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How To Sell To Your Tenant

While the fundamental legal process of selling your rental property to your tenant is the same as if you were selling to anyone else, there are a few extra considerations, things you need to know and steps you’ll have to take.

Bringing The Rental Agreement To An End

Landlords have to give at least two months’ notice to their tenant, in general, whereas a tenant paying rent monthly only has to give one.


So the most straightforward way to bring the tenancy to an end is for both parties to agree to a month between exchange and completion, is for the tenant to give their month’s notice at the point of exchange.

What Price Should You Sell For?

Establish a reasonable price, just as you would in any other situation, by asking two or three agents to appraise the property.


Take their advice on the current market and what interest they would expect, because it may be the case that by selling the property on the open market you could achieve a higher sale price.


Alternatively secure an independent valuation, based on the property’s condition via a RICs surveyor, qualified to do valuations.

At the same time, it’s important to be fair with your tenant. If you find that demand for your type of property is very high, you could propose marketing it for a number of weeks to gauge interest, but give your tenant first refusal.

Is A Fee Due To The Letting Agent?

If your letting agent was involved in any way in negotiating the sale to the tenant, your agreement is likely to mean you have to pay them a sales fee.

However, even if they played no part and you and the tenant came to an arrangement privately, you should be aware that your contract with the agent might nevertheless allow them to take a percentage of the sale price – typically somewhere between 1% and 2% - as they found the tenant, effectively introducing the buyer to the property.


Check the terms of your agreement with them as early as possible to avoid any confusion or conflict but, don’t hesitate to see if you can negotiate on the fee.

Consider using an agent to progress the sale

Agents don’t just advertise your property and find a buyer.


The good ones will also:

• Check with the buyer’s mortgage adviser that they have deposit funds and shouldn’t have any problem securing a mortgage offer

• Liaise with the legal representatives of all parties involved in the transaction

• Help identify any issues at the earliest stage and mediate to resolve them

• Keep you informed of how the sale is progressing

• Help with any further negotiations, such as a revision of the buyer’s offer following an adverse survey report

• Act in your best interests, working to your preferred exchange and completion dates as far as possible.

Given that around one in four transactions currently fall though, it seems sensible to give yourself the best chance of success, and an agent can be a welcome buffer between you and your buyer if there is any tension or conflict.


And you should be able to negotiate a favourable fee, as the agents haven’t had to carry out any marketing.

Use An Experienced Solicitor Or Conveyancer

Although every legal representative will carry out a property transaction according to the law, they can vary greatly in their approach, especially if they're asked to deal with something they haven’t come across before.


As a landlord, selling to your tenant is not a particularly common occurrence, so find someone who has handled this type of transaction before and knows exactly what clauses and terms in the standard contract of sale might need to be altered or added.

Bear in mind that it's important to have a good rapport with the tenant throughout the sales process, especially if the sale falls through for any reason, as you don’t want the existing tenant to make it tricky to sell to someone else.

As such, make sure before you formally agree to sell to your tenant, they/you or the agent carries out as much due diligence as possible that the tenant can definitely afford to buy the property from you.

If you need advice for your mortgage during this period of selling your buy-to-let property, our specialist advisers can be there to help.

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