Can I sell a property when my tenant still lives there?
With mortgage rates increasing and Landlords tax obligations changing many are considering selling their assets, but can a Landlord sell when their tenant still lives at the property, and if they can, SHOULD they?
In an ideal world, Landlords want to sell their asset for the highest price to another Landlord, so their existing tenant can remain and they continue to receive rental income until completion day. In reality any Landlord looking for an investment wants to pay the lowest price, with a tenant in situ that is paying market rent. New landlords are looking at returns and yields – if it doesn’t work financially then they wont be pursuing the investment!
Whilst you can sell a property with a tenant in-situ you need to consider:
- Does the tenant keep the property clean and tidy so the property can be shown at its best? Will they be flexible and allow viewings?
- You are reducing the number of potential buyers if you are only prepared to sell to an investor? Consider the impact this may have on the price you achieve.
- If an owner occupier wants to buy the home then you will need to serve notice to your tenant. Are you confident they will vacate? Remember there is always a risk that they won’t!
- What is your relationship with your tenant? Be honest with them and understanding should they resist. You need them on board if you plan to sell whilst they live there.
What should you do NOW if you are thinking about selling at some point:
1) Make sure your tenants are paying the current market rent.
2) Check if your tenant is in a fixed term contract or a periodic. This will impact your ability to serve notice for vacant possession.
3) Ensure you keep property maintenance up to date. Not only will this keep your tenant happy and ‘on-side’, it will also help the fabric and look of the home, therefore making it more saleable.
4) Carry out regular inspections to ensure your asset is being looked after and nip any ‘issues’ in the bud asap.
5) Make sure all your paperwork and compliance is up to scratch! If you need to serve notice to your tenant, it may be invalid if you do not have the right documentation.
The above may seem daunting if you have not changed your tenants rent or carried out any inspections at the property for some time (or ever!). Compliance and paperwork is also complex and serving legal documents needs to be completed correctly. Don’t panic! We are here and ready to help with all of the above. We can coordinate a rent increase, carry out an inspection or complete a full property ‘health check’.
Please contact the office – we’ve been talking about property, helping with tenancies, moves and opportunities for over 40 years. Coordination and communication is key, so leave it to us!