Can you sell a house to your tenant?

Keen to sell your rental property and your tenants are the prospective buyers? It can be done, and often, sitting tenant selling is a quicker process than the traditional method of selling a home.

If a landlord is keen on selling their tenanted property quickly, then the selling process with a tenant is certainly an attractive option.

What’s involved when selling a property to the sitting tenant? Will I be impacted by the Capital Gains tax? Do you still need the help of estate agents? What happens with the existing tenancy agreement and the tenant’s deposit? Is the selling price lower because you know the buyer?

To find out the answers to these questions, and more, continue reading our helpful guide.

Can I sell my rental property to my tenant?

Yes, you can sell your rental property to a sitting tenant. Many landlords may favour this option because it cuts out the pre-selling process and costs that require the house to go up on the market and hold viewings.

While selling directly to your sitting tenant can be appealing, there are many considerations to make before bringing an end to your rental income.

Ending the rental agreement

Before you sell the house, the rental agreement must be ended. The notice period for evicting sitting tenants is usually two months, but the tenants only have to give one month when they decide to vacate a rental property.

With this in mind, you should discuss it with your tenants and come to a reasonable date that the tenancy agreement can be ended.

Once an agreement has been reached, this gives the sitting tenant a precise month where they can legally hand their one-month notice to the landlord.

This creates a ‘vacant property’ of sorts until the sale has been completed.

Will the property value be lower for a sitting tenant?

Before agreeing to anything with your tenant, you should seek the professional help of an estate agent – possibly even two or three in the local area.

They will know the local market and be able to give you an accurate value for the property.

By using different estate agents, you may receive a better price than you originally considered.

You could, at this stage, find out that the property is worth a lot more than you were initially planning on selling to your tenant. If this is the case, and you want to try the property on the open market, you should be honest with your tenant in situ about the situation.

If you have a good relationship with your sitting tenant, they may be willing to see how things go.

What about Capital Gains tax?

Capital Gains Tax is another consideration for landlords, but there was good news in the Autumn Budget in late 2024.

Landlords selling any property, including to tenants, now benefit from a reduced higher rate of Capital Gains Tax, as of April 2024. It was previously set at 28% but is now at a reduced rate of 24%.

The latest Budget in the UK, in October 2024, raised the lower rate of Capital Gains Tax from 10% to 18%.

But, while the rate increased, the rate on residential properties has not changed, so a letting agent or landlord selling property will not be affected.

What are tenants’ rights for landlords selling a house?

Whether selling your property directly to your tenant or not, they have a lot of rights when it comes to their home being sold.

The first right they have is a right to know about the sale. This allows them to express their interest in purchasing the home. A tenant also must be given enough notice to vacate the property for viewings if they don’t intend to buy it.

However, if the tenant does not want to buy the property, their tenancy agreement remains the same. As long as there is still time on the tenancy agreement, the landlord cannot make the tenant leave – they must take all the legal steps to end the tenancy agreement.parties replied swiftly and there were no hiccups or negotiation issues, you could even be looking at less than three months.

Hire a reliable conveyancing solicitor to conduct your house sales process

The final step you must take when selling your property to your tenant is to hire a reliable, trustworthy house sale solicitor – like us at GD Property Solicitors.

We know all about the process of selling tenanted property and can help both you and the buyer – your tenant – go through it with ease.

As reliable conveyancing solicitors in Manchester and beyond, we have helped thousands of people all over the UK with both buying and selling property, so wherever you are, we can help you too.

We offer you a completely online conveyancing service, allowing you to manage your account from the comfort of your home. To get started, contact us today.

Also, request a FREE quote today. us today.