Guide to selling a house with tenants in situ

This guide explains the legal framework, what the sale process involves, what buyers are available for tenanted properties, and how the presence of tenants affects price and timeline.

How the Renters’ Rights Act changed the position for selling landlords

Prior to the Renters’ Rights Act 2024 receiving Royal Assent, landlords operating under the Housing Act 1988 could serve a Section 21 notice — often called a no-fault eviction — to bring a fixed-term Assured Shorthold Tenancy to an end and recover possession with relatively short notice periods. This gave landlords a straightforward route to selling with vacant possession.

The Renters’ Rights Act abolished Section 21 notices entirely and converted all existing fixed-term Assured Shorthold Tenancies to periodic (rolling) tenancies. Under the new framework, tenants have the right to remain in occupation indefinitely unless a specific legal ground for possession applies.

Where a landlord wishes to sell and requires vacant possession, the relevant ground under the new legislation requires four months’ written notice to be given to the tenant. Critically, this notice cannot be served within the first twelve months of a tenancy, and the landlord must intend to sell the property — not simply to re-let it. If the property is not sold within a specified period after the tenant vacates, the tenant may have grounds to challenge the notice.

The practical effect is that obtaining vacant possession now takes a minimum of four months from the point of serving notice, assuming no legal challenge. In contested cases, the process can be considerably longer.

What selling with tenants in situ means in practice

When a property sells with tenants in situ, the following applies:

The tenancy agreement transfers to the new owner automatically on completion. The new owner steps into the landlord’s shoes and inherits the existing tenancy terms, including the rent level, any agreements made with the tenant, and any obligations under the tenancy agreement.

The landlord is legally required to notify the tenant of the change of ownership in writing once it has taken place, including providing the new landlord’s name and address for service of notices. In practice, it is strongly advisable to notify tenants of the intended sale much earlier, as their cooperation with viewings and access will affect how smoothly the process runs.

Tenants cannot be required to vacate simply because a sale is taking place. Their tenancy rights are not affected by the transaction.

The deposit held for the tenant must be transferred to the new landlord and remain protected in an approved deposit protection scheme. The current landlord should ensure this transfer is properly documented and that the tenant is notified of the new scheme details after completion.

How tenants affect sale price and buyer pool

The presence of sitting tenants significantly narrows the buyer pool. Owner-occupiers — the largest category of residential buyers — will generally not purchase a property they cannot move into. This restricts potential buyers to:

• Landlord investors who intend to continue letting the property. These buyers will assess the property on investment return — yield, void risk, management costs — rather than purely on market value.
• Cash house buying companies who purchase tenanted properties as part of their standard offer.
• Property investors purchasing at auction, where tenanted properties are regularly sold.

Because the pool of buyers is smaller and the buyers who remain are commercially motivated, tenanted properties typically achieve lower sale prices than equivalent vacant properties. The discount varies depending on the rental yield, tenant behaviour and history, the type of tenancy, and current market conditions, but discounts of 10% to 25% below vacant possession value are common in practice.

A higher-yielding tenancy with a long-term reliable tenant will attract less of a discount than a low-yield tenancy with a poor rent payment history or a short remaining term.

The sale options available

Estate agent sale

A conventional estate agent sale is possible for tenanted properties, but requires either finding a landlord investor buyer or agreeing the sale subject to the tenant vacating before completion. The latter requires either the tenant’s voluntary agreement to leave or the service of a valid possession notice — and the associated minimum four-month wait.

Marketing a tenanted property on the open market is also practically more complex: viewings require tenant cooperation and must be arranged with appropriate notice. If the tenant is uncooperative, this can significantly delay the process.

Auction

Property auction is well-suited to tenanted properties. Investors regularly buy tenanted lots at auction, and the fixed exchange-at-hammer approach removes the risk of prolonged marketing. Fees are typically 2% to 3% of the sale price plus VAT for the seller, and the sale must complete within a fixed period — usually 20 to 28 days after the auction — which can occasionally create challenges if documentation is not fully prepared in advance.

Cash house buying company

Cash buyers will purchase tenanted properties without requiring vacant possession and are familiar with the process. The offer will typically reflect the tenanted nature of the property — expect a discount to both vacant possession value and the price a landlord investor would pay on the open market. The benefit is certainty and speed; the trade-off is price.

What to check before agreeing any sale

Regardless of which route is chosen, the following points should be confirmed before proceeding:

• That all tenancy deposit obligations are in order — deposits must have been protected in an approved scheme and prescribed information served. Failure to do so can affect the landlord’s ability to serve certain notices and may result in financial penalties.
• That all required gas safety certificates, electrical condition reports, and energy performance certificates are current and available to pass to the buyer.
• That any existing tenancy agreement is properly documented and can be produced for the buyer’s solicitor.
• That any rent arrears or tenant disputes are disclosed to the buyer. Undisclosed material issues can result in the transaction being unwound or claims for misrepresentation after completion.

Rights of the tenant during a sale

Tenants have a right to quiet enjoyment of the property. This means viewings cannot be conducted without proper notice — typically a minimum of 24 hours in writing, though the tenancy agreement may specify more.

Tenants are not obliged to cooperate with sale viewings, though most will do so with appropriate notice and communication. Where a tenant actively obstructs access, the landlord’s options are limited — and this is another reason why selling to a cash buyer or at auction (both of which do not require vacant possession viewings in the same way) can be more practical for properties with uncooperative tenants.

If a landlord wishes to serve notice to recover possession in order to sell with vacant possession, the requirements under the Renters’ Rights Act apply as described above. Serving a notice that does not comply with the legislation — for example, during the protected twelve-month period or without the required four months’ notice — will not be valid and will not give the landlord the right to proceed with possession proceedings.

Summary: key considerations for selling with tenants in situ

• The Renters’ Rights Act 2024 abolished Section 21 no-fault evictions. Vacant possession now requires at least four months’ notice under specific grounds.
• Tenanted properties sell at a discount compared to vacant possession value — typically 10% to 25% depending on tenancy quality and market conditions.
• The buyer pool is restricted to investor buyers: landlords, cash buying companies, and auction purchasers.
• The tenancy transfers automatically to the new owner on completion. Tenant rights are unchanged by the sale.
• All compliance documentation — gas safety, electrical certificates, EPC, deposit protection — must be in order before marketing.
• Undisclosed rent arrears or disputes must be declared to the buyer.