Nothing happens to sitting tenants when the landlord changes. If a landlord changes (normally due to a sale), a sitting tenant continues to live in the property under the same tenancy agreement as before. All that happens is that the new landlord takes over all the roles and responsibilities related to it.
In short, when a landlord sells a property with a tenant already living there, the tenancy doesn’t just disappear. The sitting tenant stays put, and the new owner becomes their landlord. The existing agreement carries on, and the tenant keeps all of their rights.
Understanding Who Sitting Tenants Are
A sitting tenant, or a tenant in situ, is someone who is renting a property when it is being sold.
A sitting tenant will already have a tenancy agreement in place with the current owner. When the property changes hands, that agreement doesn’t just end, it carries on with the new owner stepping into the landlord role.
So, from the tenant’s perspective, nothing changes apart from the person managing the property. And if the handover is conducted properly, the change in ownership shouldn’t cause much of a disruption either.
If you own a property with a sitting tenant and are looking to sell it, speak to the Swift Capital team at enquiries@swiftcapital.co.uk.
Does The Existing Tenancy Agreement Stay In Place When The Landlord Changes?
If the tenancy agreement has not ended, then yes, it does.
And if you’re wondering whether the change of ownership makes the tenancy agreement void. It doesn’t.
The existing tenancy agreement stays in place and continues to be legally binding. The new landlord doesn’t need to draft or sign a fresh contract unless both parties want to make changes. Even then, a tenant can’t be forced to sign something new midway through a fixed term if they don’t want to.
The only time there might be a grey area is if the agreement had any clauses about the previous landlord personally. For example, if the tenant got discounted rent in exchange for a service like childcare, repairs or consulting in any way, this may not carry over unless the new landlord agrees to it.
However in most cases, standard terms like rent, length of tenancy and landlord responsibilities carry over.
What Changes For The Tenant When The Landlord Changes?
If the handover is done right, nothing changes for the tenant. For them, the rent stays the same, the expectations on them stay the same, and life carries on. The only thing that might change is where they pay their rent, who holds their deposit, and who they speak to in case of maintenance issues or emergencies.
That said, tenants should always be told explicitly when their landlord is changing, so that they can ask any questions and get the information they need.
What Should New Landlords Do During Property Handover?
If you’re buying a property with a sitting tenant, you should make sure that you do everything you can to make the handover seamless.
We recommend:
- Writing to the tenant, introducing yourself and confirming how and where rent should be paid. As part of this, include new contact details for reporting maintenance issues.
- Reading the tenancy agreement front to back so you understand exactly what is expected of you during the tenancy term.
- Do your own inventory and check the condition of the property at the time of transfer. This can help with any disputes later on.
- Make sure the tenancy deposit is properly transferred into a government-approved protection scheme if it isn’t already. Once done, send the tenant the deposit protection paperwork within 30 days.
Can The New Landlord Make Changes To The Existing Tenancy Agreement?
The new landlord can’t just come in and hike up the rent or start changing terms. If the tenancy is still within a fixed term, the agreement must be honoured until it expires. After that, they can draw up a new agreement – but there’s no obligation for the tenant to sign it.
The only time that this isn’t the case is for protected tenancies (those who signed pre-1989). These tenancies have different laws and protections, including the tenant’s right to pay a “fair rent” – which means it stays lower than market value.
In those cases, the rent can only be increased every two years by a rent officer, not the landlord. These tenancies come with a lot of extra protections, so renewing or changing any element of the agreement may be a little more difficult than with newer tenancies.
Can A New Landlord Evict A Sitting Tenant?
If the tenancy agreement is still in place, then no.
Eviction is something many tenants worry about when they hear the property is being sold. But selling the property to someone else isn’t enough of a reason to legally evict a tenant. If a new landlord comes in and does want to evict the sitting tenant, they have to do so via a Section 21 or Section 8 notice.
A Section 21 notice is used to regain possession at the end of a tenancy. With a Section 21 notice, the landlord just needs to let the tenant know that they don’t want to renew the tenancy after the fixed term.
This type of eviction is relatively straightforward and a natural time for the landlord to regain possession of the property.
A Section 8 notice, however, is only used if the tenant has breached the agreement in any way. For example, by falling behind on rent by over 2 months. To evict the tenant, the landlord will usually have to go through the full legal process, resulting in a court order being issued.
In short: even if a new owner wants to move in or get a new tenant, they can’t do so straight away. They have to go through the correct legal process and adhere by any agreements that are currently in place.
Can Sitting Tenants Refuse To Pay Rent To A New Landlord?
No, tenants can’t refuse to pay rent just because their landlord changes.
Just like the landlord is bound by the existing tenancy agreement, so is the tenant. Because of this, the tenant must continue paying rent as normal, even during the sale process.
If the tenant stops paying rent for more than 2 months, the landlord (whether old or new) can issue a Section 8 notice. But until the tenancy’s term ends or they are legally evicted, they’re fully responsible for rent.
Managing Sitting Tenants During Landlord Changes
A change in landlord doesn’t mean the end of a tenancy or a change of terms.
For sitting tenants, nothing changes apart from who they pay the rent to. For landlords, the existing tenancy is legally binding, even if it was agreed by the previous owner.
In order to make sure the handover is as seamless as possible, we recommend clear communication, a strong understanding of obligations and building a good relationship with the tenant in situ.
If you own a property with a sitting tenant and are looking to sell it, speak to the Swift Capital team at enquiries@swiftcapital.co.uk.