However, if you’re selling a house with tenants and there have been problems with rent arrears or other disputes it will usually make it harder.

How much notice do I need to give my tenant when selling a house?

This will depend on your tenants’ tenancy type. Find more information here.

Frequently Asked Questions