Selling property to Tenant

[Chestnut]

Advice please for landlord hoping to sell to tenant?  Tenant has occupied property for many years without issues, wishes to buy and I wish to sell - price agreed. EPC and gas certificate in place.  Because I wish to sell property anyway, as backstop to failure of tenant to complete sale I propose shortly to serve section 21 (currently 4 months notice) using Form 6A, so that I can then sell on open market.  Tenant has been advised and aware.

[Richlist]

I don't see the point of the S21 giving 4 months notice. Why can't you just trust the buyer & issue an S21 if buyer fails to complete ?

Presumably you have carried out the usual checks on the buyers ability to raise a mortgage & pay a deposit on exchange ?

[Chestnut]

Thanks Richlist - good points!.  My reason for S21 is a 'shot in locker' if I run out of patience waiting for tenant to confirm ability to buy.  I have no experience of carrying out 'usual checks' you mention.  Should I use an estate agent for checks?  With buyer in hand (and in house!) I didn't think I needed agent.  I will however use solicitor for conveyance. Can my solicitor, when engaged, do checks and arrange deposit payment for me?   It's many years since I last sold a house.  Advice welcome!

[Richlist]

If I were you I'd ask your buyer to provide.....

Written proof from their mortgage lender that they have a mortgage agreed, in principle, for a sufficient sum to purchase a property at your agreed price. If the amount is less than your agreed price they will also need to provide evidence that they have sufficient deposit available to cover the shortfall.

This is usually what an Estate Agent would do when checking out the suitability of a potential buyer.

If that checks out then you both need to appoint solicitors and get the deal started.

[Chestnut]

Thank you Richlist - most helpful advice!  I will do that and pass on to my solicitor as proof, along with vendor stuff solicitor requests from me.

[Carryon Regardless]

Personally I see the point in serving notice, in case you are left in the lurch following excuse after excuse.

An alternative may be to request the tenant serve notice for an agreed date. 

Both of these can be used in with some form of flexibility.

As you want to sell and they want to buy it seems reasonable that you can reach agreement in an amicable fashion.

 

On a side note has anyone considered the possibility of a right to buy scheme for tenants? With current Gov't trends I can see how this could be an attractive strategy for them, but costly for us if long term tenants gain big advantage on price.

[Chestnut]

Thank you C-o-R.  I think tenant's notice remains at 1 month, unlike landlord's current (Covid extended) 4 months notice, so probably no point in me requesting that yet.  For the record this negotiation has been entirely amicable so far but a new experience for both parties.  

[Carryon Regardless]

1 month isn't set in stone, you can both agree as you please.

[Richlist]

Insisting that a tenant serve notice in case they don't complete the purchase of your property just doesn't seem right to me.

1. It's very unfair. You wouldn't expect to get away with imposing any penalties on any other normal buyer who didn't complete. Buyers are all free to withdraw prior to exchange of contracts.......and so it should be. There are a whole list of perfectly legitimate reasons why a buyer might not proceed to completion.

2. I'd be surprised if the law would support such a move.

Now, if the buyer (tenant) was offered the property at a discount to normal market value it would be reasonable for the seller to include/negotiate/expect something to be added to the sale contract in exchange for that discount. That might be, for example, sale completion within a shorter time frame.

If the buyer (tenant) is paying the normal market value why is the buyer expected to disadvantage themselves by serving notice before they are in possession of all the facts. It's not right.

Selling to a sitting tenant carries advantages for both parties. But in reality it's the buyer who should expect a discount on the price. The alternative for the landlord  is to serve notice, place the empty property on the open market, loose rental income, pay c/tax & utilities and all the other costs of managing an empty property. A 6 month void whilst preparing, marketing and selling the property could cost the landlord a few thousand pounds.I

Treat your tenant with respect, don't impose sanctions because they are actually very likely going  to save you a few thousand pounds.

[Chestnut]

I agree entirely with Richlist on this. 4 months landlord notice should surely be adequate time to resolve sale for me on way or other.  Incidentally my buyer-tenant gets a discount in money value and kind - because they already know well the improvements they wish to action which add value. 

Ps. I had seen suggestion of tenant serving notice on another site somewhere.  As I failed to understand it I joined this forum instead.

[Richlist]

Just one final piece of information......I don't know if your property is freehold or leasehold.

* Freehold sales normally complete quite quickly, especially if you have, as in your case, a first time buyer & no ongoing chain.

* Leasehold property traditionally takes far longer. Every leasehold property I have ever sold ( including cash buyers, first time buyers, buyers in a hurry and no ongoing chain)  has taken 4+ months to complete......some took between 5-7 months. 

[iskanderpizza]

Did you manage to sell the house to the tenant? And why is it that difficult?
I thought it would be even simpler to sell a house to a tenant than another person. There are so many things I don’t understand about real estate. I feel I need to educate myself before trying to make my first steps in this direction.
And when I become more or less proficient, I will apply for an affiliate position at https://www.lumina.com.ph/news-and-blogs/blogs/beginners-guide-to-real-estate-affiliate-marketing/ because they pay good money to their affiliates. I am developing my social media accounts now for that.

[Chestnut]

10 minutes ago, iskanderpizza said:

Did you manage to sell the house to the tenant? And why is it that difficult?

Yes.  It was not difficult at all.  Two agents valued for me f.o.c.  Obviously no agent needed for actual sale.  Freehold property. It did however take several patient months for tenant (first time buyer) to raise agreed amount and sort out solicitor for conveyance.  Selling to tenant saved me all hassle of having to ask tenant to leave, serve notice, cleaning/upgrading property etc. and both parties very happy with outcome.