Renters Rights Bill & timetable for selling a (currently rented) house

Seriya_DL

Hi!

I’m looking for some advice how the upcoming Renters Rights Bill could affect our plans to sell the house we’re currently renting out. Specifically, this is about the change from Fixed-term assured tenancies (with a 6 month fixed term) to periodic tenancies, which I understand will have a 12 month initial fixed term, during which you can’t give notice.

Husband and I have a second property. We tried to sell this house between August 23 and June 24. Despite best efforts, and several price reductions, we had no serious offers and money was getting very tight. So we decided to rent the property out instead, for a limited time. Tenants have been in since mid-October 2024 and all is well. However, we have plans, and to make those plans a reality, we need to sell the house by November this year.

We will first ask the current tenants if they want to buy the property. If they don’t, we were hoping to put it on the market around April or May, I would be happy to let the tenants stay until we get an acceptable offer, at which time we'd give them one month's notice to move, which should be ok under the existing contract.

I appreciate this itself is risky, since a tenant who is unhappy at the prospect of their house being sold could sabotage viewings; we’re hoping to keep them onboard by being as open and fair to our tenants as possible.  

Anyhow, I’m conscious that when the Renters Rights Bill becomes law – which I’m reading could be some time between July and October - it will convert all existing Assured Shorthold Tenancy Agreements into Periodic Agreements. As I read it, in a periodic agreement a landlord won’t be able to serve notice during the first 12 months of a tenancy and if they then want the tenant to move out to sell the house, the landlord has to give 4 months notice.

I’m conscious our tenants will only just be past their initial six months in mid-April. If we’d have to wait 12 months before we can even serve notice, and then it’s a four month notice, our tenants wouldn’t move out till Feb 26 at the earliest.

Presumably, if our house was already on the market by the time the bill becomes law, would that stop the new notice periods stop taking effect? Or would we need to make sure we actually serve our tenants notice before the bill becomes law?

Or would we have to go on the market before the bill is even agreed? If that’s the case, our window could be extremely narrow (potentially literally just a few days).

If anyone else has any other relevant experience, do let me know. It would have been much neater to just sell the property back in 23/24 but it just wasn’t to be. Now I worry that by renting the place out, we have just been storing up more pain for the future.

 

Voyager2002

The general consensus is that if someone is serious about selling, they ensure that the property is empty first. Alternatively, market it as a ready-tenanted investment to someone who wants to be a landlord.

Yorkie1

A Bill doesn't automatically come into effect when it receives Royal Assent and thus becomes the Act.

Each section has to be specifically brought into force / commenced. Some sections are brought into force on Royal Assent, others 2 months later, by virtue of the specific parts of the Act.

The relevant part of the Bill for your question appears to be Part 1 Chapter 1. This is not listed in the Bill as coming into force on a specific date, and therefore there will need to be separate regulations issued in order to bring it into force. (Timescale for the Regs is unknown).

This all means that, I suspect, there is probably more time on your side than you might think.

The relevant date for action is likely to be the commencement date of the relevant sections, if a quick look at the transition provisions in Schedule 6 are anything to go by (and there are no further changes to the Bill before it is finalised).

Seriya_DL

Thanks Yorkie1 - that's really helpful. I'll freely admit I'm a total layman at this

Olinda99

I expect you know this but when you give your tenants notice they don't have to leave they can stay until you get a court order.

Seriya_DL

Olinda - yes I know that that's how it can go if it goes badly. At this stage I very much hope that it won't end up like that and they will move out without needing a court order.

Grumpy_chap

I think there is no harm in mentioning to the current Tenants that you may be open to selling to them if they were interested.
How much discount are you willing to give to the Tenants should they express a desire?

Outside of the current Tenants, the best thing would be to wait to sell until there is a natural void / vacant status.

Did you know last summer that you needed to sell by this November?

What are you fearful of in the new Bill?

Seriya_DL

Hi - yes we did know before we get the tenants in that we would want to sell after a year or so. However, the house was mortgaged and we could not afford to continue paying that without getting an income (it was previously rented to my mother in law, who then passed away..) so hence why we chose to rent it out in the interim.
The thing that worries me in the new bill is that once the existing Assured Shorthold Tenancy Agreements (which would include ours) are converted into periodic tenancies, the current guide the government published on the expected changes lists under legitimate grounds for possession "1A - sale of dwelling house. Cannot be used for the first 12 months of a new tenancy.  Notice period: 4 months". 

Seriya_DL

As for a discount - good question, not sure. We reduced the price significantly while we had the house on the market before. Can't accept less than the lowest value we reached then. Though we might be able to take off the cut that the estate agent would have received; while it's let out via an agent (and the same agent we previously tried to sell it through), the letting agreement we have with them makes no mention of what might happen if the tenants were to buy the property. I realise many letting agreements specify an introductory fee that would need to be paid in this sort of situation but I'm not seeing that in our agreement and I checked it several times. 

RAS

You do need to read up on basic landlord law and make sure your notice period is correct and ALL the required paperwork is in place before you give notice. Check the Shelter list.

And accept that very few people looking to buy even offer on a tenanted property that's still occupied, except perhaps FTBs who aren't in a rush to end their own tenancy.

So you are scuppering your own market.

eddddy

Seriya_DL said:

...the letting agreement we have with them makes no mention of what might happen if the tenants were to buy the property. I realise many letting agreements specify an introductory fee that would need to be paid in this sort of situation but I'm not seeing that in our agreement and I checked it several times. 

Following a High Court judgement against Foxtons in 2009, no letting agreements should specify that Sales Commission has to be paid if a tenant buys the property.

The High Court decided that would be an unfair contract term.

 See: https://www.tpos.co.uk/images/documents/media-articles/property-drum-sept-12.pdf