Selling property – tenant still in residence

Hi Ted

It's a good letter, however, I find that face to face meetings and sharing empathy over a cuppa are far better to resolve issues than writing letters. Therefore, whenever I get a call, text or email from a tenant the first thing I suggest is a meeting. By all means follow that up with a courtious and professional letter outlining discussions.

Having said that, I have never sold a tenanted property and I can see why it could be difficult to call a tenant out of the blue and to request a meeting as their natural curiosity would lead to them asking what the meeting is about and failure to answer that would be awkward.

I will be interested to see what others have to say about this, especially if they've been in this position and are willing to share their experiences.

Good luck anyhow 🙂
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Hi Ted,

I have considered the same in your position. ie selling a property to a tenant.
Your letter/offer to the tenant is VERY generous, in terms of discount and in terms of relocation expenses.
If your tenant were to move out two or three months before you sold it, you would lose, maybe £2k..
But advertising your property on the open market with vacant possession will get alot more interest than an investment property, or even with a tenant in, who may or may not move before completion takes place ( buyers sometimes get nervous of a 'sitting' tenant ), so you may be able to market it at a higher price.

If I were you, I'd split it into two parts:
tell the tenant you have thoughts of selling, and ask if they are interested because you would prefer to sell to them, and if so, should you get a valuation and they'll get a discount.
If they are not interested in purchasing, give them a couple of days, then tell them you are still thinking of selling and will put it on the market, by this time they will be expecting this from you anyway and not be surpirsed or flustered about the news.

Don't forget, if you move into the property before you sell it as your main home, you will get some CGT allowance, as discussed in another thread.
So this could save you more money than having them up to the completion date.

There is a third option.

Sell the property for cash to another investor who will simply take over the tenancy.

Clearly, the purchaser will be looking for a discount - typically around 15% - but a tenanted properties is not attractive to the market place.

In my recent experience of trying to sell a tenanted property, the tenant refused to co-operate with any viewings.

They handed in their notice when I mentioned selling the property, and did not allow any viewings. I decided not to sell the property, but they declined to stay on.

I therefore had to wait until they left to start viewings for a new tenant. It was void for two months.

So it cost me to even mention to the tenant that I was thinking of selling.

There is some advice here about selling a tenanted property and the possible benefits of selling to a cash buyer. This is based on my story, which I told to my friend Richard Hill at Dream House Buyer:

http://www.dreamhousebuyer.co.uk/news/Selling-an-investment-property-with-tenants

I hope it helps add perspective to this issue.

Same as Mark says, go see her, talk to her.

Or as Vanessa says, sell to investor, if u gonna knock 10k off anyway, u may be close to investor price.

I’ve sold a few with tenants in, tenants get scared at first, till (in my case) u reiterate only selling to someone that is going to keep her in.

If she ain’t buying off u, u could save 10k, & offer to pay for her deposit, rent up front, for her next house, she she may help u out like that by keeping house nice etc.

You could offer her a percentage over a certain price, that u know would be rock bottom ie. 70k, but for every thousand over, if it fetches 80k, give her 20% of the excess, so if she plays ball, cleans up, tells purchasers everything's mint, she gets 2k as well. So u get more, she gets more.

And I’ve bought loads with existing tenants in, & existing owners that wished to stay in & rent afterwards, so for 10k less, I’ll buy it if it’s local & good value-Where is it? Can complete in 3 days as well, that’s got to be worth another 5k off ha ha.