Sitting Tenant: What Is A Tenant In Situ?

If you’re a landlord looking to sell a property, or you’re someone paying rent in accommodation that’s up for sale, then you need to know about ‘sitting tenant’ rights.

So, what is a sitting tenant exactly? In the UK, a sitting tenant – also called a tenant in situ – is someone who continues renting after the landlord decides to sell their property.

Why does that matter? On the one hand, sometimes sitting tenants can devalue a property – meaning that some landlords, looking to sell, may try to evict tenants early.

On the other hand, other landlords see the benefits of sitting tenants. In fact, the National Residential Landlords Association (NRLA) argues that it makes sense to sell with sitting tenants.

That’s because NRLA research estimates that the UK may need almost 230,000 new properties a year to meet demand. Therefore, it doesn’t help matters to have lots of empty properties on top of that, while landlords are trying to sell – which can take several months.

Either way, a sitting tenant has specific rights that determine how long they can remain in the property for – let’s take a look at these now.

Sitting tenant rights (UK)

Sitting tenants rights exist because when the sale happens, there is still a valid tenancy agreement in place. This gives sitting tenants the right to stay in the property under certain conditions.

The new owner, once the sale completes, becomes a sitting tenant’s new landlord. They have to honour the existing tenancy agreement, including rent and terms, until it expires.

Current landlords cannot evict a tenant just because they want to sell – and new landlords cannot evict someone just because they are a new owner.

However, there are ways for landlords to ask tenants to leave at relatively short notice, unrelated to a property sale taking place, which I’ll explain shortly.

The current landlord can ask sitting tenants to let viewings take place for potential buyers, but with reasonable notice and access terms. In general, the selling process can be disruptive for sitting tenants. 

Therefore, they are more likely to consider their options, then potentially enact the break clause in the tenancy relatively early and look for somewhere else to live more long-term.

Keeping sitting tenants – benefits for a new owner

Some landlords looking to sell their property may be worried that sitting tenants will deter buyers. However, some property buyers are happy to take on sitting tenants.

For buy-to-let property purchasers in particular, there are several practical and financial benefits to acquiring sitting tenants, including:

• Income: With an existing tenant, you avoid going through a period where the property earns no rent. This provides a steady income stream and helps manage mortgage payments or other expenses.
• Reduced marketing costs: Finding new tenants involves advertising, viewings and reference checks. Retaining a good tenant usually reduces these costs.
• Lower risk of damage: Tenants who have already lived in a property for a while are more likely to take good care of the property, potentially reducing future repair costs.
• Continuity of care: Tenants already familiar with the property are likely to report issues promptly, allowing for quicker maintenance and potentially preventing larger problems.

However, there are potential drawbacks too – let’s take a look at these.

How much does a sitting tenant devalue a property?

Many property buyers need a mortgage to make the purchase. Unfortunately, some lenders are unwilling to offer a mortgage for a property with sitting tenants.

Therefore, sitting tenants can sometimes devalue the market value of a property. It’s not possible to provide a precise estimate of how much though – it depends on many factors.

According to insurance brokers and financial planners Alan Boswell Group, a sitting tenant could decrease the value by 20% for properties with an assured shorthold tenancy in place.

But bear in mind that for some landlords, the value of the monthly rent they receive from sitting tenants may make up for a lower property market value. Also, selling to a cash buyer without the need for a mortgage could prevent a property devaluation.

It’s possible that there will be less resistance from lenders over time, particularly given that it’s in few people’s interest to leave properties vacant for several months. For example, usually you have to pay council tax on an empty property in the UK.

Also, the NRLA article cited earlier argues investment buyers may make higher offers for properties with sitting tenants, especially if it’s a HMO (house in multiple occupation).

When landlords cannot evict sitting tenants

Many landlords wait until the tenancy agreement runs out before selling their property. Or alternatively, if tenants leave and the landlord knows they will look to sell the property soon, they won’t take on new ones in the meantime.

Landlords wanting their tenants to leave early can, for the time being, use a Section 21 notice – I’ll explain the terms shortly.

But bear in mind that – unless tenants have breached the terms of their tenancy agreement – landlords cannot evict them using Section 21 if:

• The tenant is still in their fixed term period, or it’s under four months since the tenancy began (unless there’s a clause in the contract allowing this)
• The property is a HMO, but does not have the required licence from the council
• You have not put the tenants’ deposit in a deposit protection scheme and the tenancy started after April 2007
• You have not given the tenants the Energy Performance Certificate (EPC), a ‘How to rent’ guide, or a current gas safety certificate (unless the property is electric-only)
• In the last six months, the council has served an improvement notice or a notice that says it will do emergency works on the property

If the tenancy started a very long time ago – before 15 January 1989 – then it likely counts as a regulated tenancy.

Also known as a protected tenancy, landlords cannot evict tenants using Section 21, based on the terms of the Rent Act 1977.

If tenants have breached the terms of the tenancy agreement, landlords can use Section 8 to evict them.

Evicting a sitting tenant using Section 21 or Section 8

Section 21 eviction notices

During a tenancy with no fixed end date – a ‘periodic tenancy’ – you can use a Section 21 notice. Otherwise, you must wait until after a fixed term ends.

You must give your tenants at least two months’ notice to leave your property. But for a ‘contractual’ periodic tenancy, you may need to give a longer notice period.

This is a fixed term tenancy that has ended, but continued as a periodic tenancy. The amount of notice must be the same as the rental period, if this is more than two months.

In other words, if your tenant pays rent every three months, then you must give them three months’ notice too.

At the time of writing, the government plans to put an end to ‘no fault’ Section 21 evictions, but has not yet confirmed the timeline.

Section 8 eviction notices

Section 8 allows eviction for a variety of issues. This includes:

• Rental payment failure: If a tenant owes rent, or consistently pays it late.
• Damage to the property: Causing excessive damage or neglecting basic care of the rental.
• Anti-social behaviour: Disturbing the neighbours with noise, harassment or illegal activities.
• Breaches of the tenancy agreement: Violating other terms – e.g. inviting unauthorised occupants to live in the property.

Each reason for issuing a Section 8 notice requires evidence and proof in court.

Final thoughts: Tenants’ rights when property is for sale (UK)

People often ask me – how long before a tenant becomes a sitting tenant? Well, now you know!

Sitting tenants are renters who continue to live in a property after the landlord decides to sell it.

Landlords cannot evict a tenant just because they want to sell. New landlords cannot evict tenants just because they are the new owner either.

But there are ways for landlords to ask tenants to leave at short notice, unrelated to the property sale.

I hope you found this article useful. If so, check out my other guides on the Fine Living blog – these include articles on property searches, a first time buyer checklist and what the non-resident landlord scheme is.

There’s also an explainer on how to rent out your house or flat. Plus, find out what questions to ask when viewing a house.

If you’re a renter or landlord with any follow-up queries about sitting tenants, or you’d like to ask about something in our portfolio, we are here for you! Please don’t hesitate to get in touch.

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