You may have heard the term ‘sitting tenant’ and wondered what it means. Here we explain what rights a sitting tenant has, how a sitting tenant may affect a property sale, and the choices landlords have if they are buying or selling a property with a sitting tenant.
What does 'sitting tenant' mean?
A sitting tenant, or ‘tenant in situ’, is a tenant that is still living in the property when it is sold by a landlord. This could be because a tenancy agreement is still in place. Buyers can respect the tenants’ right to remain living in the property. But a seller may choose to evict the tenants, if they are able to do so, because the selling price will be negatively affected with a tenant in situ.
What rights do sitting tenants have?
Sitting tenants do have rights. If they have an ongoing tenancy agreement with the landlord who is selling the property, they have the right to remain residing there even after the sale. In the unlikely event that the tenancy began before January 1989, the sitting tenants can exercise their rights to ‘security of tenure’ under the Rent Act 1977. In these cases, tenants can remain in the property even after their agreement has expired or been terminated. A landlord has to prove they have ‘ground for possession’ for a pre-January 1989 tenancy in order to evict the tenant.
However, there will be few tenants today with such a long standing agreement. Most tenancies these days are assured shorthold tenancies, which gives a landlord the right to use an eviction notice, even for a sitting tenant.
Buying a property with sitting tenants
If you are buying a property which has sitting tenants, the price you pay will be lower than similar properties which are sold with vacant possession. So if you want to save some money on the purchase this is a great way of doing so. However, you may struggle to get a mortgage offer on a property with sitting tenants, so this might only be an option for cash buyers. You could just wait until the tenancy has come to an end or the tenants have been evicted.
Are you buying with a view to letting out the property anyway? Many landlords prefer to have a sitting tenant in the property they are buying, especially if they are long term tenants. It saves the hassle and expense of finding a new tenant, and continuing with a long term tenant is a much less risky option. The new landlord usually takes over the ownership of the tenancy agreement after the property sale.
Selling a property with tenants in situ
Landlords who are selling a property with sitting tenants may find it difficult, but not impossible. If they allow their tenants to remain in residence, the buyers of the property are likely to struggle to get a mortgage and proceed with the purchase. However, sales with sitting tenants are on the increase. If the sale does go through, the selling price will be lower with sitting tenants.
If the landlord chooses to evict the tenant, the sale may be saved or run more smoothly, but rental income will be lost for the time it takes for the sale to complete.
Frequently asked questions
What qualifies you as a sitting tenant?
Sitting tenants are those that have a tenancy agreement or agreement with a landlord in place at the time a decision is made to sell the property they are living in. You have more rights as a sitting tenant if your tenancy began before January 1989.
Can you evict a sitting tenant?
If you prefer to have vacant possession of the property, to live in the property yourself, or want to find new tenants, you have the right to evict the sitting tenants with a Section 21 notice.
Do sitting tenants have the right to buy?
Sitting tenants or tenants in situ do not have an automatic right to buy the property they are living in, unless it is a property owned by a local authority.
Can you increase the rent of a sitting tenant?
Normal sitting tenants have the same rights to fair rent as any other tenants. Landlords can only increase the rent when an existing tenancy agreement expires, unless the tenancy agreement has a rent review clause.
If the sitting tenant has security of tenure (explained above), a landlord can only request to put the rent up through a review process. This can only be undertaken every two years, and has to be carried out by a Rent Officer.
Find out more about butters john bee’s letting property management
If you have a property to let, we can help with a range of property management services, advice and information about the lettings process.