When selling a rental property, having a tenant in situ – a tenant who stays in the property after it's sold – can actually work in the seller's favour. Unlike vacant properties where the new owner can move in or find new tenants, selling with a tenant in situ means passing over the existing tenancy agreement. Done right, it can streamline the sale and preserve income during the process whilst offering buyers a ready-made investment. However, if done poorly, it can lead to delays, disputes or a lower sale price.
In this guide, we explain how to navigate the process efficiently and position the property as a turnkey investment to potential buyers.
Understanding the tenancy agreement
It's important to begin by reviewing the existing tenancy agreement. If it's a fixed-term tenancy, generally, you're unable to evict the tenant before the term ends unless there's a break clause or valid reason under Section 8 of the Housing Act 1988 – such as rent arrears or property damage. For periodic tenancies (month-by-month), ensure you provide the appropriate notice period as stated in the rental agreement. It is important to remember that tenants have the right to 'quiet enjoyment', which means you cannot disrupt their living arrangements without proper notice and consent. However, most tenancy agreements allow for the property to be viewed during the last month or two of the tenancy and you should check if this is specified.
Communicate transparently with your tenants
Open and honest communication is crucial and it’s important to inform your tenants about your intention to sell as early as possible. Discuss how the sale might affect them, especially if they have concerns about rent increases or changes in living conditions.
While not legally required before sale, it is best practice to inform tenants early and addressing their concerns can lead to a smoother selling process and maintain a positive landlord-tenant relationship. After the sale completes, the new landlord must formally notify the tenant of the change of landlord in writing within two months, as required by Section 3 of the Landlord and Tenant Act 1985.
Decide whether to sell with tenants in situ or vacant
Sellers have two primary options:
Sell with tenants in situ
This approach allows you to continue receiving rental income until the sale is completed. It's particularly attractive to investors seeking properties with existing tenants as they can receive rental income from the day they acquire the property. If the sale fails to be completed, you will still have the surety of the tenants' income.
An investment purchaser will require complete tenancy paperwork, including tenants' Right to Rent evidence, a signed tenancy agreement, gas and electric safety certificates, proof of protected deposit with proper documentation, copies of any legal notices served (with delivery details) and information on any current repairs or complaints.
However, it's important to be aware that some buyers may be deterred by the presence of tenants, particularly if there are concerns about rental arrears or property maintenance. It is also wise to offer tenants first refusal to buy the property not merely as a courtesy; there have been cases where tenants have unexpectedly decided to make an offer. Although this is not a legal obligation for single residential properties, as Right of First Refusal rights generally only apply to blocks of flats (under the Landlord and Tenant Act 1987).
Sell with vacant possession
If you choose to end the tenancy, ensure you follow legal procedures. Under the law as of 2025,
Section 21 of the Housing Act 1988 is still legally valid, meaning landlords can still use it to end an assured shorthold tenancy (AST) without providing a reason, often referred to as a "no-fault eviction”. The landlord must issue a written notice giving the tenant at least two months’ notice to vacate the property. However, it is expected to be abolished in the future as part of the Renters (Reform) Bill likely to take effect by late 2025.
Once Section 21 has been abolished, landlords will no longer be permitted to evict tenants by providing two months’ notice without specifying a reason, even after the expiry of an initial fixed term or following the first six months of the tenancy.
All evictions must then use Section 8 notices based on statutory grounds, including a new ground allowing possession if the landlord intends to sell the property, typically after twelve months of tenancy; however, landlords must evidence their genuine intention to sell.
Prepare the property for sale
Whether occupied or vacant, presenting the property well can significantly impact its marketability and sale price.
Maintenance and repairs
It's crucial to promptly address any underlying maintenance issues, as buyers are often deterred by properties requiring extensive repairs. Promptly fixing issues like leaks, cracks or faulty wiring can strengthen the initial negotiating position and prevent price reductions.
Under The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020, it is a legal requirement to have a valid Electrical Installation Condition Report (EICR) — completed every five years. Gas appliances must also be inspected annually under the Gas Safety (Installation and Use) Regulations 1998, and tenants must be provided with a valid Gas Safety Certificate (CP12).
Although properties currently require a minimum EPC rating of E to be legally rented, the government has proposed future regulations requiring most rental properties to reach a minimum EPC rating of C by 2028, albeit these plans are currently under review and have not yet been enacted into law.
Staging and presentation
Consider repainting walls in neutral tones, decluttering spaces and simple landscaping. These steps can enhance the aesthetics of the property and increase its value.
Schedule viewings considerately
If the property is tenanted, scheduling viewings requires sensitivity and respect for the tenant's rights. Review the tenancy agreement and clarify if it includes clauses about viewings and the required notice period. Usually, providing at least 24 hours’ notice is the norm; however, this alone does not give the landlord an automatic right of access and the tenant's consent must also be obtained for each viewing appointment.
Discuss with tenants to agree on suitable times for viewings to minimise disruption.
Entering the property without the tenant’s consent, even with notice, can amount to unlawful entry and harassment under the Protection from Eviction Act 1977.
Transfer tenancy agreements and deposits
If selling with tenants in place, the existing tenancy agreement typically transfers to the new owner, who assumes the role of landlord. Ensure all necessary documents, including the tenant's deposit details, are provided to the buyer. This transparency helps the new owner manage the property effectively and maintain a positive relationship with the tenant.
A government-approved tenancy deposit protection scheme must protect a tenant's deposit. During the sale of a property, the seller and buyer should agree on how the tenant's deposit will continue to be protected. Depending on the scheme used, the deposit may either be transferred to the new landlord or the new landlord must re-protect it. To ensure compliance, it is best practice to re-protect the deposit in a new scheme and issue new prescribed information within 30 days of the transfer.
The seller is also responsible for demonstrating that the tenant's rent is fully up to date and for providing all necessary certificates and documentation, including a valid Gas Safety Certificate, an Electrical Installation Condition Report and an Energy Performance Certificate.
Expert insight can make a significant impact when selling a tenanted property, therefore we strongly recommend a private consultation with our experienced team of property professionals who can offer tailored guidance to assist throughout the sales process.
By understanding your rights and responsibilities, preparing the property thoughtfully and seeking professional advice when necessary, you can navigate the process smoothly and achieve a successful sale.
