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Selling Your Tenanted House in Birmingham
While lots of homeowners wait for their tenants to move out – or even ask them to leave – before selling the property, this isn’t always possible. In Birmingham, there are currently over 2,500 properties listed for rent, and this is just a small snapshot of how many tenants currently live throughout the city.
It is important that you follow all the correct procedures, and respect everyone’s rights, while selling a tenanted property. You may also need to accept that potential buyers will offer less on the house if there is someone already living in it.
Alternatively, a cash house buyer can complete the deal within a couple weeks, while making sure that you only need to carry out one viewing of the property, instead of arranging dozens of different viewings for lots of different people.
Sold.co.uk is an experienced online estate agent that has sold tenanted properties in each part of the city: from Erdington to Bearwood, Sparkbrook to Shard End, and everywhere in between.
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How Do You Sell A Property With Tenants in Situ?
If you have tenants living in a property that you own, it is usually desirable to ‘keep the peace’ with your renters while selling your house. Typically, if everyone communicates clearly and regularly throughout the process, it creates a smoother and less stressful process.
The average property sale price in Birmingham over the past year is £274,000. However, when tenants are still living in your property, you will likely receive an offer slightly lower than this.
The type of tenancy agreement that you have in place will also make a difference to the buyer. For example, different Assured Shorthold Tenancies (the most common type in the UK) may have varying conditions on when and how rent is reviewed, or which bills the tenant is responsible for.
As a second example, if a Joint Tenancy Agreement has been signed, then there are usually more people that potential buyers will have to communicate with.
Sold.co.uk has lots of experience helping homeowners in Birmingham to sell their tenanted property. Whether you live in the city centre, the Jewellery Quarter, Edgbaston, Bournville or anywhere in between: we can make your life much easier.
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Challenges of Selling a Tenanted Property
One of the main challenges is organising viewings. You are required to give your tenant at least 24 hours’ notice before any viewings take place, which involves regular, clear communication between you and both parties. Although, the wait time of 24 hours may potentially count against you with the few impatient buyers who demand to see a property within a few hours of making an enquiry.
There is likely to be a smaller pool of people willing to purchase your house when tenants currently live there, because they won’t be able to live there themselves without going through the hassle of eviction.
This usually means that it will be mostly investors who show interest – although, there is still a high number of property investors in Birmingham.
Finally, you won’t be able to decorate your property as you would like to when selling with tenants in-situ.
Keep in mind that some homeowners offer their tenant a sum of money to move out, before they begin selling their property. This may make it slightly easier to sell the house for a large sum. It’s important that you keep an eye on the legal guidelines while doing this, however.
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What is Buy-to-Let?
Buy-to-Let is when a property is being purchased by someone, who will immediately rent it out to tenants. Usually, the bank that approves this mortgage will make it conditional on the fact that the buyer rents it out – and the mortgage will have to be switched if the owner wants to live in it themselves.
Most Buy-to-Let mortgages in the UK are interest only, which means that the owner does not have to pay off the entirety of the mortgage. Instead, they will just pay back the interest on the loan – as long as they remortgage, sell or pay off the loan at the end of the mortgage period.
What is an Assured Shorthold Tenancy Agreement?
An assured shorthold tenancy is the most common in the UK. This agreement involves a ‘fixed term’ being agreed, which the tenant is allowed to live in the property for. In many cases, this is for 6 or 12 months. After the fixed term has been completed, the landlord can then provide two months’ notice to regain possession of the property.
Most assured shorthold tenancies have clauses in the contract. These might relate to the landlord’s ability to increase rent, whether the tenant is allowed to have pets in the property, whether the landlord permits smoking in the premises, or whether the tenant is allowed to sublet.
If someone purchases your tenanted property, it means that they automatically own the tenancy agreement you put in place. If it is an assured shorthold tenancy, it may mean that they have the right to evict the tenant from the property with a Section 21 notice.
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Who Rents in Birmingham?
Almost 60% of Birmingham’s renters are under 35 – which means that first-time buyers and young couples keen to start a family are the most common renters in the city.
It is no surprise that there is also a large student population in Birmingham, due to both Aston University and the University of Birmingham being based in the city.
