Buying a property with sitting tenants? Here’s what you need to know

On paper, buying a property with tenants in place might look like a win: immediate rental income, no need to find occupants, and a seamless investment. But with big changes coming to rental laws and increasing challenges for landlords, this type of purchase needs a hard look before you sign.

What is a sitting tenant?

A sitting tenant (also called a tenant in situ) is someone who is living in a property when it’s sold, and they stay put after completion. As the new owner, you become the landlord from day one, taking on all legal duties under the existing tenancy agreement.

This can be a great setup if you’re looking for hands-off rental income. But it can also come with limits, complications, and long-term consequences, especially now, given the impending changes to regulations for residential landlords.

What is changing for landlords?

Landlords are facing tougher rules, and soon, even tighter restrictions, on recovering possession of their properties. Here’s what’s changing:

• The Renters (Reform) Bill, expected to become law soon, will abolish section 21 ‘no-fault’ evictions. Landlords will only be able to evict tenants using specific legal grounds, such as persistent rent arrears or anti-social behaviour.
• All fixed-term Assured Shorthold Tenancies (ASTs) will convert to periodic tenancies, removing the ability to end tenancies automatically at the end of a fixed term.
• Landlords will need to justify and evidence any possession claims through the court, with a higher threshold in place for regaining control of their property.
• Court delays are already causing long waits, making even justified evictions could be slow and unpredictable.

In short, the law is shifting to give tenants more security, and anyone buying a tenanted property will be stepping into a more regulated, tenant-friendly landscape.

What buyers must consider

If you’re buying a property with a tenant in place, you’re taking on the full responsibilities of a landlord. That includes:

• Rent collection and repairs
• Legal compliance (e.g. deposit protection, gas and electrical safety)
• Navigating complex eviction rules, if things go wrong.

Before you commit, make sure you understand:

• What kind of tenancy is in place (this impacts your rights and options)
• The tenant’s payment and conduct history
• Whether all documents (tenancy agreement, gas safety, EPC, deposit scheme, etc.) are in order.

What sellers need to know

If you’re selling a property with a sitting tenant, transparency is key. That means:

• Providing all tenancy documents upfront
• Disclosing any rent arrears, disputes, or legal notices served
• Understanding that a tenanted property may command less on the open market.

Buyers may see a tenant in situ as an asset or as an added risk. Either way, being upfront helps avoid delays and potential legal disputes.

The takeaway: know what you’re buying

Buying with a tenant in situ can be a solid investment, but only if you understand what you’re walking into. With the legal landscape tightening and tenant protections increasing, you can’t assume you’ll be able to regain possession easily or quickly.

Get legal advice early. Understand the tenancy. Price the property accordingly. And be sure you’re ready to manage the risks that come with being a landlord in today’s climate.

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