Selling a Rental Property in London with Tenants: What to Consider

If you’re a landlord with a property in Hampstead, Fitzrovia, Mayfair or in another Prime London location looking to reduce your portfolio, you may consider selling a property with sitting tenants – as known as selling with tenants in situ.

Doing this has pros and cons, and it’s worth understanding your options before you start. We look at the main things you need to consider.

Your Options When Selling A Tenanted Property

You have two main options when selling a property with sitting tenants:

1. Ask Your Tenants To Leave The Property And Sell It With Vacant Possession

Current legislation allows landlords to ask tenants to leave by serving them a Section 21 notice, as outlined in the Housing Act 1988. From 1st May 2026, the Renters’ Rights Act will change possession law and landlords will have to gain vacant possession using a Section 8 notice.

As long as the new Section 8 grounds are met, you will have an empty property to sell to whoever you like. However, selling homes can take some time and you will need to factor in the loss of rent during the sales process.

2. Sell The Property With Tenants In Situ

Selling a property with a sitting tenant to another landlord is common but this path will limit the buying audience to buy-to-let landlords. It does mean there will be no loss of rental income while the sale goes through – a benefit for you and the prospective buyer. Another option is to sell to your tenants, if they like the home and are able to buy.

Do You Actually Want To Sell A Tenanted Property?

While things may go smoothly, selling a property with tenants has potential pitfalls, so consider carefully why you want to sell and whether this is the right time.

Selling With Tenants In Situ – Points To Consider

Before deciding whether selling a property with a sitting tenant is the right choice for you, these are some things to consider:

Market Conditions

Review the current market conditions to decide whether now is the right time to sell. It may be better to wait until house prices to potentially increase if the market fluctuates. You can check the recent trends on sold house prices or ask your estate agent for information about market conditions.

Demand For Tenanted Properties

You should also research whether there is demand for tenanted properties in the area. If there is little demand, selling a property with tenants may be difficult. If this is the case, you must start proceedings to evict tenants – a process that is changing on 1st May 2026 as outlined in the Renters’ Rights Act.

Covering The Mortgage If Tenants Leave

Once your tenant has been informed you are selling the property, they may decide to find a new home immediately rather than wait for the sale to go through. If selling a property with tenants in situ, they are more likely to stay on and pay the rent.

If you find yourself in a position where the tenants move out, it may take several months for the property sale to complete. In that case, you’ll need to consider if you can afford any mortgage repayments with no incoming rent.

Negotiating Viewings  

Another essential factor is how viable it will be to conduct viewings while you have a tenant in situ. If you have a good relationship with your tenants, they are more likely to accommodate viewings. If your relationship isn’t friendly, you’ll probably find it challenging to arrange viewings before they move out.

Reasons For Selling

If you want to sell your property because it’s not profitable enough, or if you’ve had trouble with tenants, passing the problem on to another landlord could backfire. A landlord interested in buying with tenants in situ would do their financial calculations and perform checks on tenants they are taking on.

Tenancy Agreement Differences  

While all assured shorthold tenancies (ASTs) will automatically change to assured ‘rolling’ periodic agreements on 1st May 2026, some lifetime and protected tenancies will remain and tenants with these benefit from extra protection. Frequently, the landlord of a lifetime or protected tenancy can only sell the property to another landlord so the tenancy can continue.

Selling With Tenants In Situ – Pros And Cons

There are pros and cons to selling a property with tenants to another landlord and you will need to weigh up how these pros and cons will affect your situation:

Advantages Of Selling A House With Tenants

• No loss of rental income – You’ll receive rent until the house is sold, so there will be no void periods where the cost falls on you.
• Less disruption for the tenants – Evicting a tenant can be difficult, especially if you have long-term tenants settled in your property. When you sell in situ, you do not have to uproot them. 
• Buyer receives income immediately – he landlord buying your property will have a guaranteed yield, which will give them confidence that it will be a profitable investment.
• Secure a higher price – Properties with good rental yields are an attractive investment, meaning you might secure a higher price with tenants in situ. They also won’t have to pay tenant-finding costs.

Disadvantages Of Selling A House With Tenants

• Difficult to arrange viewings – When tenants live in your property, they have the right of “quiet enjoyment”. They can refuse to allow viewings unless the tenancy agreement states that they must allow viewings.
• Reduces the pool of prospective buyers – If you are selling a property with tenants in situ, you are limiting who you can sell to. Landlords will be your prospective buyers and not buyers who want to live in the property themselves.
• Tenants can put buyers off – If your tenants are not looking after the property very well or it is untidy for a viewing, the property’s condition may deter buyers.

