Advice on selling with tenant-in-situ versus vacant
Property Investment

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19 Posts
1 year ago

I have a 2 bed freehold fully furnished end of terrace house in London with a long term tenant (contractual periodic tenancy) paying well below market rent. The property is in good condition, well maintained but tired (old kitchen & bathroom, needs new carpet and a re-paint). I just replaced all windows and doors with UPVC double glazed. I want to sell. I live abroad so co-ordinating tradespeople (incl time difference) is challenging.

I have conflicting advice from estate agents:
Serve notice and once vacant re-decorate and stage
Sell as is, incentivise tenant to stay put while sales process takes place (i.e. keep rent at current low level). Tenant must vacate before completion.

All say that my target market is first home buyers. Investor market much smaller, no-one will want tenant at current low rent, sale price probably 25% below first home buyer.

My research says time from offer to exchange is 12-16 weeks on average plus 2-4 weeks to complete.

Pros to selling with tenant, avoids:
Long void period
Cost and hassle of basic re-decoration
Cost and hassle of sorting out furniture to stage it
Insurance issue if empty > 90 days, weekly inspections required 30-90 days.
Risk of damage or squatters if empty.
Tenant may not be able to find another flat given current market which would force me into accelerated possession process.
Cannot control date it would be on market due to above (3 months if all goes well: 1 month advance notice, 2 months S21, or much longer if possession process required).

Cons to selling with tenant:
Risk of sale falling over if tenant does not vacate.
Q: is it correct that buyer will not exchange until vacant? Or is it possible to exchange and then have tenant vacate before completion? In which case should I serve S21 but arrange with tenant not to enforce it until exchange of contracts. I don't know how this would work in practice.
Need tenant co-operation for viewings (with notice given of course).
Lower price as not smartened up (but probably no true gain vs higher price & cost of decoration/void period?)

Does anyone have any advice on a preferred option? In particular the situation with selling with tenant staying on until sold. As an accidental landlord (this was my first home) it's all very daunting.
The question of whether 2023 is the right year to be trying to sell is another whole topic!

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