Tenants’ Rights When Property Is for Sale
19 Nov 2020
If your landlord is going to sell the place you are renting, there are important things you must be aware of. Read this article to find out your tenants’ rights when the property is for sale.
Landlords put their properties up for sale more often than you might think1. Even though this is not something tenants want to face during a tenancy, landlords have every right to do so, as long as they adhere to all the applicable laws.
A wise tenant should always be prepared for a situation like that. While your current landlord might not give any signal that they want to sell the place any time soon, it is never unnecessary to be aware of your rights. Read on to find out what the law says about tenants’ rights when the property is for sale.
- Tenants’ Rights When The Property Is Up For Sale
- Can Tenants Be Evicted?
- Responsibilities of The Landlord During The Property Purchase
- Which Is the Best Choice for Renters?
- Wrapping Up
A change of ownership of a property does not automatically put an end to your rights as a lawful tenant, even when they are not explicitly stated in the tenancy agreement. A lease is a legal interest that is recognized and protected under various laws, such as the Landlord and Tenant Act 19882.
This interest continues to persist even though your old landlord has completed the sale and your tenancy is now under a new property owner. You will still retain all the tenants’ rights required by law like before. None of them will be restricted, altered, or limited when the rental property with tenants in situ is put for sale.
It is the tenants’ right to stay until the tenancy agreement expires
Even though the original paperwork does not have the name of the new owner, you (also known as a tenant in situ) can legally remain in that house until the end of the fixed term period. The new landlord has a responsibility to respect the original lease agreements between the renter and the previous landlord.
They can still make adjustments to the tenancy agreement, but those changes must be made through proper legal procedures, including eviction against the sitting tenants. If eviction is one of your concerns when your landlord wants to sell the place, jump to the next section in this article to learn more about it.
It is the tenants’ right to live in quiet enjoyment
Landlords, no matter the seller or the buyer, must provide tenants quiet enjoyment - one of the most popular and important implied warranty in a tenancy. While there is no specific law relating to this, almost every lease agreement, such as assured shorthold tenancy (AST)3, has the “covenant of quiet enjoyment,” meaning the tenants are entitled to a noise-free and disturbance-free environment throughout the tenancy. This obligation is valid and must be fulfilled before, during, and after the sale process happens.
When someone wants to enter your rented house or apartment (for example, when your landlord wants to arrange a house viewing during the purchase process), they must seek your permission. It is your tenant’s right to decide whether to let other people go through the door or not. The only exception is government law enforcement agents like police or bailiffs4.
It is the tenant's right to live in a 'safe environment'
This is another right that will not become invalid when the property with tenants in situ is up for sale. Even if your house or apartment has changed hands, you will still be entitled to a safe and protected environment, including all the necessary maintenance and repairs.
According to the Landlord and Tenant Act of 1988, the landlord has to cater for the repairs in a timely manner once you have reported to them a problem with the property. They can be held accountable if the rental property becomes hazardous or unsafe to tenants.
Yes, you can still be evicted before or after a property sale even though you do not do anything wrong to breach the lease agreements. Landlords are allowed to evict tenants without a reason if the tenancy is an Assured Shorthold Tenancy, according to Section 21 of the Housing Act 19885.
This is also what many landlords do when they want to put their properties up for sale, either once the contract expires or two months before it ends with an Intention to evict notice6.
However, the transfer of ownership does not change the fact the eviction still needs to go through proper procedures. This applies to both fixed-term and periodic tenancies. Eviction is not a quick process, and landlords may face legal troubles as illegal eviction is a criminal offence. The Housing Act will make sure while landlords can always have a way to get back their property, tenants still have a reasonable time to find an alternative place before the eviction takes place.
Not all tenancy agreements are an ASTs, and there are different laws regarding eviction in this situation. For example, if you entered the tenancy before 15 January 1989, your landlord is bound to different tenancy rules under the Rent Act 19777. It provides sitting tenants with a security of tenure, meaning landlords cannot evict them with a Section 21 eviction notice from the Housing Act when the property is for sale.
