Normal tenancy V’s sitting tenancy
As of 2012, some 100,000 households in the UK were home to a sitting tenant.
What is a sitting tenant?
What rights do sitting tenants have?
How do I know if my tenant is a sitting tenant?
We often receive enquiries from property owners who have inherited tenanted properties and don’t have any paperwork to show the terms on which the property is rented. Without a tenancy agreement you don’t know for sure whether the property is let on an AST or is a regulated (sitting) tenancy. If there’s no paperwork to be found and the tenant doesn’t have a copy of a tenancy agreement then solicitors need to be instructed before there is any attempt to sell. If the tenant doesn’t have legal advice about their rights, you could find them complaining about being treated unfairly because they didn’t know their rights, even a few years after the sale!
Is it possible to sell a property with a sitting tenant?
Can the owner “buy out” a sitting tenant?
Auctioning a property with a sitting tenant
Auctions are attended by the type of buyer on the look out for investments, so if two or more prospective buyers are interested in the property the sale will benefit from competitive bidding which ultimately results in a sale for the best possible price.
The second reason why properties with sitting tenants sell particularly well at auction is because they sometimes sell for considerably more than they should! If a novice investor isn’t fully aware of the implications of a sitting tenant, they might bid to a higher level assuming they’re able to either increase the rent or evict the tenant. Property investment has changed a lot over the past few decades, so it’s not surprising if a reasonably well-informed investor isn’t aware of a type of tenancy that was only originated until 40 years ago.
Of course, an investor would have themselves to blame if they didn’t fully read through the legal pack and check the tenancy agreements. But it does happen!