Maybe you’ve had enough of the landlord life, or it could be that you’ve got your eye on a different investment. Whatever the reason, it’s not uncommon for buy-to-let owners to sell up. But there’s one important question that needs tackling, which is how much notice should you give your tenants? We just so happen to have the answers below.
The importance of understanding your tenancy agreement
First things first, get that shorthold tenancy agreement out and give it a good read. It might not be the most exciting document around, but it’s the cornerstone of any relationship with your tenant. Within the lease agreement, there should be a section that discusses the sale of the property.
Some contracts might specify a notice period, while others may be void of any information altogether. In the latter case, you will either need to sell the property with sitting tenants or wait until the end of the tenancy to provide notice (more on both of those later).
What are my legal obligations and rights?
Before we dive into the details, it’s helpful to know that both you and your tenant have rights and obligations set by the tenancy agreement, which is often an Assured Shorthold Tenancy (AST). So even if you’re itching to sell, it’s not a case of evicting tenants as you see fit. Not only would that cause huge disruption to the tenants, but there are also ethical arguments to consider.
What are the common notice periods?
Now, let’s talk notice periods. These are the timeframes that landlords are required to give their tenants before they can legally take possession of the property for selling purposes. These times can vary quite a bit depending on where your property is located, as different jurisdictions have their own unique sets of rules and regulations regarding tenant notice periods.
England and Wales
In England and Wales, for example, the standard rule of thumb is that landlords are generally required to give at least two months’ notice before regaining possession of the property. This is currently known as a ‘Section 21’ notice.
It’s a no-fault eviction notice, which means that you don’t need to provide a reason for the eviction. But remember that this doesn’t necessarily mean your tenants will have to vacate immediately. They have the right to remain in the property until the end of their tenancy agreement or, in a more extreme scenario, until you obtain a court order for possession if they refuse to leave once the tenancy has expired.
You cannot enforce a section 21 unless the initial fixed period has passed and the tenancy is operating on a rolling basis. Furthermore, the section 21 is due to be scrapped soon and new laws will come in , which make provisions for eviction if selling the property.
New rules:
The renters’ reform bill which is estimated to become law in late 2024, will change things up. Once in force, all tenancies will be periodic (rolling) tenancies from day one. There will be no more fixed terms. Under the new rules, if you are selling your tenanted property you will be able to evict a tenant with a 2 month notice period, at ant point within the tenancy.
Scotland and Northern Ireland
Scotland and Northern Ireland, on the other hand, have their own unique rules. In Scotland, if you’re selling with vacant possession, you’ll need to serve your tenant with a ‘Notice to Quit’ alongside a ‘Section 33 notice’. This must give your tenants at least two months’ notice, but the notice period could be longer depending on the terms of your agreement and how long the tenant has lived in the property.
In Northern Ireland, the length of notice you need to give will depend on how long the tenant has lived in the property. If it’s less than five years, you’re looking at giving four weeks’ notice. If it’s between five and ten years, the notice period extends to eight weeks. For tenancies that have lasted more than ten years, you’ll need to give 12 weeks’ notice.
It’s worth noting that these are the general rules, and there might be exceptions or additional requirements. Consulting with a legal professional can also be helpful for ensuring you adhere to all the relevant regulations and laws in your jurisdiction.
It’s a bit of extra work, but it’s well worth it to ensure a smooth selling process and to maintain a positive relationship with your tenants.
How to give notice: best practices
You’ve got your notice period figured out. Now what? Well, you’ll need to put pen to paper (or fingers to keyboard) and write that notice. Make sure it’s formal and clearly states the intention to sell the property, the reason for the sale and the date by which the tenant should vacate the premises. It’s always bet to get legal support when issuing an eviction notice as it needs to be 100% correct, particularly if it ends up in court later down the line.
And remember, it’s not just about doing the legal bit. It’s also about maintaining a good relationship with your tenant. You don’t want any bad blood, so keep the communication open, honest and considerate.
Dealing with fixed-term contracts and month-to-month tenancies
Here’s where it can get a bit tricky. Fixed-term contracts and month-to-month tenancies are different beasts when it comes to selling your property. For fixed-term leases, you might have to wait until the fixed term is up unless there’s a break clause or the tenant agrees to leave early.
On the other hand, with a month-to-month periodic tenancy (also known as a rolling contract), you usually have a bit more flexibility. These types of tenancies continue monthly without any long-term agreement, giving both you and your tenant the option to end the agreement with a month’s notice.
Can I sell my buy-to-let with tenants still in the property?