Notify sitting tenants about the purchase
The Landlord and Tenant Act 1985 requires the new landlord to notify existing tenants about the transfer of ownership of the property. Under Section 3 of this Act, they have two months after the purchase to let sitting tenants know that they are the new owner, including their name, address, and contact details.
This is important when you're selling a tenanted property. When the new owner fails to properly inform tenants about the change, the previous landlord will still be held accountable for any violation of the lease agreements, such as poor conditions and disrepair.
But remember that tenants are not entitled to know other information on the purchase, including when the property has been sold and its price. It also means the previous landlord is not required to inform sitting tenants that they are planning to put the property up for sale.
Inform tenants about any property viewing
As tenants have the right to live in quiet enjoyment, the seller (your landlords) and real estate agents must seek permission by formally notifying them about any planned viewing with the prospective buyer. In accordance with the Landlord and Tenant Act 1988, landlords must give tenants a notice at least 24 hours before a visit. If they fail to do so, it is totally within the tenant's right to refuse to let the landlord, letting agent, or any other person in.
There is also an additional requirement that allows landlords to plan the visit only during "reasonable hours." For example, early morning or midnight is certainly not a good time to ask the tenants to open their door and let several people inside for a property viewing.
Make sure the property complies with all legal requirements
Once the purchase is completed, the buyer will automatically become the new landlord, and it is their responsibility to follow all the laws relating to renting in the UK8. They must have the security deposits of sitting tenants transferred to them and serve prescribed information to the tenants.
Like the seller, the new owner also needs to examine the property to make sure that it does not breach any safety requirements for renting, such as Energy Performance Certificates (EPCs)9. The best way to verify this is perform a comprehensive safety check for the entire property.
Even though tenants may still be able to retain their rights and continue to live in the property until the end of the tenancy, the fact that their landlords want to put the rental property up for sale in the market might always bring risks and uncertainties.
There are many reasons for this. Perhaps landlords sense that the real estate price in the market is going up considerably and they want to profit from their investment by selling it to other people. Or perhaps they simply do not want to be a landlord anymore. There are also plenty of benefits of buying a property tenants in situ that make people consider it.
Those changes of the property’s ownership are always worrying for people who seek a long-term home, especially since rental price in the UK market keeps rising10. You may never know whether the new owner wants to keep renting out or changes their mind and evicts sitting tenants before moving in. Finding a similar place to live after investing so much into the tenancy is not always an option for many people.
This makes new forms of rental property like Built To Rent more appealing for people who are looking for a secured long-term tenancy. Since BTR projects are designed exclusively only for renting right from the beginning, and investors usually do not plan to sell them their investments in the foreseeable future, tenants do not need to worry about landlords selling the property.
No matter if it is only in the middle of the purchase process, or when the sale has been completed, you should be aware of the landlord's responsibilities and tenants’ rights when the property is for sale. For example, you have every right to deny their entry if your landlord and agents want to give a property viewing without a proper notice with a reasonable time and date.
You and your family can consider other safer forms of private renting like Build To Rent later, but in the meantime, make sure that the original owner and the new landlord comply with all the required laws relating to tenants’ rights, especially when eviction is a possibility.
- Mansion Global, A Quarter of U.K. Landlords Are Planning on Selling Properties This Year↩
- UK Government Legislation, Landlord and Tenant Act 1988↩
- UK Government, Tenancy agreements: a guide for landlords (England and Wales)↩
- UK Government, Bailiff powers when they visit your home↩
- UK Government Legislation, Housing Act 1988↩
- BBC, No-fault evicitions: "Our lives are falling apart↩
- UK Government Legislation, Rent Act 1977↩
- UK Government, Renting out your property↩
- UK Government, Buying or selling your home↩
- BBC, The cost of renting in the UK in seven charts↩