Even when everything goes according to plan, selling your property is rarely straightforward. With so many parties involved, managing your costs, and getting things done to a reasonable timeline, it is natural if you feel concerned about the process ahead.
If your property currently has tenants living in situ, this nervousness may increase even further. After all, tenanted houses are notoriously more difficult to sell, and therefore, preparation is key to completing the transaction smoothly.
But what exactly can you do to prepare your tenanted home for a sale?
Selling a house with tenants in situ does not need to cause you stress or anxiety. By reading our blog below, you will learn important things to consider when going through the process of selling a tenanted house.
What is a Tenanted House?
A house is classified as ‘tenanted’ if there are still tenants living in situ while you are selling it. This may occur because you cannot evict your renters or simply don’t want to kick them out.
Tenanted properties tend to sell for a slightly lower price. They may take longer to find a buyer because they are often considered ‘less attractive’ by potential buyers. For example, arranging viewings or making improvements (such as an extension) to the house while people live there is challenging.
Communicate with your tenants
Communication is key during the selling process. Your tenants may feel nervous about a new owner coming in and potentially turning their lives upside down, so you should reassure them and give them lots of advance notice wherever possible.
It is in your interest to maintain a friendly relationship with your renters. After all, they can make your life extremely difficult by causing damage to the property or being non-cooperative with viewings.
Find a convenient way of selling
Selling a tenanted house on the open market usually takes longer because potential buyers are less attracted to a property they cannot live in. Therefore, you should try to speed up the selling process so it does not drag on for months and months.
Some high street estate agents specialise in selling tenanted properties and have a network of potential buyers who do not object to purchasing a house with tenants. You may also wish to explore other options, such as using a cash house buyer or an auction house.
Like with all important decisions, you should do thorough research on any organisation you choose to partner with when selling your property. Some cash buyers, estate agencies and auction houses are more reliable than others, so checking their reviews – and even asking for references from people who have sold tenanted houses in the past – is a good first step.
Get a realistic valuation
When you sell a house with tenants still living there, you need to be realistic about the price you will get for it. After all, a property the buyer cannot live in – and cannot make improvements to without considerable hassle – is inherently less valuable.
You may choose to bring in an independent property valuer, who can give you a realistic estimation of its worth. While estate agencies can offer this service, too, some people feel that these companies give you an inflated price, so you are more likely to use them to sell your house.
The nature of the tenanted property will make a difference to its value, for example:
- How co-operative the tenants are
- Whether damage has been done to the house
- Whether the tenants can live there indefinitely
- How long is left on the lease
Like all house sales, the market conditions will make a difference to the price you could reasonably expect on the open market. You should ask your valuer for an in-depth explanation if you have any questions about the figure they’ve decided on.
Research the rights of everyone involved
When you hire a conveyancer to help you with the selling process, you should discuss the rights of everyone involved. You do not want to break any laws, and it will also help you understand what you can/cannot do while selling a tenanted house.
Offer your sitting tenants first refusal
It is often considered decent to offer your sitting tenants first refusal on purchasing the property. Even if they do not have the funds to afford it, giving them the option will be appreciated by them and can help you maintain a positive relationship during the selling process.
If your tenants can buy the house, this could also speed up the time it takes to complete the sale. After all, your potential buyers won’t need to be taken on several property viewings, and may be less picky around subjects such as the survey.
Hold viewings in group batches when possible
If your tenants cannot purchase the property themselves, and you, therefore, hold viewings on the open market, it is better to do it in group batches. Finding days and times that all your renters can be out of the house may be difficult, so you should make the most of any opportunity where you successfully arrange it.
Ideally, you should speak to your tenants beforehand to determine which days and times work best for arranging viewings. You could then fit three or four separate viewings into any available slots (if that number of potential buyers is interested).
Finding a solution that is convenient for everyone involved is always desirable.
Get all your paperwork sorted
Documentation is an important part of any property sale, but when you still have tenants in-situ, there may be details involved that you would not otherwise have to consider.
You will usually be required to gather all of the following:
- The signed tenancy agreement
- Evidence of your tenants’ right to rent
- Inventory
- Gas and Electricity safety certificates
- Details of deposit protection
- Condition report and details of any repairs
Your potential buyer will want to know everything possible about the house they purchase, and all this paperwork makes that possible. Your conveyancer can provide additional guidance on any information you need to provide.
Allow extra time for the sale, if possible
Selling a property with tenants can take longer on the open market than selling a property without anyone living there. Therefore, you may need to allow extra time for that. This is particularly important if you have a specific deadline you need to meet.
Remember that you will often not need to allow extra time if you use a reliable cash house buyer, as the most trustworthy organisations can complete your sale within 7 days.
Handle the tenancy agreement and deposit
In most instances, your tenancy agreement will transfer to the new owner and is no longer your responsibility. However, with the deposit, your conveyancer may need to transfer it to the new owner, so you should ensure they have the skillset and experience to handle this.