There comes a time in every landlord’s life when they are ready to exit the market and sell off their investment property. Deciding to sell your investment property can be complicated when introducing a third party who is not likely to embrace the situation with positivity. We delve deeper into selling your property while a tenant is still living there or selling it empty.
Selling a property with tenants
Think about it from the perspective of the tenant; this is their home that is being sold. While they are taking the risk of the property being sold when the sign the lease, they are often taken by surprise when it is actually listed. It is important to get the tenant on side when listing the property so that you have their full cooperation throughout the sale process.
The biggest concern for anyone selling their home is presenting the property in peak condition. When an owner is selling a home that they live in, they ensure that the house is freshly cleaned and gardens are tidied before potential buyers come through. However, you can never be sure that a tenant will put the same amount of care into preparing the home for inspections.
Legally, a tenant must allow the agent to show buyers through the property so long as they are given sufficient notice. However, they are not required to leave the property, meaning they can stay in the home, potentially turning buyers off.
Having a tenant in the property can be a good thing, especially if it is a property likely to be purchased by another investor. Investors like to know that a property is likely to be rented out again. If they know how much it is currently rented for and that someone is currently paying that amount of money for it, it can persuade an investor. However, a potential buyer who is looking to live in the property themselves might be turned off by the tenant if the home is not presented well or if the buyer wants a quick settlement.
Selling a property empty
The alternative to selling a property with a tenant in it, is selling the property vacant. This has the benefits of reducing the potential for the above problems, but comes with its own set of problems for the owner.
Selling an empty house is not always appealing to buyers as rooms can feel cold and empty. Owners must choose whether to display the home this way or pay a stylist to come and present the home with display furniture.
Open home times are made easier as the agent is free to come and go as they like, with the potential to show a buyer through at any time without disturbing anyone.
Be mindful that keeping a tenant in place provides income. You must be prepared to cover the loss of the rent for an unknown period until the property sells. While selling an untenanted home may be easier in many ways, the tenant also provide a crucial source of income for you, making them a valuable asset. For example, if your property takes three months to sell and then you need to wait another month or so before it is transferred to the new owner, you could spend a significant period without any rental income.
If you sell a property with a tenant living in the house, the tenant will continue to pay rent. Once you find a buyer and it exchanges, you can then give your tenant 8 weeks’ notice to vacate, if their lease has expired. If your tenant has a current tenancy in place and the property sells, the new owner purchases the property subject to the tenancy and takes over the rights and responsibilities of the previous landlord.
Should your tenant wish to vacate earlier and their lease has expired, they are only required to provide 3 weeks’ notice. In this scenario, your agent may be able to negotiate with the buyer to settle earlier with the buyers’ approval.