Yes, even if a tenant has an agreement, you only need to wait for them to vacate the property if you wish to sell it vacant. However, there’s nothing to stop you from selling with tenants in situ. In this scenario, the person who buys the property becomes the new landlord and inherits the existing terms of the lease. For instance, if the new owner buys the property and the tenancy agreement has eight months left to run, they will need to keep the tenants in the property for this time frame, and then it would be their job to handle any eviction (if that’s what they wish to do).
If you are thinking of selling a property with a sitting tenant, it sure might be harder to sell it because in most cases you’ll need to find another landlord as the buyer. But there is another, faster solution. You could sell it to us. We buy properties with tenants in them all the time. We’ll buy any property in any condition too. We can send you a no obligation cash offer for your property. All you need to do is email us. Here’s our email address: sales@propertyrescue.co.uk
What are the pros and cons of selling a property with tenants in situ?
If you’re selling to another landlord, your property will likely be even more appealing. Finding tenants can be tricky, but a landlord buying a new buy-to-let with a tenant already in place can start receiving rental income as soon as they become the legal owner.
They won’t need to find a new tenant and, therefore, can maximise while saving on costs like letting agent fees, furniture and maintenance to get the property in order.
That’s the good news. The bad news is that you limit your buying market by selling with sitting tenants. Technically, you’ll only be able to sell to another landlord, as it’s unlikely a regular homeowner looking for somewhere to live will be happy purchasing a property that already has occupants.
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What happens with security deposits and prorated rent?
When it comes to selling your property, the financial aspects extend beyond just the sale price – they also involve the security deposit and prorated rent.
Security deposit
The security deposit is a sum that tenants pay upfront as a safeguard against damage to the property or a breach of the rental agreement. When the tenancy ends, it’s standard practice to return this deposit to the tenant.
However, you can make deductions if there are damages beyond normal wear and tear or if the tenant has left unpaid bills or rent. It’s important to provide a detailed account of any deductions made and why to maintain transparency and avoid potential disputes.
If you’re selling the property with tenants, the security deposit must be transferred to the new owner. Security deposits also need to be registered under the tenancy deposit protection scheme, and you’ll need to update the details and say that you’re no longer the landlord.
Prorated rent
As for prorated rent, this refers to dividing the rent according to the number of days the tenant has occupied the property during the month. If the tenant leaves before the end of the month and they’ve already paid rent for that entire month, you’ll usually need to return the rent for the unused days.
For example, if a tenant who pays £600 per month moves out on the 15th, they would be entitled to a refund of £300 for the remaining 15 days of the month. This ensures the tenant only pays for the time they actually occupied the property, which is both fair and legally sound.
What do I do if the tenant refuses to leave?
In cases where your tenants have received eviction notice but refuse to leave and vacate the premises, you’ll need to turn to the legal system for eviction proceedings. Trying to undertake the eviction process personally, such as changing locks or removing the tenant’s belongings, is considered an illegal eviction and could result in criminal repercussions. Therefore, you’ll need to go through the courts.
Frequently asked questions
Lastly, let’s address some of the common questions and misconceptions landlords often have when it comes to selling a property with tenants.
Can I sell a rental property with the tenants in it?
Yes, you absolutely can. Landlords are often on the market for new investments, and buying a property with good tenants already in situ saves them time and money as they don’t need to find new renters.
What if they are bad tenants?
Having bad tenants can be a nightmare, but it doesn’t have to stop you from selling your property. But you should let the buyer know the exact terms of the tenancy contract, as they will assume the tenancy agreement after completion.
What if I don’t want my tenants to know I am selling?
This can be a sensitive issue. If you’d rather keep your plans under wraps, some property buyers can be discreet about inspections and negotiations, limiting the interaction with your tenants until a deal is close to being made. Still, transparency is the best route here, and you should be open and honest with your tenants about your intent to sell. This is especially true if they still have a rental contract with you.
Can I sell a house with Section 8 tenants?
Yes, you can. Section 8 tenants, or those who receive housing benefits, can stay on even when the property changes hands. The new owners simply take over the contract and continue the relationship with the tenant.
How fast can you sell a rental property?
The speed at which a rental property can be sold varies. However, with cash home buyers, you might be able to close the deal as quickly as eight to 15 days, as they don’t need to wait for bank approvals and inspections.
Alternatively, you can sell your house fast with Property Rescue. Get a free, no-obligation quote in seconds and see how much you can get for your property, whether it’s tenanted or not.
Selling a property with tenants
Selling your property as a landlord needn’t be stressful as long as you’re transparent with tenants and abide by the terms of the rental contract. Remember, communication is key, and being considerate of your tenant’s rights and needs will go a long way.