Selling a House Due to Bad Tenants, If You’re a Landlord, What Are Your Rights?
Landlord rights are few and far between when it comes to selling a house with bad tenants. Some TV programmes now depict the biggest problems many landlords have; abusive behaviour, antisocial behaviour, criminal damage and rent arrears are just a few of the issues tenants have to deal with regularly.
If you’re in such a position, you’ll know just how stressful the entire process can be. While you have to address these issues, you’re still the one having to foot the bills caused. And if you have a mortgage on the property, the stress can be even worse.
An increasing number of property owners decide to sell a house due to their tenants causing a nuisance to their neighbours. However, there are some strict laws regarding the sale of a property with sitting tenants in residence, so you need to know your legal position before proceeding.
Common problems landlords face when they decide to sell
A lot of sitting tenants will not like the uncertainty of having their home change ownership. They have a relationship with you, and they may feel nervous about the new owner’s intentions. If they give you notice and move out, it may leave you with an empty property and no rental income. You will also be liable for at least part of the council tax.
However, the problems can be far worse with bad tenants who could make life as difficult as possible for you by refusing you access to show potential buyers around. They may also stop paying rent, which could lead to a long, drawn-out process that might take several months to resolve legally.
Can I sell a house with sitting tenants?
The short answer is yes. However, the buyer needs to know the exact terms of the tenancy contract. The new owner will assume responsibility for any sitting tenants. If the owner wants to move in or renovate the property, they won’t be able to do so until the tenants are legally evicted or choose to get out, restricting the market for your property.
Some landlords actively seek properties with sitting tenants, reducing their costs and giving them an immediate income. However, you’re highly unlikely to find anyone willing to purchase a property with bad tenants in it. In fact, a new buyer may consider evicting bad tenants even harder than you, with the grounds for doing so lost. Selling at Auction might be the best way to get a sale as professional Landlord buyers will purchase homes with problematic tenants knowing the difficulties involved.
What are your landlord rights?
The first thing to note is that your tenant’s rights aren’t affected in any way because you decide to sell. The chances are your tenant has an Assured Shorthold Tenancy Agreement, which gives them rights to stay until the end of the contract period, along with a protected deposit and a two-month notice period.
If the agreement you signed with your tenant was open-ended — without an expiry date — you should look for a “break clause,” which allows you to give the notice to terminate the tenancy agreement. If you haven’t included an expiry date, and you’re unsure about where you stand, you should consult with a solicitor.
REMEMBER: Your tenant has the right to “quiet enjoyment,” which means you can’t harass them about leaving or exert any pressure. Any attempts at coercion or intimidation could result in a fine and tenants given legal permission to remain.
What happens if tenants won’t move out?
Assuming there is an expiry date in the agreement, you can legally request your tenant vacate the property by issuing an S.21 notice. However, you will usually need to give two months’ notice. Unfortunately, your tenant’s failure to vacate the property by the termination date could put you in a tricky spot for selling, leaving formal eviction proceedings with associated costs your only option.
Make a formal application for possession with the court, but know that from start to finish, the process will take at least two months — and probably more.
A scenario in which tenants won’t move out is likely to substantially delay the sale of your property.
Can I still list my house for sale with bad tenants still living there?
Yes, nothing is stopping you from listing your property for sale, but you will need to tell potential buyers about the situation. However, this will be a hard sell; it means you will struggle to gain access to your property to show prospective purchasers around.
If you’re struggling to access the property, your best option is to try reasoning with your tenants. If that fails, check your agreement to see if there is a particular clause that allows you access under certain circumstances. If there is one, you can legally enter the property by giving your tenant 24 hours’ notice.
TIP: If you’re having trouble gaining access to your property, contact the tenant and offer a one-off reduction in rent. However, this will obviously only work if the tenant is paying it in the first place.
Is there a way around the issue?
If a quick sale is needed, your options are limited if bad tenants make life difficult for you. No right-minded investor, developer, property buyer or buy-to-let landlord is going to want to buy your property with tenants who are refusing to move out.
Of course, you may be able to sufficiently reduce the asking price to persuade someone to take on the problem, but it’s unlikely. And even if you can find a willing buyer, some issues could put a stop to the sale before it completes — throwing your plans into chaos. Selling at Auction is an option as the problem disappears when the Auctioneers hammer drops, although there is still no guarantee of a buyer on the day.
But there is another way, and it involves selling your property to a house buying company. Yes, you might have to forego a little of the property’s market value, but you can wash your hands of the problem and move on. It will then be up to the new owner to cover the legal and administrative costs of evicting bad tenants — and getting the property up to scratch afterwards.
Many landlords decide to sell up because of the stress, misery and expense of dealing with bad tenants. If you’re facing this scenario, take legal advice at every step, and consider accepting a slightly lower-than-average price for your property — allowing someone else to deal with the problem. Read more top tips for renting your home here.