Selling With Tenant In Situ

Selling With Tenant In Situ

Selling a tenanted property is increasingly common. The tenant remains in occupation throughout the sale and the buyer takes on the tenancy. This can be attractive to investor buyers but may reduce the pool of potential purchasers.

Advantages:

• No void period — rental income continues until completion
• No need to serve notice or go through possession proceedings
• Attractive to buy-to-let investors who want an immediate income stream
• Avoids the cost and disruption of an empty property

Disadvantages:

• Typically achieves 10–20% below vacant possession value (varies by market and tenant)
• Limits buyer pool to investors — owner-occupiers generally cannot purchase a tenanted property
• Viewings must be arranged with tenant cooperation (minimum 24 hours' written notice required)
• Tenant may be uncooperative or present the property poorly

Tenant Rights During the Sale:

• The tenancy continues unaffected — the sale does not end or alter it
• The new owner takes on all landlord obligations from the date of completion
• The deposit must be transferred to the new owner and re-protected in an authorised scheme within 30 days of completion
• The tenant must be notified in writing of the new landlord's name and address within 2 months of completion (s.3 Landlord and Tenant Act 1985)
• Tenants cannot be required to leave simply because the property is being sold

Managing Viewings:

• Give at least 24 hours' written notice before each viewing
• Viewings must be at reasonable times — the tenant is entitled to quiet enjoyment
• Consider offering the tenant a rent reduction or other incentive in exchange for cooperation
• Never enter without the tenant's consent — even during a sale process

Capital Gains Tax:

• CGT on the gain must be reported and paid within 60 days of completion
• Use HMRC's online Capital Gains Tax on UK Property service
• Current rates: 18% (basic rate band) or 24% (higher/additional rate band) for 2025/26
• Take tax advice before completing — timing the sale across tax years can affect your effective rate