There are over 38,000 students combined attending these two universities at any given time, and landlords therefore invest in Birmingham to capitalise on this opportunity.
While Birmingham is less expensive than London, it is still quite pricey for first-time buyers who want to live in the city centre. It is no surprise therefore that younger people make up most of the rental market in Birmingham.
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Average Figures for Rental Properties in Birmingham
Birmingham is the UK’s second largest city for a reason. It has excellent infrastructure, attractions, education and career opportunities. The forthcoming arrival of HS2 also means that transport between other major cities – such as London, Manchester and Leeds – will be significantly easier.
According to Zoopla’s house price data, the average rent in Birmingham is £1,353 per calendar month. Therefore, property in Birmingham can deliver gross rental yields (not factoring in expenses) of around 7.6%.
These figures vary depending on the neighbourhood of Birmingham you are in. For example, Nechells is generally regarded as one of the cheaper parts of the city, and the average rent in this area will be slightly lower. Meanwhile, Edgbaston is slightly more expensive, and you may therefore expect average rent to be higher than this mean figure.
Approximately 40% of people living in Birmingham are also aged under 25. This is a key age group of tenants in the private rented sector, with young professionals one of the most likely age groups to rent.
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Frequently Asked Questions About Selling A Tenanted Property in Birmingham
What happens if you sell a property with a tenant in situ?
When you sell a house with tenants still living there, the tenancy agreement and the deposit transfers to the new owner. Depending on the agreement, the new owner may choose to evict their tenants, or they may be happy to keep them living there for the time being.
Why are houses sold with tenants?
Often, the tenancy agreement in place may prohibit the owner from evicting their tenants on short notice, so they decide to sell it with the tenants in-situ. It may also be that the landlord doesn’t want to evict their tenants, especially if they had a friendly relationship and are aware of how important the property is for their livelihood.
Is it easier to sell a house with tenants?
It is generally considered to be more difficult to sell a house with tenants. This is because it somewhat limits the new owner regarding what they can or can’t do with the property.
How much does it cost to sell a tenanted property?
There is no reason why selling a tenanted property should be any more expensive than selling one without tenants. On the other hand, if you choose to sell to a cash buyer to get the tenanted house ‘out of your hair’, then it could save you legal fees and estate agency commission.
Can I sell my tenanted property?
Yes, you can sell a house with tenants in-situ. There are several routes you can sell the property through, including a traditional high street estate agency, an online estate agency or cash house buyer – like Sold.co.uk – or by auction.
Can you sell a property with a sitting tenant in the UK?
Yes, you are allowed to sell a property with a sitting tenant in the UK. There are certain rules that you must follow through, which are outlined in UK law and in your tenancy agreement. If you are unsure about any aspect, then it is recommended that you get legal support to guide you.
Can you evict a tenant because you want to sell the property?
If a landlord wants their tenants to leave the property, they have to follow the correct procedures. Wanting to sell the house is not a sufficient reason to evict tenants in the UK. Sometimes, however, a homeowner will offer their tenants a financial incentive to leave the property, so they can then sell it without anyone still living there.
How much notice do I have to give a tenant if I want to sell my house?
Your rental agreement will determine how much notice you are legally required to give your tenant. You should review the agreement, and seek legal advice if you are unsure, to get your answer. In most cases, the notice period is 60 days, although this can vary.
Once you start the process of selling your property, you must give your tenant at least 24 hours’ notice before each viewing takes place.
Is it better to sell a house with or without tenants?
Some buyers view selling a house with tenants in-situ as a bad thing, while occasionally you will find a buyer who sees it as a positive.
When tenants already live there, it limits the new owner on what they can do with the property. For example, if they want to refurbish it, extend it or live in it themselves, this isn’t really possible while the tenants are still in-situ. The new owner may also be unhappy that they haven’t been able to ‘vet’ their renters or determine how much the monthly rent is. These are key examples of why tenanted properties sell for less.
On the other hand, if someone buys your property as an investment, it could be seen as beneficial to already have people living there. This is because it gives them an immediate source of income and saves them the hassle of finding new tenants themselves.
Contact Sold.co.uk today if you want to sell your tenanted house in Birmingham for cash.
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