What is a sitting tenant?

A sitting tenant refers to an individual who resides in a rental property that is up for sale. They possess legal rights to remain in the property as long as they adhere to their tenancy agreement’s terms and pay rent. These rights and protections are governed by UK law.

In the UK, the number of renters is increasing, and lease terms are extending. As a result, rental and buy-to-let properties with sitting tenants are becoming more common, particularly as some landlords opt to sell due to recent tax changes and the ongoing credit crunch.

Sitting Tenant Rights

Before purchasing a property with sitting tenants, it’s crucial to understand their rights and how they might impact the transaction. If no tenancy agreement exists, sitting tenant legislation will protect them. Tenancy rights may vary depending on the type of tenancy agreement.

A sitting tenant cannot be evicted unless they violate the terms of their existing agreement. They have the right to remain in the property until the tenancy’s natural conclusion or if they are evicted for a valid reason. Additionally, a sitting tenant may occupy the property for life without disturbance, and the tenancy can be passed on to a spouse or family member upon their death.

Sitting Tenant Obligations

Tenants must pay rent on time; otherwise, they lose their sitting tenant status. Landlords can apply for an eviction order if a renter owes rent for three months or more under the Rent Act of 1977. Tenants are responsible for maintaining the property’s interior condition, and the landlord can revoke sitting tenant agreements if tenants breach the original agreement’s restrictions.

Landlord Rights

If a tenant’s tenancy began before 1989, they are entitled to “fair rent” under the Rent Act. In this case, the new landlord should be aware of their responsibilities. A new landlord can inspect the fair rent every two years (or earlier if significant improvements have been made) by employing a rent officer.

Sitting Tenant Scenarios

When a rental property is sold, sitting tenants might experience different scenarios, including no change, a new tenancy agreement, or eviction. It’s essential for tenants to be well-informed about their rights and responsibilities in these situations.

Buying and Selling Properties with Sitting Tenants

Purchasing a property with sitting tenants can offer lower prices and immediate rental income. However, financing can be an obstacle, as many lenders may decline mortgages on properties with sitting tenants. For landlords interested in this market, thorough research is crucial.

Selling a property with sitting tenants is possible, and having tenants in place can be a significant selling point. To ensure a smooth sale process, landlords should communicate with tenants, provide financial assistance if necessary, allow tenants enough time to find a new home, and arrange property inspections with potential buyers. Always consult a property lawyer for legal advice before taking action.