Buying a property with sitting tenants has many advantages, but it’s not entirely straightforward. And if you want to sell a property with sitting tenants, there are certain matters you should consider before you put it on the market.

In this blog, we look at some of the points landlords should consider before selling or buying property with tenants in situ.

What do we mean by sitting tenants?

A sitting tenant is one who is already living in the property when it is sold. In legal terms, a sitting tenant is strictly someone who has lived in the same property since 1989 or earlier. However, the term “sitting tenant” is now commonly used to mean anyone who is renting a property at the time it is sold. 

What should I do when putting a property with a sitting tenant on the market?

If you own a property with tenants in it and you want to sell, there are a number of matters to consider first. Selling a property with sitting tenants is more complicated than selling a vacant one, so be prepared!

1.        Double-check your landlord paperwork

Double check that all the aspects of the tenancy were correct in the first place. From up-to-date energy performance certificates to HMO licenses, all your paperwork needs to be in order or your sale could fall through. For example, you may have been happy with an informal agreement between you and the tenant, but such informality could be seen as a risk by your buyer’s mortgage lender and jeopardise the sale. 

You can find out what documents landlords should hold in our blog here.

2.        Be prepared to work with a specialist conveyancer

Selling a property with tenants in situ is more complicated than a regular buy-to-rent transaction. For this reason, only certain conveyancers will handle the sale and you might not have the luxury of instructing one you’re familiar with. 

3.        Be prepared for a slower sale

Not all landlords like the idea of buying a property with tenants in it. The tenants are not the ones they chose and the new landlord might be taking on all sorts of problems. For this reason, you might find the property takes longer to sell than a vacant one does. If this carries financial implications for you, try to plan accordingly. 

4.        Consult the tenancy agreement before booking viewings

Most tenancy agreements state that the landlord should give 24 hours’ notice to tenants before entering the property. This applies to viewings too, so be ready to postpone eager potential buyers and make time to inform your tenants. 

Should I buy a property with a sitting tenant?

If you’re keen to become a landlord and you see a property for sale with a sitting tenant, think carefully before you take steps to purchase it.

Firstly, check whether the tenants will still be in the property when it comes into your possession. It might be that their tenancy will have ended by then, and your new property will be vacant. 

Advantages of buying a property with a sitting tenant

On the plus side, a property with sitting tenants means you don’t have to advertise or find tenants yourself. Everything is in place – even the tenancy deposit – and all you have to do is change the name on the tenancy agreement.

Disadvantages of buying a property with a sitting tenant

On the other hand, you don’t know what you’re taking on. It’s a good idea to ask why the landlord wants to sell the property. The tenants might have a history of getting behind with the rent, or not take care of the property as well as you would like. For this reason, it can be difficult to get a buy-to-let mortgage for a tenanted property. 

It’s also important to find out if the tenancy arrangements fit in with your own business plan. For example, the current tenants might have been there since before 1989 which would mean you couldn’t evict them unless they broke their tenancy agreement. 

Fortunately, these matters will all be clarified during the conveyancing process. However, it’s a good idea to find out as much as you can in advance so there are no surprises later to undermine the sale. Ask the estate agent, the letting agent and the tenants – get as much information as you can. 

Buy and sell Guildford properties with tenants

If you have property to sell – with or without tenants! – Cobbles would love to help. Our experienced team have great knowledge of the Guildford area from both a sales and lettings perspective. Explore our site to find out more, or get in touch on 01483 457 000.