Let’s face it, the life of a landlord isn’t easy at the moment. The Coronavirus pandemic in 2020 has created many problems for landlords. Citizens Advice saw its “Dealing with rent arrears” page increase traffic by 332% in the year up to June 2020. The London School of Economics (LSE) predicts tenants with rent arrears to increase by 300% during 2021. To put that in numbers, they’re talking about over 700,000 people being affected with difficulties in paying their rent. Evictions are likely to top 50,000 people.
However, the LSE doesn’t see it all happening in one go. The Government introduced restrictions to issuing Section 21 notices where all eviction proceedings are paused until 11th January 2021 (and may extend further). They also changed the notice period to six months.
Due to the courts being closed for most of 2020, there is also a massive backlog of cases to clear. As such, we’re looking at a slow burn of proceedings over a long period. They predict many tenants will find cheaper accommodation or younger ones may opt to move back in with their parents during that time.
It seems like landlords and tenants will face uncertainty and stress for 2021 and, probably, well into 2022. There will also be additional pressure on local authorities to provide emergency housing for those evicted. All things considered, many private landlords are asking themselves if it’s worth it anymore, and if they should sell their blocks of flats.
Can you sell tenanted flats?
The short answer is yes. Absolutely you can. Sometimes, it may be preferable for the buyer to have sitting tenants as they receive an income as soon as they purchase your flats.
From the landlord’s perspective, selling flats with tenants isn’t very different from selling empty properties. You also avoid the need to issue Section 21 notices and all the accompanying hassle.
What is a Section 21 Notice?
While we’ve mentioned Section 21 notices, it’s worth explaining them a little more, in case you’re not sure what they are or how they work.
If a landlord wants to regain their property, they can serve a section 21 notice on the tenants. It’s basically giving the tenants notice that the landlord wants to end the tenancy agreement early. The tenant isn’t forced to leave on the end date and may stay in the flat longer. In that case, the landlord has to apply to a court for an eviction notice. Once that has been granted, bailiffs are appointed and will carry out the eviction.
With the new restrictions introduced in 2020, the initial notice period is six months. If the tenant refuses to leave and the landlord applies for an eviction order, that can take several weeks. If bailiffs are required, that can take several more weeks as well.
Overall it could take 6-9 months to complete the eviction. Possibly longer depending on the backlog of cases in the court.
How do you sell a block of tenanted flats?
While there’s no legal requirement to inform your tenants that you’re selling the flats, it’s better to tell them. Nobody wants to get home from work to a For Sale notice on their flat, for a start.
Also, it’s better to have your tenants on-side to make the sale as hassle-free as possible. Prospective buyers will want to view the property and tenants do not have to allow them access. If your tenants are prepared to work with you, it’s a good sign for a buyer. Nobody wants to buy a load of headaches from difficult tenants, so it’s essential to do the right thing by them.
Before you start marketing your property, have a face to face meeting with your tenants and explain what’s happening and why you want to sell. You can assure them that they aren’t being evicted and their tenancy agreements will transfer to the new owner.
Positives of selling tenanted flats
As with all things, there are pluses and minuses. The pluses of selling tenanted flats are:
- You will be selling to another landlord, which means they won’t be “tyre kicking”. It should also mean a speedier process as they understand the process.
- No need to issue Section 21 notices and deal with all the stress and costs associated with evicting multiple occupants.
- No danger of squatters occupying your empty property or vandals causing damage.
- If the property is mortgaged, the landlord will have still have to maintain the mortgage payments without any rental income.
Negatives of selling tenanted flats
On the downside:
- Having tenants in place can complicate the sale as viewings need to be arranged around multiple occupants.
- There will be a lot of paperwork in transferring the tenancy agreements to the new owner.
- The timing of the sale is important as it’s better to complete on a rent payment day. Otherwise, the rent has to be split between the new and previous landlords.
- The new landlord may want to renovate or rebuild. In which case, they will have to carry out the Section 21 eviction process themselves. Depending on the buyer and how experienced they are, this could put them off.
At Sell My Flats, we have the experience to buy your flats, with or without tenants. We have access to immediate cash funding, and our team prides themselves on a speedy turnaround. Typically we can complete within 4-6 weeks of agreeing on a sale.
If you’re interested in knowing more about Sell My Flats and how we operate, contact us here <LINK> for a friendly, no-obligation chat.