Newspaper article The Evening Standard (London, England)

For Sale, Studio with Tenant; What Happens to Your Tenant When You Want to Sell Your Letting Property

Newspaper article The Evening Standard (London, England)

For Sale, Studio with Tenant; What Happens to Your Tenant When You Want to Sell Your Letting Property

Article excerpt

Byline: LIZ HODGKINSON

I am considering putting my holiday home on the market. The property includes a separate, self-contained studio flat presently occupied by a retired gentleman. My tenant is very cosily ensconced and does not wish to uproot if he can possibly help it. Ideally, he would like to be able to stay in the flat for several more years. I'm pleased to say that he has proved an ideal tenant, always paying his rent on time and keeping the place clean, neat and tidy.

Also, his rent more than covers service and maintenance charges and council tax on the property.

My dilemma is: do I harden my heart and give my tenant notice before putting the property on the market, or try to sell it with him in situ? In the old days, when it could be difficult to evict tenants, most buyers insisted on vacant possession. Any property with a sitting or protected tenant could prove very hard to sell, except at a knockdown price.

But nowadays, when most modern tenants have signed Assured Shorthold Tenancy Agreements and are paying the full market rent, is a partly occupied property still a no-no? The consensus of opinion among estate agents is that it is. In the main, buyers still require vacant possession.

Rebecca Read of Cluttons says: "In the first place, the presence of a tenant creates problems for viewing. Easy access for prospective purchasers is an important aspect. Also, it's a fact that many mortgage lenders will not advise taking on a property with a tenant in place. The buyer has no guarantee how long the tenant will stay and has only the vendor's word of a good track-record of payment.

"Also, would the yield be good enough? A little studio flat in South Kensington costing [pound]180,000 would need to bring in [pound]260 a week to produce a gross yield of 7.5 per cent, which is not all that high."

James Wilson, director of Lane Fox's acquisitions and investment department, also advises against trying to sell with a tenant in place. …

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