Selling a Tenanted Property: What Landlords Need to Know

29th April 2025

For landlords, selling a tenanted property can often seem like a daunting decision. With the complexities of tenant rights, market dynamics, and potential legislative changes, it’s essential to navigate these waters with care.

This article explores everything landlords need to consider when selling a property with tenants in situ, including the latest legislative updates, insights from a Rightmove-hosted webinar exploring your concerns, and how to manage tenant concerns effectively.

Selling a Property with Tenants In Situ: The Basics

In Brighton there’s a strong demand from property investors actively seeking tenanted homes. A tenanted property can offer instant rental income, avoiding void periods, and providing a seamless transition for the buyer who’s likely to be another investor or landlord.

However, landlords must ensure they are compliant with all relevant legal obligations when selling a tenanted property. Tenant rights must be respected throughout the process, and clear communication is essential.

Legal Considerations and Tenant Rights

The tenant’s rights to privacy, the right to remain in the property, and protection from unfair eviction must all be respected. Here’s a quick rundown of the key legal considerations:

Notice for Viewings: Landlords must provide tenants with adequate notice before scheduling viewings. This ensures that tenants’ rights are respected and that they’re given reasonable time to prepare for visits.

No Forced Vacancies: You cannot ask tenants to vacate the property in an attempt to sell it without following the proper legal procedures. In most cases, tenants have a right to remain in the property unless you’ve given them proper notice or the tenancy agreement has expired.

Communicating with Tenants: Transparent communication is key. It’s crucial to keep tenants informed about the sale and ensure that they understand the process. While tenants are not required to vacate, their cooperation during viewings can make the process smoother and quicker.

Ending Tenancy Agreements: If you wish to sell with vacant possession, you may need to issue a Section 21 notice to end the tenancy. However, this is subject to specific regulations, including notice periods and legislative changes that may affect this process. There’s uncertainty regarding how Section 21 notices will be handled once the RRB is in place. Possible government approaches include:

Notices served before the law changes will remain enforceable.

Notices may be valid, but court proceedings cannot progress under the new rules.

Notices may fail if court proceedings have not begun before the legislation is implemented.

Legislative Updates

Here’s a breakdown of the key legislative updates and how they could affect landlords selling a tenanted property:

Landlord’s Insurance Considerations

Changes in Rent In Advance: The new legislation will make it unlawful for landlords to request rent in advance, which could affect how some landlords manage cash flow when selling. It’s crucial to coordinate with your insurance provider to determine how coverage will be impacted under the new rules.

Rent Guarantee Insurance: Rent guarantee insurance typically requires tenants to be in arrears for 2-3 months before claims can be made. As part of the changes, landlords may need to adapt their practices to ensure they comply with the new legislation.

Tenancy Structures: Monthly tenancy structures might be the way forward, particularly as rent in advance is phased out. Ensure that your insurance policies are in line with these new arrangements.

Eviction and Reletting Restrictions

Restrictions on Reletting: If a tenant is evicted due to the sale of the property, the landlord cannot relet the property within 12 months. If the sale falls through and the property is rented again, the tenant may be entitled to compensation. This adds an extra layer of complexity when selling with tenants in situ, as landlords could face penalties if they don’t adhere to these rules.

Refurbishment Grounds for Eviction: Landlords can still issue notices under Ground 6 for refurbishment purposes. However, notice periods will be extended from 2 months to 4 months. If you are unsure about selling, negotiating a commercial agreement with the tenant rather than using Ground 6 may be a more practical solution. Offering moving expenses, a month’s rent, and avoiding court action can help maintain good tenant relations and avoid costly delays.

Rent Adjustments and Tribunal Cases

Market Rate Increases: Landlords must ensure they have robust market evidence if planning to increase rents during a tenancy. Rightmove’s Best Price Guides and Automated Valuation Models (AVMs) can provide impartial evidence to support your rent increases.

Disputes with Tenants: If tenants disagree with rent increases, they can take the case to the First-Tier Tribunal. The tribunal has three possible outcomes: agreeing with the tenant, agreeing with the landlord, or setting a rent higher than what the landlord requested. This third outcome has often deterred tenants from disputing increases but as it look to change tenants may become more inclined to challenge rent hikes.

At every stage, communication with tenants is key. With the right approach, selling a tenanted property can be a seamless and profitable experience, allowing landlords to continue providing high-quality housing while meeting their business goals. Should you need expert guidance, our team is here to ensure you stay ahead of the curve and navigate any legislative changes with confidence.