Can a Landlord Sell a House During an Assured Tenancy Agreement?

Selling a property during an existing tenancy agreement can present unique challenges and considerations for landlords. Here, our experts explain whether landlords can sell a residential property while it is tenanted. 

Whether you are a seasoned property investor or a first-time landlord, selling a property with sitting tenants can be complicated. It requires careful planning and informed decision-making, as tenants' rights under assured shorthold tenancies are strictly enforced. Understanding the rights of sitting tenants and the obligations of landlords are important to ensure a smooth and compliant sale.

In this guide, we will explore the legal framework surrounding assured shorthold tenancy agreements, the impact of a sale on existing tenancies, and the steps landlords must take to ensure compliance with UK law.

If you have any questions we have not covered, our specialist landlord solicitors are able to answer your landlord query. You can contact us by completing the enquiry form below or by calling 0151 666 9090.

What is an assured shorthold tenancy agreement?

An assured shorthold tenancy (AST) agreement is a widely used form of rental contract in the UK. It is among the most common as it provides tenants with a high level of security and landlords with a structured framework for managing their properties. Introduced under the Housing Act 1988, the AST is designed to balance the rights and responsibilities of both parties, ensuring a fair and regulated tenancy.

The key features of an assured tenancy agreement include:

• Security of Tenure: Tenants have the right to remain in the property for the duration of the agreement.

• Fixed-Term and Periodic Tenancies: Agreements can be for a set period or roll on a periodic basis.

• Rent Control: Rent increases must comply with the terms of the tenancy or be mutually agreed upon.

• Grounds for Eviction: Evictions can only occur under specific conditions, following legal procedures.

• Tenant Responsibilities: Tenants must pay rent on time and maintain the property.

• Landlord Obligations: Landlords must ensure the property is safe, habitable, and well-maintained.

While the individual terms of an AST agreement for a residential property may differ, the above elements are determined by law and will generally apply in all cases.

Can a landlord sell a property with an assured tenancy?

If a landlord wishes to sell a property with an assured tenancy agreement in place, they can usually do so. However, certain legal considerations and responsibilities must be taken into account to ensure that landlords are on the right side of the law when selling a house with sitting tenants. Here are the key points to consider:

• Continuity of Tenancy: The sale does not automatically terminate the tenancy. Tenants have the right to remain in the property under the existing terms until the agreement expires or they are lawfully evicted.

• Sitting Tenants' Rights: Because the existing AST remains valid even after the landlord sells the property, the new owner must honour the terms of the rental agreement, ensure the tenant's rights are protected and fulfil the duties of the landlord.

• Notification: The current landlord must inform the tenants of the sale and provide details of the new landlord. This ensures tenants know whom to contact for any issues or concerns.

• Deposit Protection: The new landlord must transfer the tenancy deposit to a government-approved protection scheme and inform the tenant of the transfer.

• Property Viewings: While selling a rental property, landlords must respect their tenant's right to privacy. Proper notice must be given for any property viewings, and these should be conducted at convenient times for the tenant. You can read our guide on “Can A Landlord Enter Without Permission?” here.

Selling a tenanted property that is under an assured shorthold tenancy agreement requires careful handling to maintain compliance with UK law and uphold tenant rights. Our team of specialist solicitors can guide you through this process, ensuring all legal requirements are met and your interests are protected, or advise you on carrying out an eviction.

What is a “sitting tenant”? 

A “sitting tenant” is the name given to any person who occupies a rental property while it is being sold by the landlord. This tenant retains their right to reside in the property even after it changes ownership, and their tenancy continues uninterrupted by the sale. The existing tenancy agreement remains in effect after the sale, meaning the new landlord inherits all responsibilities and obligations outlined in the original contract.

Sitting tenants have the right to remain in the property until the end of their tenancy agreement or until they are lawfully evicted. Their rights are protected by law, regardless of the change in ownership. This continuity ensures that tenants are not unfairly evicted due to the property sale.

The sale price of a property can be significantly affected by the presence of sitting tenants. While selling a property with existing tenants can provide a steady income stream for potential buyers, it can also present certain challenges that may impact the property's market value.

You can read more in our guide to sitting tenants.

Can you evict tenants during the sale? 

Evicting tenants during the sale of a property is a complex matter that requires careful adherence to legal procedures. Landlords must respect the rights of their tenants and follow an established legal framework to ensure any eviction is lawful and justified.

Under an assured shorthold tenancy agreement, tenants have significant protections against eviction. A landlord cannot simply evict a tenant because they wish to sell the property. However, there are specific circumstances under which eviction may be possible:

• Section 21 Notice: Also known as a “no fault” eviction, this notice allows landlords to evict tenants without providing a specific reason. However, it can only be used after the fixed term of the tenancy has ended or if there is a break clause in the tenancy agreement. It can be used at any time during a periodic tenancy.
   Landlords must provide at least two months' notice, and the notice must comply with all legal requirements. For example, the landlord must have protected the tenant's deposit and provided the necessary documentation (such as a     gas safety certificate and the government's "How to Rent" guide) or the eviction will not be legal.

• Section 8 Notice: This notice can only be used if the tenant has breached the terms of the tenancy agreement, such as by failing to pay rent or causing damage to the property. The landlord must specify the grounds for eviction and provide the appropriate notice period, which varies depending on the grounds cited.

Tenants have the right to challenge an eviction notice in court. If the court finds that the notice does not comply with legal requirements or that the eviction is unjustified, the landlord’s request for possession may be denied or deemed an illegal eviction. For this reason, it is vital to seek expert legal advice during the eviction process.

Additionally, landlords should avoid any actions that could be construed as retaliatory eviction. Retaliatory evictions, also known as “revenge evictions”, occur when a landlord attempts to evict a tenant in response to the tenant asserting their legal rights, such as requesting necessary repairs. Such actions are illegal and can result in significant penalties for the landlord.

You can read more about how to legally evict a tenant and avoid court here.

How Can Percy Hughes & Roberts Help?

If you need legal advice regarding the purchase or sale of a property with a sitting tenant, or assistance with any other legal matters, our specialised team is here to help. 

Percy Hughes & Roberts has been delivering exceptional legal services to clients across the Wirral, Merseyside, and the North West region for over 100 years.

We recognise the complexities and challenges involved in property management and tenant relations. Our aim is to reduce your stress and provide you with valuable, time-saving solutions. 

For more information about our landlord services, contact our expert solicitors today. Call us on 0151 666 9090, or send us your query by email by filling in our online contact form.