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For those that own a rented house, it can often be confusing what the rules are about selling the property, especially while there are still tenants renting the property. However, it is possible to sell the property even if the rental contract is still in force and there is no legal limitation to prevent this.


What Is a Tenanted Property?

A tenanted property, in short, is a property which has permanent tenants living in it. When looking to buy a house, buyers may come across the term ‘tenanted property’. This simply means the house up for sale currently has tenants living in it, on a permanent basis, usually for 6 or 12 months depending on the contract.


Can You Sell a Tenanted Property?

If you own a tenanted property (also frequently known as a buy-to-let property) it is possible to sell it, both as a tenanted investment or as a vacant property. However, selling it as a tenanted investment may limit your pool of buyers, as it will only appeal to investment buyers.


What Factors Should You Consider Before Selling a Tenanted Property?

Before choosing to sell a tenanted property, you might need to ask yourself the following questions:


What Is Your Tax Position?

Investment properties have different tax implications, namely capital gains tax. Depending on your particular situation, you may be eligible for certain allowances and exemptions in order to reduce this liability. Capital gains tax will impact the value of your investment and could impact whether or not you want to sell.


What Is Your Financial Situation and How Much Will It Cost You?

If you have a mortgage on your tenanted property, you may incur certain penalties if you decide to sell before the end of your mortgage term. Depending on how long you have left on your mortgage, it may work out to be very expensive in order to sell your tenanted property. However, bear in mind that selling your property takes a few months including conveyancing, accepting an offer and completing the sale so this is all time that you could be continuing to pay off the mortgage.


What Is Your Current Tenancy Agreement?

A tenancy agreement is a binding legal document between a landlord and a tenant. Just because you decide to sell a property does not mean that the tenancy agreement automatically comes to an end; instead, the new buyer can take over the role of the landlord.

Tenants have certain rights during their tenancy agreement. Before showing your house to prospective buyers, you should first check the terms of the tenancy agreement; most will specify whether the property can be viewed during the last month or two of the tenancy and whether the tenant is entitled to ‘quiet enjoyment’ up to a certain point.

Also, it is important to note that during the tenancy period, as a landlord you will still be responsible for fixing any issues in the property, even if it is listed for sale. For example, if the boiler breaks or a pipe burst, it will still be your responsibility to fix that on behalf of your tenants.

If you want to sell the property without the tenants living there (i.e. as a vacant property), you will need to consider what notice period you will need to give your tenant. It is not possible for you to ask the tenants to vacate the property out of the blue and you will need to follow a particular protocol. Check whether or not your contract has a break clause as this will impact how much notice you need to give your tenants.


Who Is the Current Tenant and What Is Their Situation?

If you are selling your property as an investment with a tenant in situ, it is important that you communicate this information property to the tenant; it will increase the chances of cooperation and understanding. In the case that the tenant is happy to stay in the property while you sell, it means that they will honour the rental agreement up until the property sale completion – this is good from the seller’s perspective as it means that they are not losing out on a key source of revenue during the sale process. It also means that if for any reason the sale falls through, you are still able to benefit from the tenants’ income.

From the buyer’s perspective, having a tenant in situ can also be a good things as it means that they have guaranteed rent incoming from day one. Additionally, for investment buyers, tenanted investment is usually a fairly straightforward and quick transaction to process.


What Are the Pros and Cons to Selling a Tenanted Property?

If you have a tenanted property, here are some advantages and potential drawbacks to selling one:

The Pros to Selling a Tenanted Property:

  • Desirable for potential investors
  • No need for expensive renovations
  • Continue receiving income through rent while the property is on the market


The Cons to Selling a Tenanted Property:

  • Renters may be uncomfortable with frequent house viewings
  • Potential legal obstacles if wanting to sell a property while tenants still living there
  • Tenants may influence potential buyers to not purchase the property