Legally Repossessing Your Property After 1st May 2026

Gaining legal possession is changing. Section 21 notices can be issued up until and including 30th April 2026. There will be a new law for landlords wanting to sell their property with vacant possession from 1st May 2026, as follows:

• A Section 8 notice will be the only way to gain vacant possession
• A new Ground (Ground 1A) pertains to the ‘sale of dwelling house’ – i.e. if a landlord wants to evict tenants so they can sell an empty property
• If they want to sell, landlords will not be able to ask their tenant to leave within the first 12 months of a new tenancy
• When 12 months have elapsed, the landlord must give 4 months’ notice before they apply to the court for a possession order

All of the possession grounds – existing and new – that are contained within the Renters’ Rights Act are explained on this Government web page.

Notifying Your Tenant Of The Sale

Out of courtesy, contact your tenants well in advance and explain the sale. If you intend to repossess the property first, explain your reasons for wishing to sell – this would be the point to give them a chance to make an offer if they want to do so.

If you are selling a property with tenants in situ, explain why you need to sell. Reassure your tenants that you will sell to another landlord, so everything about their tenancy should stay the same. Being open and honest with your tenants and getting them onside will help viewings go more smoothly.

Can You Demand More Money For Your Property With Tenants In Situ?

This really depends on the market conditions in your local area – a good sale price might be forthcoming if there is high demand for buy-to-let properties or if finding good tenants is a particular challenge. Theoretically, you should be able to command a premium because the property has tenants in place, saving the buyer money and stress.

However, taking on someone else’s tenants entails more risk for the buyer, and the experienced landlords who buy this sort of property may strike a hard bargain.

Who Should I Instruct To Sell My Tenanted Property?

There are a few different options available to a landlord selling a property with tenants:

1. Sale by estate agent

Selling a property with tenants in situ is more complicated than a standard house sale. Still, if you choose an experienced estate agent, they can help you find the right type of buyer. A good estate agent should also be able to provide you with an accurate valuation, considering the current rental property market and house price trends.

2. Sale by auction

You can sell the property at auction. This option can be a gamble, as landlords may not be willing to meet your reserve fee. The open market valuation provided by auctioneers will be lower than an estate agent valuation, with the hope of driving the price up through competitive bidding.

Auctions can be overwhelming if you are unfamiliar with how they work, and you will likely have to pay a fee of around 2% -2.5 % when the property is sold. 

3. Sale by Home Buying Company

Another option is selling your property to a home-buying company, which guarantees a quick sale. The main disadvantage of this option is that the company will not pay the property’s open market value, which you could achieve with another type of buyer.

Selling A Property With A Sitting Tenant: The Process

Selling a property with tenants in situ can be the ideal scenario for you as the seller, the tenants and the buyer. To help you prepare for selling the property, the process will include the following steps (although these may vary depending on the sale method):

1. Scheduling And Arranging Viewings 

Check your tenancy for any clauses about viewings – if there aren’t any you may need to rely on your tenant’s goodwill. Remember that landlords need to give tenants 24 hours’ written notice before any property visits – and need their permission.

Try to be considerate about arranging viewings at reasonable times – giving the tenants the chance to go out if they prefer. Some landlords offer incentives, such as rent reductions, to sweeten the viewing period.

2. Paperwork And Changing The Tenancy Agreement Contract

If you’re selling a property with tenants, use a conveyancing solicitor with experience of dealing with tenants in situ. Once you have completed the sale, they will ensure the new owner automatically takes over as landlord.

While this removes your obligations to the tenants, the tenancy agreement remains in place – even though it still contains your name and details. You will also need to gather all the documents, such as safety certificates, to pass to the buyer.

3. Transferring The Tenancy Deposit

When your tenant moved in, you (or your letting agent) will have placed their security deposit in a Government-backed scheme. As part of the sale process, your conveyancing solicitor will arrange the transfer of the buyer’s name to the deposit scheme you are using. For additional peace of mind, it may be worth contacting the scheme to check this has all gone smoothly.

4. Completion And Apportioning Rent

It is usual to set the completion date for the day the rent is due – so there is no need to move rental payments between seller and buyer. If this can’t be done, your conveyancing solicitor will arrange to apportion any rent due to the buyer and ensure it is paid.

Conclusion

If you are considering selling a property with tenants in areas like Hampstead, Victoria, Little Venice, Kensington, Battersea, Bayswater, Mayfair and Holland Park, we’d be happy to offer advice. Contact us to find out more today.

Selling A Property With Tenants FAQ

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