Are you a landlord looking to buy a new property, or want to sell your place? Either way, there are a few extra things to think about if the home already has tenants living there.
Don’t worry – we're here to guide you through them.
What does tenants in situ mean?
This is also called having a ‘sitting tenant’. It means someone is already renting the home that’s about to be bought or sold.
If the home is sold, the new owner takes over the tenancy, and the tenant can keep living there.
Can you buy or sell a property with tenants in situ?
Yes, it’s completely legal to buy or sell a property with tenants in situ. There are just some extra things to think about if you’re taking over the tenancy agreement – not just the property.
Who usually buys tenanted properties?
Usually, it’s landlords who want to rent out homes with tenants already living in them.
That’s because they come with benefits like:
- earning money from the property right away
- there’s already a working tenancy agreement, so they don’t need to worry about setting up a new one
Do tenants need to agree to the sale?
No, tenants don’t need to agree to the sale. But you need to make sure you let them know what’s going on and when you agree to a sale.
Remember, they’ll need to agree to any house viewings and have at least 24 hours' notice.
What happens to tenants when a property is sold?
Not a huge amount will change for your tenants. They’ll still live in the property – but will have a new landlord.
Does the tenancy agreement still apply?
Yes, the existing tenancy agreement will stay the same.
If you want to change the amount of rent or the tenancy terms, you’ll need to go through the proper legal channels to do it.
Do tenants have to move out when a landlord sells?
No, they don’t have to.
If they want to move out when the property changes hands, they’ll need to give formal notice.
Buying a property with tenants in situ: the legal process
Once you’ve found a property with tenants already living there, here’s what you need to do next.
Step 1: review the tenancy agreement
Check over the tenancy agreement for things like:
- how much the rent is
- deposit details
- any special terms
Step 2: check everything
You and your solicitor should check all the relevant documents to make sure the tenancy is legal.
That includes:
- making sure the deposit is in a protection scheme
- checking the previous landlord completed a Right to Rent check
Step 3: get the deposit transferred to you
The seller will need to transfer the tenant’s deposit to you, making sure it stays in a protected scheme.
They also need to give you the important documents, including a copy of the tenancy agreement.
Step 4: check safety and compliance certificates
Make sure the gas safety, electrical safety, and EPC certificates are up to date.
Selling a property with tenants in situ: the legal process
Ready to sell? Here’s what you need to do next.
Step 1: check your safety and compliance certificates are up to date
Make sure all the important documents and certificates are up to date. That includes:
- gas safety checks
- electrical safety checks
- EPC rating
If they’re not, update them as soon as you can. It’ll make things easier later on.
Step 2: notify your tenant of the change
Once you’ve agreed the sale, you’ll need to give the tenant a Section 3 notice.
This just is the official way to tell them who their new landlord is and give them their contact details.
Step 3: transfer the tenancy and deposit
You’ll then need to transfer your tenant’s deposit over to the new landlord, making sure it stays in a protected scheme.
Tenant rights and new landlord responsibilities
You might be a seasoned landlord who’s already clued up on tenants’ rights. But if this is your first time, here’s a reminder of their rights and your responsibilities.
Notice periods and eviction rules
Under the new Renters’ Rights Act, there have been some changes to notice periods and eviction rules.
The law has changed, so you can’t evict a tenant without a reason anymore. You need a valid reason, like if your tenant hasn’t paid rent in three months or more.
You’ll also need to give them at least two months’ notice.
Just a heads up – renters' rules are different in England, Wales, Scotland and Northern Ireland. Check out your government website to find out more.
Deposits, safety certificates, and legal compliance
Remember, as a landlord, you’re responsible for making sure the rented property is safe and in good condition:
- Gas and fire safety checks – checking there’s smoke and carbon monoxide alarms on every floor, and arranging an annual check with a gas safety engineer.
- EPC certificate – you'll need to get a valid EPC rating, which lets your tenants know about the property’s energy efficiency.
- Electrical Installation Condition Report (EICR) – this is to look at the condition of the property’s electrical wiring and make sure it’s safe.
Find out more about who’s responsible for what in a rented property.
You also have to make sure their deposit stays in a protected scheme. There are three main ones to use:
- Deposit Protection Service
- MyDeposits
- Tenancy Deposit Scheme
Can a new landlord issue notice immediately?
Only if you have a valid and legal reason. That could be:
- antisocial or criminal behaviour from your tenants
- if your tenant is seriously neglecting or damaging the property
Mortgages and insurance for tenants in situ
There are a few things to think about when it comes to getting a mortgage for your new property.
Will a tenant in situ impact your mortgage options?
Yes it can.
Some lenders can see it as a higher risk if there are tenants in the property. They can make it harder to get a buy-to-let mortgage.
You might need to show extra proof of income or give tenant references.
Always check with your lender and understand their rules before you sign anything.
When do lenders require vacant possession?
Vacant possession means the home is empty when you buy it.
Some lenders only offer a mortgage if the home isn’t lived in when you buy it. It’s best to check with lenders what their rules are.
Landlord insurance considerations
It’s important you have landlord insurance in place for when the sale goes through.
That means you’re protected for things like:
- Accidental damage – for example, if your tenant accidentally broke the sofa in the property.
- Loss of rent – say your property isn't fit to live in because of a fire, leak or other insured reason. Your insurer will either pay for the rent you won’t be able to get or the cost of your tenants’ temporary accommodation.
Remember, policy limits and exclusions apply, so check your policy book to see what you’re covered for.
