Selling House to Current Tenant
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Selling House to Current Tenant
If you’re contemplating selling your Buy to Let property, one option is to sell it to your current tenant. It’s an arrangement that can provide advantages for both of you.
This guide will help you decide whether this could work for you.
Can I sell my house to my current tenant in the UK?
Yes, as a homeowner in the UK, you have the right to sell your property to your current tenant. Selling to a tenant can be mutually beneficial, helping your tenant onto the property ladder and making the process easier and less costly for you.
What are the benefits of selling my house to my current tenant in the UK?
Selling to your current tenant offers several advantages. Perhaps the most appealing of these is that it eliminates the need to search for new buyers, or pay an estate agent to market your property. This should make the selling process much shorter.
Also, your tenant is already familiar with the property and its condition, so it’s unlikely there will be any unwanted surprises during the sale.
Are there any legal requirements I need to consider when selling my house to my current tenant in the UK?
Legal requirements include providing formal notice of your intention to sell, ensuring the tenant’s right to a fair negotiation, and following the terms of their existing tenancy agreement.
If you currently work with a letting agent, check what your obligations are in terms of ending the arrangement – you may need to respect a set notice period. Some contracts require you to pay a fee on selling to a tenant, as they originally introduced you to each other.
Speak to a property-focused solicitor to make sure you comply with any other legal requirements.
What is the process for selling my house to my current tenant in the UK?
The process typically involves:
Notify the tenant: Inform your tenant of your intention to sell the property, allowing them a fair opportunity to express interest.
Agree the terms: If your tenant wishes to buy, you would discuss the terms of the sale, including the selling price and any other relevant details.
Legal/financial work: You now need to talk to your mortgage lender and legal professionals to handle the transfer of the property. At this point your tenant will be working on getting a mortgage.
Completion of the sale: Once all parties have agreed and exchanged contracts, the sale can be finalised, and the property ownership transferred to the tenant.
How much can I sell my house to my current tenant in the UK for?
The selling price will depend on various factors, including the property’s market value, location, condition, and current rental rates. Speak to an estate agent to determine a fair price for your property.
What factors should I consider when setting the selling price for my house to my current tenant in the UK?
Some landlords decide to offer their tenant a discount on the market value of the property, in recognition of the rent paid over the previous months and years, plus the saving on estate agency fees. This allows the tenant to use the discount as a deposit, which potentially makes the sale easier.
What financing options are available for my tenant when purchasing my house in the UK?
The usual route is for your tenant to get a mortgage to buy the property. It’s a good idea to ask them to get an Agreement in Principle at an early stage in the negotiation, as this is an indication that they will be able to get the mortgage needed.
Who is responsible for paying for legal and survey fees when selling my house to my current tenant in the UK?
The buyer (in this case, the tenant) is responsible for paying for a survey, as it gives them important details about the condition and structure of the property.
Legal fees apply when both selling and buying property – you will each pay fees for the required legal work on contracts and liaising with lenders.
What are some potential risks I should be aware of when selling my house to my current tenant in the UK?
A few risks to consider include:
Tenants may push for a reduction in the price you’re asking for the property. They may argue that they’ve been paying rent for years and that you are saving money by selling to them
If the tenant is unable to secure a mortgage they may not be able to complete the purchase.
Negotiating may be more complicated, as you have an existing relationship and you may be dealing with them direct. It could require more of your time, or cost you more in legal fees.
There could be complications if the tenancy agreement ends with the tenant before the property purchase is complete. Seek legal advice if this could potentially happen.
What documents do I need to prepare when selling my house to my current tenant in the UK?
Some of the main documents that you will need to provide when you are selling your home include:
ID and proof of address
Energy Performance Certificate (EPC)
Property Title Deeds
Fitting and Contents Form
Property Information Form
Your conveyancing solicitor will ensure that all necessary documents are in order so that the sale is smooth and legally compliant.
How can Richard Crow Mortgages & Insurance help?
As a mortgage broker, we have worked with several landlords who have sold a house to their current tenant. It can be an attractive option, especially if you have a good relationship with them.
We can help make sure that you are following all the required processes, including dealing with your current Buy to Let lender. We can also put you in touch with legal professionals to make sure that you meet all the requirements and have as smooth an experience as possible.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Some forms of Buy to Let Mortgages are not regulated by the Financial Conduct Authority.