Tenanted property sales: Will a Tenancy End When a Landlord Sells Up?

Faced with a tenanted property sale, many renters can become understandably worried. Are they going to have to uproot their lives and find a new home? If they can stay, will they face massively increased rent?

Landlords do sell up for a whole variety of reasons. They may be  looking to retire, or make investments in other areas, so this is neither a new nor unique problem. As a tenant, how does this affect you?

As experienced specialists in the buying and selling of tenanted properties, we’re well placed to advise both landlords and tenants on the process and likely outcomes when the sale of a tenanted property happens.

Let’s take a walk through the process to understand what is going on and how it affects all the parties involved.

“My landlord is selling up, I’ll have to move out!”

This is one of the biggest misconceptions which affects private tenants; the idea that their tenancy is inexorably tied to the current landlord. This isn’t the case. Let’s look at an analogy…

You currently get your weekly shopping delivered by Big Bob’s Stores Ltd. Big Bob has had enough and sells up to Johnathon’s Giant Fruit. Does that mean you won’t continue to get your weekly delivery?

It’s far more likely that you’ll see no practical changes in your relationship – Jonathan’s Giant Fruit needs you, the customer, to be successful, so they’ll continue to serve you just as Bob did.

This is true in the private rented sector (PRS). While there seems to be a disproportionate amount of talk about landlords when discussing the market, tenants are key. No tenants – no business.

Since good tenants are highly prized, there is an excellent chance that if your current landlord chooses to sell, another landlord will be more than keen to take over the property and to maintain your tenancy.

The only fly in this soothing ointment is when the current landlord decides that they want to sell to potential homeowners and consequently needs a vacant possession to do so. This does happen, but it can be a lot more work and cost for the landlord.

Also, in this case, you may decide to discuss buying the property from the landlord.

Ok – that doesn’t sound so bad – so what happens?

It’ll come as no surprise given what we do that we’ve written extensively on the subject of tenanted property sales. Our piece, ‘7 Things Your Tenants Need To Know When Selling Your Tenanted Property’ lays out the basics.

We think it’s important to understand that the relationship between landlords and their tenants is not an inherently adversarial one, despite many, many words written to the contrary.

Are there bad landlords and equally troublesome tenants? Of course there are, but the vast majority of tenant/landlord relationships are mutually beneficial. Allow us to digress slightly from the main thrust of this article…

The property market does not just comprise a pool of wannabe home owners and a dark cabal of landlords determined to keep them from getting onto the property market.

Rather it is a wide mixture of competing and complementary requirements. Many people want to buy their own homes, but there are a substantial number who don’t and who would rather rent.

There are many reasons for this and to be frank this is probably worth an article in its own right. However, to keep it brief; tenants may not intend to stay in a location permanently or they may not want the cost and responsibility of home ownership yet.

They might appreciate the flexibility renting offers – it’s not just landlords who end tenancies, tenants do so all the time.

Don’t be passive

The oft-mentioned concept of ‘passive income’ from buy-to-let properties actually does the sector no favours. Properly managing a rental property is a job, whether the landlord does it or hands it over to an agency.

A landlord who fails to look after their tenants is equally failing to look after their investment. Why should a tenant care about a property if the landlord makes it clear they don’t care about their tenants?

Good tenants are critical to the PRS, and landlords cannot count on them battering down their door looking for a home.

All that said, let’s get back on track.

A good sale will be mutually beneficial

When done properly, a tenanted property sale should benefit everyone involved:

• The seller realises the value in the property as a business, allowing them to move on with whatever comes next in their lives.
• The buyer benefits from immediate income and a long-term investment with reliable tenants (and income) from day one.
• The tenants should see little or no change in their lives. Their home remains the same and the level of support they receive continues uninterrupted. Even the terms of their tenancy will remain the same.

Advice from the property pros

While it’s entirely understandable that tenants might get nervous when a landlord sells up, if the sale is handled sympathetically, their concerns should prove to be ill-founded.

With the exception of some (hopefully) well-managed intrusions to get photos of the property and to compile the Home Report, they should find themselves transitioning to a new landlord with little fuss or bother.

This is important as reliable and settled tenants are to be prized, and both incoming and outgoing landlords should make it their priority to ensure that the tenants involved in a sale remain settled and reliable.

In summary…

As an estate agency which focusses on the buy-to-let and property investment markets, we are explicit in the importance of ensuring that tenants are kept fully up-to-date of the changes happening.

As you can see from the link above, we advise landlords to communicate with their tenants before we even start marketing the property – keeping your tenants on side really is that important.

If you are considering selling a tenanted property, or are interested in adding further tenanted properties to your portfolio, please get in touch with us. We’ll ensure that everyone involved is treated fairly while also ensuring the best deal for all.

Written by Ross MacDonald, Director of Sales & Cofounder of Portolio

Get in touch on 07388 361 564 or email to [email protected]