Sometimes landlords will want to sell their properties.
This post, which was prompted by a question I got asked along the lines of the first point below, looks at this and tries to demolish a few myths.
Here are five important points:
1. Vendors eviction rights
The fact that you want to sell your rented property does not entitle you, per se, to evict the tenants. There is no special ‘I want to sell the house so you will have to go’ ground for possession in the legislation.
You either sell with the tenants in situ or wait until you can evict them normally (ie using section 21).
2. Vendor / landlords rights to show round purchasers
Neither does that fact that you want to sell the house or flat mean that you have the right to take prospective purchasers round whenever you like. You can only do this
(a) if it is authorised by your tenancy agreement and
(b) upon giving the tenants not less than 24 hours notice in writing.
If your tenancy agreement does not mention viewings by prospective purchasers, then you are not entitled to take anyone round as of right, and you will be at the mercy of your tenants good will.
Even if your tenancy agreement does mention it, the tenants will be entitled to refuse to allow access save at times convenient to them, and if there are a lot of viewings this may constitute a breach of their covenant of quiet enjoyment.
After all, would you like a stream of strangers walking around YOUR home and poking about in your cupboards?
3. Purchasers rights as landlord
When the property is sold, the purchaser will become the landlord of the tenants, in the same way that the vendor was. The text books describe this as saying that he ‘stands in the shoes’ of the vendor.
He does not have any extra rights and some grounds for eviction will no longer be available.
4. Changing the tenancy agreements
So far as the tenancy agreements are concerned, these will still be valid even thought the landlords name is out of date.
It is a good idea, from the landlords point of view, to get new tenancy agreements signed up as soon as you can. However if the tenant has security of tenure he will often refuse to sign anything. There is nothing the landlord can do about this.
What the landlord should do though, is write a formal letter to the tenants telling them of the change of landlord and giving details for the payment of rent.
5. Purchasers eviction rights
Finally, if the vendor does not have any special rights to evict tenants because of the sale, neither does the purchaser.
In fact it is more difficult for the purchaser. Some grounds for possession will be lost to him (eg ground 6 is not available to a landlord by purchase), and he may find it difficult, if challenged, to prove the date a tenancy started or service of notices.
It is very important therefore, if the purchaser is looking to get vacant possession after purchase, that he gets proper evidence of these matters, verified by statutory declarations, from the vendor before completion.
Purchasers should also be wary of cheaply priced investment properties as these may contain nightmare tenants who cannot be evicted as they have a protected tenancy.
Note – if you need to evict your tenants you will find guidance >> here. Or if you need to sell your property with sitting tenants but are finding it difficult >> click here.
Tessa, re 2b, can you tell me what law relates to the 24hrs in writing rule?
An excellent and cautionary article Tessa. Hardly a week goes by without me getting complaints about this. The usual scenario being the landlord serves Section 21 intending to sell and expects the tenant to leave.
The tenant makes a homeless application and gets told, quite correctly, that they are not homeless under the statutory definition because until they move out or the landlord obtains an order for possession they still have a legal or equitable interest in the property.
They often don’t have the deposit and rent in advance to find somewhere else and the landlord gets the hump. This is where the harassment and illegal evictions come in as the landlord panics and tries to shortcut the process, blaming the council for screwing up their plans.
Landlords can often become incensed that the council is taking such a hard line but the council is simply doing what the law requires it to do and the council is not there to sort out the landlord’s problem for them. It becomes the Suzy Butler case again.
And its not just the tenants who are affected by these situations. I currently have 2 cases where the landlord failed to follow due process but sold anyway, and when the purchasers turned up to move in they found sitting tenants in place. The purchasers are now living on friend’s settees because the vendor didn’t do what the law required them to do first. As a consequence the purchasers are looking to sue the vendor. Everybody gets affected.
@David For inspections for disrepair etc, you need to give 24 hours written notice per s11 of the Landlord & Tenant Act 1985.
Inspections for purchasers when the landlord is selling the property are not of course included in this. However I think it likely that any clause allowing the landlord to inspect for this WITHOUT at least 24 hours written notice will be considered unfair (and therefore unenforceable) under the Unfair Terms in Consumer Contracts Regulations 1999.
Bearing in mind the covenant of quiet enjoyment which is implied into all tenancies.
@Ben I am not a conveyancer but I would have thought that the purchasers’ conveyancing solicitors should have asked about tenants in enquiries before contract, and made sure that they were gone before completion.
At the very least the purchasers themselves should have spotted them when viewing the property before deciding to buy! Yes, they have a claim against the vendor for breach of contract, but they should have done proper checks before buying too.
In an ideal world Tessa. What happens in these cases though is that the vendor tells the purchaser that the tenants will be gone come move-in day and the purchaser gets too caught up in the excitement to ask further.
I would imagine that if a dilligent conveyancing solcitor heard that tenants were in residence they would be looking for a possession order and even a warrant before clearing things but again, that may be in an ideal world, and presuming that the vendor has even told the solicitor about tenants, given that usually the mortgage company doesnt know either.
Rarely mentioned and equally rarely considered is deposit protection.
I would say there is little doubt the sale of the property (transferring the deposit refunding obligations to a new landlord) is a new deposit protection event and the new landlord should make sure the money is covered by one of the schemes and that the prescribed information is given (the new landlord might use a different scheme).