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A sitting tenant refers to a person who continues to occupy a rented property even after the original lease has ended. They have legal rights and can remain in the property until the landlord follows the proper eviction procedures or both parties reach a mutual agreement.
It’s no secret that the number of people renting in the United Kingdom is on the rise, and lease terms are also getting longer. This implies that you’re more likely to come across rental properties and buy to let properties with sitting tenants, especially now that some landlords are looking to sell after the recent tax changes and the continuing credit crunch.
It’s important if you’re thinking of buying a property that has sitting tenants in place, to understand what sitting tenants rights are and how they might affect the deal. If there is no sitting tenancy agreement in place, they will be protected under the sitting tenant legislation.
When the buyer completes possession of the property, they will also acquire title to the original tenancy agreement prepared by the previous landlord. The new landlord may have the right to evict a tenant from property under an Assured Shorthold Tenancy AST, which is known as a Section 21 notice in most cases. If your tenant has an assured or regulated tenancy, their tenancy rights are more comprehensive compared to an AST.
However, not all tenancies will be ASTs. If the people renting in question had the security of tenure under the Rent Act 1977 and signed the lease before 1989, they will have a security of tenure and retain their right to reside there.
A sitting tenant cannot be evicted unless they break the terms of their existing tenancy agreement. The property must be sold as a going concern, which means that it is part of the sale deal that includes homes for sitting tenants as well as vacant possession.
If the tenant has an ongoing contract or agreement with their original landlord, then they retain the right to live in the property when it changes hands.
The tenant in situ also has the right to remain in the property until their tenancy reaches its natural end or they are evicted for good cause.
A sitting tenant has the right to occupy a property for life without being disturbed and should a sitting tenant die, they are allowed to pass on the tenancy to a spouse or another family member.
If the tenant in situ leaves before the deal is complete, they will have no obligation to contribute towards legal professional fees or other costs of legal requirement incurred by the buyer when taking over possession of the property.
A sitting tenant cannot be charged more than once for any single service provided by a landlord during any given tenancy (such as repairs and maintenance), unless more than one thing happened simultaneously, such as an upward and downward repair during a tenancy.
If there was only one instance of damage requiring repair work while sitting tenants were occupying the property, they shouldn’t be charged anything at all.
It’s important to remember that if tenants in situ in place are not in the legal sense, they will be protected by sitting tenant legislation under any circumstances.
If a tenant fails to pay his or her rent on time, he or she loses their sitting tenant status. If a renter owes the landlord rent for three months or more, the landlord may apply for an eviction order to evict tenants under the Rent Act of 1977.
The tenant is in charge of maintaining the property’s internal condition. Repairs must be made in a timely manner, and no equipment in the house should be utilised for any other purpose.
The landlord is able to restrict the tenant’s right to occupy by revoking his or her sitting tenant agreements. The original tenancy agreement may contain restrictions such as not having any pets and ensuring that the garden is kept up. If the tenant breaks these rules, he or she risks losing their tenant rights.
Even if a landlord decides to sell the property, none of these rights and responsibilities is changed. If the property is sold, a sitting tenant is under no obligations and does not need to sign a new contract if they do not want to. The original agreement still remains valid even though the name is out of date. However, if you do not wish to sign the new tenancy agreement, it is critical that you obtain your new landlord’s payment information, as a change of landlord will not be accepted as a reason for rent non-payment.
It’s easy to see why sitting tenants want to maintain their position and why many landlords want them to renew their leases. The ideal thing a sitting tenant can do is to adhere to the established standards and regulations and play it completely by the book. That way, the landlord won’t be able to seek an eviction order.
As previously stated, if a tenant’s tenancy began prior to 1989, they are entitled to “fair rent” under the Rent Act. In this instance, the new landlord should be knowledgeable of their responsibilities.
A new landlord taking may inspect the fair rent every two years if they take on a property with tenants in situ. (or before if significant improvements have been made) They cannot do it themselves; instead, it must be done by a rent officer.
It may be an uncertain time if you’re the person renting and your landlord informs you they’re going to sell. It’s vital for you to be fully informed if you want to get rid of some of the uncertainty. As a current tenant, you have certain rights and protections that you need to know about.
Let’s look at the most typical situations for sitting tenants before we dig into your rights and obligations:
A landlord may often sell a rental property to another person, which might imply that your tenancy will stay the same as it is or with very little variation to you or your existing agreement. Obviously, you’ll have a new incoming landlord, but everything else will remain the same.
Although this isn’t always the case, frequently rentals are transferred between landlords, so there is no guarantee that your current contract will not be changed. The new owner might want to alter your contract from the previous owner and create a new agreement, particularly in terms of duration and the amount you are required to pay (higher rent).
It’s also common for tenancy agreements to be renewed merely to reflect the change in ownership, even if the terms of the contract are unchanged.
This isn’t something you want to hear, but it’s a possibility. The buyer may wish to house their own tenants in the home or perhaps move in themselves.
Another cause for eviction might be that the buyer sees great potential in the property and has plans to make major changes that would require the structure to be vacant while renovations are done.
If you’re looking to acquire a rental property with existing tenants, the price should be far lower than if it is a vacant property. This can make it a fantastic opportunity for any landlord who is willing to wait out the current tenancy since the property will be on the full market value once the existing tenant has departed. There will not be a void period when the sale has been completed, which means you’ll save on agency fees by not having to advertise the rental
Financing is the most common problem for purchasers wanting to buy a property with sitting tenants. Many lenders will refuse to grant a mortgage on a house with a tenant in situ, so a cash purchase might be your only hope. However, in light of an increase in the number of such situations occurring and the ongoing competitiveness among lenders in the buy to let sector.
For landlords who are interested in entering into buying a property with a sitting tenant, it is important that they research their market thoroughly before making an offer. Often times this market can provide excellent rental returns and long-term capital growth potential for those who invest early enough.
While it may appear to be a difficult process, selling a property with a sitting tenant is feasible and doesn’t have to be as stressful as it appears. This is especially true if you have a longstanding, happy relationship with your tenant.
It is a major selling point to have tenants already in place as it ensures that the property won’t be left vacant and unloved for a period of time.
In order to sell your home with sitting tenants, there are several important steps you will need to take so as to ensure a smooth sale process:
If you are planning on selling your home with sitting tenants, it is important that you plan ahead so as to ensure a smooth sell. The content of this article is intended for informational purposes only and does not constitute legal advice, so always consult a property lawyer before taking action.