Selling with a tenant

[Bluebell247]

Just reading a thread about buying with a tenant in situ.

We will be selling in about 6 months, when we've finished renovating our new house. We have what is essentially a self contained granny annex attached to our current house that we rent to a friend. We don't have a contract as we know her well and it's all done on trust.

She knows all about the sale and will move in with her partner when we sell up. She wants to stay until we move as she likes having her own space, but I have no doubts at all that she will move out.

She'd move before exchange but reading that other thread is making me worried it will put off potential buyers if she's still in place when we list/do viewings - but I don't want to make her leave earlier than is necessary.

WWYD?

Your friend will need to sign the contract to confirm she will vacate. Once you are nearing exchange I would ask her to leave just to be on the safe side. Just blame the solicitors saying it’s a requirement.

GET A CONTRACT SIGNED and witnessed

be very aware that today's friend may not be your friend come the moving day

I'd avoid at all costs

We rent out property, and always have a letting agent do the contract and also have legal cover to kick them out should they refuse to when the need arises.

@Bluebell247 per above this could go well, or it could go really badly. Even with a contract, assuming you are in the UK, the law falls firmly on the side of the tenant. If your tenant plays ball, happy days, but if they don't, you could be looking at anything up to a year in court battle to get them evicted. Without a contract, this will be longer, especially if you have taken a deposit without having it in a deposit scheme, and then there is gas safety, electrical installation reports etc. If you don't have those, then you can be fined or worse.

Any sensible buyer will need the tenant to have vacated before they exchange contracts.

Contract or new contract, I wouldn’t view a house with a sitting tenant unless I was possibly buying as an investment and wasn’t moving in myself. As your friend actually has somewhere to move into with her partner, I’m afraid I would be telling her that she needs to move before the house goes on the market.

If it's a recent thread, that might have been mine that you were on.

She wants to stay until we move as she likes having her own space

She may not have a contract, but she is a tenant so I would have thought that you'd need to be honest and upfront about that with estate agents and interested buyers. Also, despite not having a contract, if she's paying you any money, she might still have rights, although I'm not sure about that.

Her presence will likely put off would be buyers, so in your situation, I would absolutely tell her to be moved out by month 4 of your 6 month count-down to listing the house. 5 months at the maximum.

but I don't want to make her leave earlier than is necessary

I understand that, but why should a would-be buyer take the risk and believe that she is actually going to leave on time, when you yourself have doubts about this?!

Thanks all. It's good to get views from people who are detached from the situation. As I say, I'm certain she'll move without any issue - we've known each other 25+ years. But I can see that doesn't mean a whole lot to others.

The positive about her being in situ is that she keeps the place immaculate and the vast majority of the furniture is hers - it looks better when occupied.

There's also a small chance that any incoming buyers would actually want a reliable tenant.

They will try to negotiate the price down if there is a sitting tenant, especially one without a tenancy agreement. I would.

Their mortgage will have very different terms for a rental.

Yes YOU know she will move, but as a buyer I wouldn’t pay out for survey and searches on a property with a tenant in it.
I would need to see her gone.

You also need to think about the extra stamp duty on the annexe with the end of multiple dwellings relief - any purchaser is going to have to pay stamp duty (plus potentially the 3% additional property surcharge) on the combined value of both dwellings, instead of on the average cost of the two of them. Depending on your price bracket, this could easily double the stamp duty that needs to be paid, which is going to put some buyers off, or at least encourage them to push for a significant discount

How separate is the annex? If you asked her to move out before you started marketing, could you present it as just one property?

Honestly op, we are not in the same market as a couple of years ago. It will either put potential buyers off or they will want to knock the price. Has your friend got somewhere else to go? If not, she needs to start looking.

it depends. The house we bought had tenants, but they were final year uni students so we were confident they would leave.

We looked at others with families renting and when asked have they started looking were told "not yet, but they say they will". Didn't offer on that, no confidence they would ever leave willingly.

She is going to need to move at some stage - why would you compromise your sale, a huge transaction, to facilitate her moving a bit later to her Dp's?

Your loyalty could put you at a serious disadvantage here.

Exactly. The tenant is not a friend, its a business transaction.

Also if they don't want to move in with their partner now because they want more space....why will they not want their own space when you are about to exchange contracts? The fact they won't want to leave now is a big red flag.