Selling property with a tenant - rules?

[Magicalwoodlands]

I’m going to sell a property with a tenant and I’m wondering if anyone knows what current rules are about notice periods, etc? Thanks.

It’s currently four months, though will revert to two months shortly. But unless you want to sell to another landlord, I’d advise giving your tenant notice and then waiting until they vacate before putting it on the market. Regardless of the notice period or what it might say in their tenancy agreement, your tenant can refuse access for viewings and isn’t legally obliged to vacate even at the end of the notice period, they can wait until you formally evict them through court bailiffs, which at the moment could take over a year. The property being tenanted will therefore put off a lot of buyers in the first place and you could end up in a lot of mess if you reach the point of exchange and you’re unable to guarantee vacant possession because your tenant won’t move out.

Tbh it’s worrying if you’re a LL and your key source of info is MN.

It is usual for LLs to get vacant possession of the property before marketing. This could take some time, because whilst most tenants vacate by the point if the end of their notice period, some don’t and the legal process to evict can take months or more than a year. It is this unknown end point that means you can’t really market your property until it is vacant. It is impossible to exchange with the property still tenanted as mortgage lenders won’t lend until can’t possession, and consequ rely most solicitors advice buyers that proceeding on a tenanted property is fraught with problems…..the mortgage offer might expire, chains may collapse etc. If you market the property before it’s vacant, you are asking buyers to hang on for an indeterminate amount of time….clearly most won’t want to do that and it often doesn’t just affect them but a whole chain.

Therefore, serve notice to your tenant, don’t expect them to vacate before the legal notice expires, and once the property is vacant start advertising. LLs cannot expect to receive rent and to be marketing at the same time. It is something LLs should know and factor into their financial calculations.

Not really. Things have changed very rapidly recently so finding info online can be misleading.

It’s four months, that’s all I needed to know

Definitely don't expect them to move out in 4 months. The rental market is dire because so many landlords are selling. Our local FB is full of very desperate families who have been served notice, and cannot find anywhere. Landlords are using the lack of housing to push rents up to ridiculous levels, that people simply cannot afford.

I know, it’s very difficult at the moment. However, I can’t hold onto a property indefinitely for this reason either.

It will go back to two months notice in October, but check the exact date online.
Near me quite a number advertise for investors only as tenants would like to remain. I bought a flat and kept the tenants - no void and made a decent 8% return from the start.

Oh that’s interesting - will check. Thanks

It might be the case that you can’t afford to wait to sell, it the reality is that you have to go with the legal processes and timescales for notice and evictions and accept these….they are the rights of the tenant and not determined by what you can afford.

You should expect a void time in usual selling circumstances, because it’s usual to get vacant possession before selling.
Yes, you can sell to a LL who is a cash buyer and doesn’t need a mortgage, if they want to keep the tenant and your solicitor does the necessary paperwork to make sure it’s all above board and both yourself and the tenant are protected. Selling to a LL who isn’t going to keep on this tenant though, won’t necessarily speed things up that much. They still can’t exchange until there is vacant possession and again, you cannot know when this will be for sure until it happens.

Seasoned LLs know that you don’t decide quickly to sell a BTL property and be done with it in a short period of time. They know that you need to factor in serving notice, waiting for that to expire and possibly going through eviction processes. This is all the legal right of the tenant. They know not to market the property until that’s all done. And they expect to have a void period of empty property when marketing it. So it’s not a speedy decision and often LLs will plan ahead to be off-loading a property at least a year ahead of doing it, by serving notice a year before they expect to actually complete on a sale. Those are the realistic timeframes. If you are thinking you’ll have liquidated your asset and have the cash in a few months, you’ve probably been misinformed or uninformed about the realities and will need to accept the time it takes.

You can serve notice now or wait until the October date when it will be 2 months. Do consider yore then looking asking someone to be out just before Christmas. The sooner you serve formal notice, the sooner they should be gone (although do t expect them to vacate before that notice expires…it is their property until then…and even beyond if they don’t go and you have to follow eviction procedures) . Even if youre interested in selling to another LL with the tenants in situ, I’d still serve notice. You might not find a LL buyer and really need them to move out so you can then market it to a non-LL. Having served notice, if you then find a LL buyer, you can ask the tenants if they’d like to stay on. It will be up to them. This whole process can work better if you’re selling the property with the same agent that is currently letting it. The agents are then go-between between you, the tenant and the buyer. If there is currently no agent involved in the lettings, it’s more difficult.

Most likely scenario is selling to non LL as there are more about. Start revising your timescales for offloading the property to be realistic, given the need to get vacant possession and focus on achieving that. Only then think about selling.

