Can I sell my property whilst the tenant has a fixed term contract?

confused_landlord

Basically, I live in Germany so I rent my UK property out on a houseshare basis and each tenant has their own contract. Three of the tenants are out of the fixed term portion of their contract - so that's ok. But one tenant moved in literally last weekend and has 9 months to go on her fixed term contract. The thing is that I have now found out I might need to move to the US and so I would like to sell the property. Am I at liberty to do so?

The thing is that the tenant signed the contract and is waiting for me to add my signature. I only found out this week that I might need to relocate and now I am not sure how to handle this.

Thanks in advance

terryw

Has the tenant paid any rent?

confused_landlord

Yes. The tenant paid the first months rent in advance....

G_M

If the tenant has paid rent, and been given a key, you clearly have a contract!

But of course you can sell.

To another landlord.

00ec25

there is NOTHING stopping you selling
however your market is restricted to other LL who are willing to take over the liability of a tenant who has the absolute right to occupy the property for the next 8 months

Werdnal

If your new tenant is already living there and paid rent, regardless of a signature on the agreement, the tenancy has started - tenancy agreements do not need to be in writing to be valid and legal, verbal agreements are just as legit.

As for selling, even your tenants who are outside their FT will require 2 month's notice that you will apply to evict them, possibly followed by a court case to gain possession (another 4-6 weeks if you are lucky) if you want them to leave, so just because the FT has ended, doesn't mean you can get them out quickly. Obviously, the new tenant would have the right to stay to the end of their term (unless you can reach a financial agreement with them to make it worth their while breaking the tenancy).

However, the whole problem will selling with tenants (especially with you being so far away), is that they have a right to refuse all viewings, and you cannot ensure the property is presented well, tidy, clean, no nasty smells, rubbish on the floor etc. You also cannot gag the tenants and stop them putting buyers off - would you be inclined to "sell" the place for your landlord if you are effectively encouraging them to make you homeless.

With the length of the possible eviction process, you are also limited your market to investment buyers. Anyone buying with resi mortgage, will be advised by solicitor not to exchange on the property until you can prove it is vacant and all tenants have left. This can obviously delay the purchase, and buyers may lose interest and pull out.

If you are lucky enough to get BTL investor interested, they will inherit your tenants and all the terms and conditions of their existing tenancy will transfer to the new landlord.

So, in answer to your question, there is nothing to stop you trying to sell with tenants in place, but there are many more hinderances to achieving a successful sale if you do so.



Just as an aside, as you are a non-UK resident LL, I assume you have complied with the HMRC regs for tax on rental income (unless you have an agent acting on your behalf in UK of course). Also, do tenants have an address (postal) in England or Wales for contacting you to serve notices etc - if not, you are in breach of tenancy laws. No doubt you are all up to speed with all of this, but it is often overlooked when LLs rent out properties here and move overseas.

confused_landlord

THanks werdnell. Yes, I pay UK tax on my rental income and I have a UK contact for the tenants to liaise with - I also make sure the boiler is serviced every year etc etc.

Also, the tenants have the right to vacate whenever they wish (break their fixed term) if they can find a replacement tenant which has happened many times in the past. Bearing in mind I do give them some latitude, would I not be due some latitude for my extenuating circumstances?

TopQuark

Dear OP,

As you said, your tenants are permitted by your contract to break their fixed term as long as they find a replacement tenant (this, I presume, is what you call giving them 'latitude').

You are also permitted to relinquish your role as a landlord and 'break' the fixed term - by selling the property to another landlord. Or you could try persuading the fixed-term tenant to leave early by providing a cash incentive. There is your latitude.

What would you do if a tenant wanted to leave before the end of the fixed term and a replacement could't be found? Would you just let them off with the cash they contractually owe you? Highly unlikely I suspect.

You are proposing to remove the roof over several people's heads here, one who has only just moved in. If the tenants are house-sharing, it's likely that they are young and/or financially limited, so moving house, along with being highly stressful in it's own right, is also likely to be very expensive for them.

Being a landlord is not a game, it's a business that by its nature, also carries certain moral obligations. Whether you choose to oblige is up to you, but on the information you've provided so far, it appears the tenants hold the cards.

agrinnall

confused_landlord wrote: »

Bearing in mind I do give them some latitude, would I not be due some latitude for my extenuating circumstances?

No. You are due what the contract and the law says. You can try to appeal to your tenants with the mitigating circumstances, sweetened by a decent cash offer to leave early, but if they say no then you have to wait until you are legally permitted to commence eviction proceedings.

confused_landlord

TopQuark wrote: »

Dear OP,

As you said, your tenants are permitted by your contract to break their fixed term as long as they find a replacement tenant (this, I presume, is what you call giving them 'latitude').

You are also permitted to relinquish your role as a landlord and 'break' the fixed term - by selling the property to another landlord. Or you could try persuading the fixed-term tenant to leave early by providing a cash incentive. There is your latitude.

What would you do if a tenant wanted to leave before the end of the fixed term and a replacement could't be found? Would you just let them off with the cash they contractually owe you? Highly unlikely I suspect.

You are proposing to remove the roof over several people's heads here, one who has only just moved in. If the tenants are house-sharing, it's likely that they are young and/or financially limited, so moving house, along with being highly stressful in it's own right, is also likely to be very expensive for them.

Being a landlord is not a game, it's a business that by its nature, also carries certain moral obligations. Whether you choose to oblige is up to you, but on the information you've provided so far, it appears the tenants hold the cards.

Well. The last thing I need is unhappy tenants ruining the atmosphere for the other residents, so if a tenant needs to move I have always found a replacement tenant myself - not least, because I know they can't pay rent on two places and so it's unlikely I will get the money from them anyway.... the clause was merely a deterrent. IF the rents had fallen, I would give the tenant the option to pay the difference in the rent for 6 months or so and this was never more than about 15gbp pcm.

I only asked because I was under the impression that room sharers have more limited rights - by nature their tenancies are more short term. Their contract is called a 'Houseshare licence' though it states within the body of the contract that it is an AST. But there is also a clause which states:
Upon the greater of one month notice and any notice required under the Act, the Landlord may terminate the tenancy under this Agreement without cause or reason.

Yorkie1

If you do not live in the property then each individual has an AST and the notice period you can give is that which is set out in statute, irrespective of what the tenancy document says.

As others have already said, this means that you cannot terminate the tenancy as the document says. In fact, if you give notice, it has to be two months to coincide with the end of a tenancy period - and cannot expire before the end of the fixed term.

TopQuark wrote: »

Dear OP,
You are also permitted to relinquish your role as a landlord and 'break' the fixed term - by selling the property to another landlord. Or you could try persuading the fixed-term tenant to leave early by providing a cash incentive. There is your latitude.

The bit in bold is incorrect. Whilst you can sell the property to another LL, you are not breaking the fixed term by doing so. The original tenancy continues, unaffected by the change in LL.