How to Sell a Rental Property with Tenants?

How to Sell a Rental Property with Tenants

Research shows that a significant number of landlords are now considering reducing their number of properties, so needing to sell a property while having sitting tenants could be a situation that landlords come face to face with in the near future. Though it is entirely possible to sell your property if you have tenants, and it is a problem that can be tackled with ease, it is important that you take precautions to ensure you’re protecting your tenant’s rights to the best of your ability. You should make sure you’re fully aware of tenant rights, your responsibilities as a landlord and best practices concerning these. 

Can You Sell With the Tenants in Situ?

One way to ensure you are protecting your tenant’s rights when selling your property is to consider marketing your property to other landlords as opposed to standard buyers. Having tenants already living in the property can work to your advantage when selling to fellow landlords, as it means that the new owner is already guaranteed an income and doesn’t have to worry about furnishing or marketing the property to new tenants. Selling your property to other landlords can take away a lot of the stress and energy of ending your contracts with your current tenants, plus it can be quicker, so if your tenants still have long fixed-term leases, they can keep them while you sell to another landlord.

If you do decide to sell to another landlord, you must inform your tenants. You must also ensure that their deposit is passed over and protected. The process for this will depend on which deposit protection scheme you use.

Can You Sell to the Tenants? 

Out of courtesy, before marketing elsewhere, you should always offer the property to the current tenants. Approaching them, being upfront about your plans to sell and enquiring if they have any interest in buying the property is best practice when dealing with tenants in situ, as it allows them a fair chance to stay in their current home before it’s offered to others. 

Notifying Your Tenants in Advance 

Along the same lines, if your tenants aren’t interested in buying the property, the best practice is to still keep them up-to-date with your plans and progress in advance of the end of their tenancy. They should have ample time to make other living arrangements and plans before having to vacate the property.

One way to make this work for everyone is to notify the tenants early but to allow their tenancy to continue for as long as possible, perhaps on a monthly basis at the end of their current tenancy, while the property goes up for sale. Usually, you can arrange viewings with the tenants still in the property, as long as you give ample notice. There may be something in your contract about how long this is, but it’s usually around 24-48 hours. Be aware: renters do have the right to refuse viewings if it isn’t in their contract. Building a good relationship with your tenants and protecting their rights is probably the best way to get them to want to help out with things like that — keep that in mind!

This means you get to avoid a loss of income while you keep collecting rent instead of having the property sat empty for months on end. After all, you don’t know how long the process of selling your property could take.

What Are Your Legal Responsibilities to Your Tenants?

The best way to know your legal responsibilities to your tenant is to check your contracts and tenancy agreements. Tenants will have the right to see out their current tenancies and fixed-term leases and have legal renters rights that you should be familiar with. 

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