I am a LL.
I have bought a property with a tenant in situ before. They had already been served legal notice when I visited the property. The agents marketing the property were also the letting agent and knew the tenant was good, had paid fully for 2 years on time and wanted to stay. They were only marketing the property to LLs while the tenant was there. If there had been no interest, they would have waited until the tenant was gone to market it to anyone else. So the seller was glad to have me come along. I was a cash buyer without any chain and was able to complete in about 8 weeks. Without me or someone similar, the tenant would have still been in the property for 8 weeks minimum (assuming they mvoed out…but within their rights to remain and wait to be evicted…possibly taking another year) and the owners wouldn’t have been able to market it to anyone else until they had gone.

Personally, I wouldn’t have considered buying the property tenanted unless they had been there for at least 18 months with a proven record (from letting agent info not seller info) of paying in time. So you can consider your tenant and if they will look an attractive option for a LL or not. Quite often a LL prefers the existing tenant to go before sale and prefers vacant possession so they can start from scratch with their own tenant. All things to consider.

Wombat - I haven’t gone into the thought processes and decisions made over the last three to four months. What I wanted was a simple answer to a simple question.

I’m sorry if I sound narky, but it is one of the more annoying things about the property section if you are a landlord. Nearly every question you might have will have someone popping up declaring you ‘not fit’ to be a landlord because you didn’t know the answer. Then, when you decide not to be a landlord, that’s all wrong too!

I wanted to know the timescale. I have that answer. Thanks!

Okay. My comments followed on from you mentioning that you couldn’t hold onto the property indefinitely. I took that to mean you want a fairly speedy sale….and was just giving some info about why it can take longer to sell a tenanted property than is often imagined.

Yes, my initial comment in my first post was about needing to be informed to be a LL. You asked a very basic question and didn’t give any indication of whether you were an experienced LL or not, but the basic Q with no further context suggested you were not experienced or knowledgeable.

My later posts were not a suggestion about whether you are fit to be a LL or not…purely about timescales for selling.

Yes, I can see what you mean about more info than you directly asked for. I guess, that as this is a discussion forum, rather than simply an info provision site (lots of other non-discussion sites available where purely factual info without any comment are available) you will find that people want to discuss and expand, and if further context isnt given by Op, assumptions based on what has been said will be made, as part of other posters comments.

Are you on Landlordzone? Perhaps that forum would suit you well - the info might be more targeted and useful for you?

Sorry if my attempts to give more detail were not helpful as I intended but annoying.

I wish you well in selling your property.

I’m sorry @WombatChocolate - I probably sounded quite combative which wasn’t my intention but you know what MN can be like.

Holding onto property indefinitely is different in terms of months (a tenant being evicted - it hopefully won’t come to that) and years (holding onto property because starting the process is stressful.)

We have given this a lot of thought, though. I just wanted to be clear about the current rules re timeframes. The letting agent didn’t know which is

Appreciate you can't hold on to it forever, it's more just to be aware that it may take A LOT longer than the notice period. My landlord did not know that and made my life hell because I wasn't out within the 2 months. I really was trying my best to get somewhere and it was really embarrassing having to explain that the only time I would have to leave would be when the court bailiffs came. Otherwise you can get told by councils that you are making yourself intentionally homeless, and that means that if you haven't succeeded in getting another private rental, they won't see you as a priority and will not come to your assistance.

So it's just to say...bear the longer wait in mind when planning.

Of course and I’m aware of that.

Just the same, while it is possible that in six months time the tenant will be there it is also possible she will not. I have rented myself in the past, I’ve been on the receiving end of these notices and I know they are pretty horrible. But I can’t hold onto a property forever when I need to release the equity for my own needs either.

@Magicalwoodlands have you thought about putting the property into an auction whilst tenanted? Lots of experienced investors and LL looking to purchase with certainty of income. Maybe worth investigating.

I’d wait until the 2 months notice date comes in during October and give notice straight away.
Lots of LLs will be doing that. Or you could wait until the end of Nov, so you give notice which has a date if the end of Jan to avoid Christmas.

I’d then be working on a best case scenario of having vacant possession by Christmas/end Jan and marketing it then. If for some reason your tenant doesnt move out (perhaps in an area where there is little to rent at moment, or if they are a family and rents have risen and they can’t find something within price range or school area etc) then you’ll be looking at possibly another 6 months to year for eviction, but you can at least be planning for best case scenario.

You don’t mention the kind of tenant you have or rough area of country. I’d think some types of tenant and property and in some areas, you’re more likely to see the tenants move out more quickly than others.

Absolutely understand you can’t hang onto the property forever if you need to realise the asset. That’s why you need to give notice sooner rather than later….then the date of likely sale will also be sooner rather than later, regardless of whether the tenants move out within the notice period or don’t. Serving notice quite simply starts the ball rolling and until the ball starts rolling, you are no nearer to selling than you are now. The thing that is unknown, is just how long the ball will need to roll for before you can market with vacant possession after notice is given.

Hope it goes smoothly for you and for the tenant too. It’s always the case that your fortunes are tied up with each other’s.

It reverts to 2 months notice on 1st Oct.

The problem with selling to an existing landlord is that the tenant is paying below market rent. So it’s unlikely to be an attractive prospect.