About Selling Properties with Sitting Tenants

Selling a house with sitting tenants can be quite problematic, particularly if the tenant has a protected tenancy agreement.

Protected tenancies were set up in 1989 as a social law to make the rental market more favourable to tenants. Although before then it can be argued that tenants were insufficiently protected and could fall prey to unscrupulous landlords, of whom the media of the day was full of examples, the Rent Act of 1989 was far too extreme in the other direction. Tenants were granted tenancies for life, and the tenancies could be passed on to their spouses and children. The rent was also controlled, and was often well below fair commercial rates.

Like many examples of social engineering by government, in reality this law had the opposite effect from the one intended. No longer was it commercially viable for prospective landlords to buy properties in order to rent them out, and the private rental sector declined enormously. This created huge social problems.

It was obvious that the law needed changing in order to be fair to both tenants and landlords, and through a succession of housing acts a much improved tenancy agreement was introduced. This is the Assured Shorthold Tenancy and most tenancy agreements drawn up after February 1997 are of this type. These are time limited, so are much less restrictive on the landlord who wishes to sell.

Even if the prospective vendor has a protected sitting tenant, all is not lost. There is always the possibility that the tenant will agree to give up the tenancy agreement in exchange for a financial reward, say a percentage of the sale price of the property. Also there are a number of organisations around that take a long term view and are willing to purchase property with protected tenants. Naturally the price will be somewhat less than selling a vacant possession, but as with many things in life, sometimes compromises need to be made.

john wright
swift capital