Selling a tenanted property can be complicated.
You must consider tenants’ rights and negotiate with buyers who are likely more interested in empty properties.
So, how exactly can you do this simply and quickly?
Keep reading to find out.
What is a tenanted property?
A tenanted property is a house that still has renters living in it.
Selling this type of house with the tenants in situ is possible. However, it is more difficult than selling without tenants.
Ultimately, unless you can sell it to another landlord, it will likely devalue the property.
The impact of types of tenancy
There are different types of tenancy contracts. Potential buyers view these in different lights.
For example, if the new owner can evict the renter immediately, it will be easier to find a buyer.
On the other hand, if an assured tenancy is in place, the price people are willing to pay for your house may significantly decrease.
(An assured tenancy means the renters have the right to stay there indefinitely).
How common are tenanted properties?
According to the latest figures, 19.1% of properties in the UK are privately rented. This figure equates to around 4.6 million individuals.
However, this number does not include people who rent through a public organisation, such as a housing association.
According to a 2022 report by Property Mark, 73% of agents reported an increase in tenants renewing their rental contracts over the last year.
Many housing experts think this is because buying a property is becoming less affordable. The gap between the average salary and the average house price is widening.
Location matters
Renting a house is more common in some parts of the country than in others.
For example, if a major university is nearby, you will likely have lots of students renting in the area.
Similarly, in expensive cities like London, specific neighbourhoods have a high percentage of renters.
Advantages of owning a tenanted property
Consistent income
When you own a property with tenants living there, you have a monthly source of income (if they meet their payments).
Safety net
If you have renters living in your property under a contract that enables you to evict them at any time, this also gives you a ‘safety net’ for complex situations such as:
- lose your job and cannot afford the place you are currently living in
- if you are evicted (or repossessed) from your current home
Long term investment
As the months pass on a rented property, it will also typically increase in value.
This means that when you do eventually decide to sell, you can make an enormous profit in addition to the rental income.
Disadvantages of owning a tenanted property
Potential risk
On the other hand, there is no guarantee that your tenants will meet their monthly payments, which could leave you in a difficult position if you have a mortgage on the house.
In the short-term, you’ll either have to meet the mortgage payment yourself, and/or evict your sitting tenant.
Time and costs
There is also a lot of time, costs and stress associated with owning a tenanted house.
When appliances break in the house, it is your responsibility to organise fixing them. Likewise, you will likely need to take out insurance that protects against claims.
Your house may experience some wear and tear, too, which you may need to fix later once the tenants have moved out.
Managing multiple properties
Owning a tenanted house only becomes possible if you have another place to live that suits your needs.
This can put you in an unstable position, though, because if you are renting another house, you may be evicted at any time.
You will need to manage your finances carefully so that you can always afford to meet both your payments—the mortgage on your rented house and any payments on where you’re living.
Need to live near the tenanted property
In an ideal world, your tenanted house will be nearby, so you can drive there quickly and handle any situations yourself when needed.
Can I sell a house with tenants still living there?
Yes, you can sell a house with tenants still living in situ. However, they have certain rights that you must adhere to throughout the selling process.
Firstly, you should give your tenants at least 60 days’ notice that you are selling the house.
Check whether your tenancy agreement outlines how much notice needs to be given, as it may be less or more than this.
You are required to give your tenant at least 24 hours’ notice before any viewings take place.
Ideally, you would communicate clearly to your renter throughout the selling process. As a result, they would be more likely to cooperate.
If your renter becomes ‘problematic’, this will count against you with any potential buyers. This could result in you getting a lower figure for the property.
Notice periods
If the fixed term contract has ended, the contract is periodic (it rolls over each month for example).
If a tenancy contract has no fixed term, you need to give tenants at least two month notice.
How can I sell a tenanted property?
Selling a tenanted property on the open market using an estate agent is rare. The typical buyer through this channel intends to live in the property themselves.
However, there are other ways to sell a tenanted house.
Cash buying companies will purchase your property for an up-front lump sum, which will be slightly below its typical market value.
If it’s a trustworthy organisation, you can complete this transaction within 7 days and then move on to the next phase of your life with the money in your account.
You can sell tenanted houses at a property auction, too. These auctions have many developers in attendance, who will happily take over the house with a renter still living there.
Remember that the terms of your tenancy agreement will impact the price you receive for your property.
How much will a tenanted property sell for?
You often receive around 15% less than the market value for a tenanted property.
This figure could drop even lower if the tenant is problematic or the house is in disrepair.
The terms of your tenancy agreement will majorly impact the price you receive.
For example, whether the new owner can change the rent payments or evict your tenants immediately will have a significant impact.
Speak to an independent valuer who can provide an informed, up-to-date opinion on how much you could sell your house for.
Sell your house fast with We Buy Any Home
If you’re looking to sell a tenanted property, We Buy Any Home can help.
We are chain-free cash house buyers who can purchase your tenanted property up-front and quickly, without hassle or stress.
Fill in our enquiry form below if you want a cash offer for your house.
