Can I sell property with regulated tenancy? The short answer is yes, but it’s like trying to sell a car without the keys – possible, but certainly more challenging than a standard property sale. These unique tenancy arrangements create hurdles that many traditional buyers simply aren’t prepared to jump.
Homes with regulated tenancies typically sell for 30-40% below their vacant possession value. This significant discount reflects the inherent complications these properties present to potential buyers. With regulated tenancies becoming increasingly rare – making up less than 1% of all UK rental properties today – fewer estate agents and buyers have experience handling these special cases, further complicating the sales process.
What is Regulated Tenancy and Why Does it Matter When Selling?
A regulated tenancy is a type of residential letting agreement created before 15 January 1989 under the Rent Act 1977. Unlike modern tenancy agreements, these provide extraordinary protections for tenants, including:
Lifetime right to occupy the property (security of tenure)
Protection from eviction except in very limited circumstances
Regulated “fair rent” that’s typically below market rates
Potential right to pass the tenancy to a spouse or family member
These iron-clad tenant protections make selling a regulated tenancy property particularly challenging. Most traditional buyers want vacant possession, and mortgage lenders are notoriously reluctant to finance properties with sitting regulated tenants.
Selling Options for Landlords with Regulated Tenancy Properties
If you’re wondering how to sell your property with a regulated tenant in place, you generally have three main options:
Sell on the open market to an investor at a discount
- Sell to a specialist property buying company like Property Saviour
Each approach has its advantages and disadvantages, depending on your timeline, financial needs, and priorities. Let’s explore each option in more detail.
Selling a Regulated Tenancy Property on the Open Market
Selling through an estate agent is possible but presents unique challenges. Your property will only appeal to a small subset of investors who:
Understand regulated tenancies
Have available cash (since mortgages are difficult)
Are looking for a long-term investment
Accept the significant discount required
The main advantage is potentially achieving a slightly higher price if your agent finds the perfect investor. However, this comes with significant downsides including longer marketing periods, uncertain timelines, and the real possibility of sales falling through.
Selling to a Specialist Property Buying Company
Companies like Property Saviour specialise in buying problematic properties, including those with regulated tenancies. Our service provides certainty and speed that other methods cannot match.
At Property Saviour, we understand the complexities of regulated tenancies and offer a straightforward solution: we’ll buy your property directly, with no chain, no viewings, and completion in as little as 2-3 weeks. Our approach eliminates the uncertainty and frustration many landlords face when trying to sell these challenging properties.
The pros & cons of selling with sitting tenants
To help landlords weigh their options, here’s a table comparing the advantages and disadvantages of selling a property with sitting tenants:
| Pros | Cons |
|---|---|
| Continued rental income during sale process | Potentially lower sale price |
| Attractive to other landlords/investors | Limited pool of potential buyers |
| Property remains occupied and maintained | Complications with viewings and access |
| No need for eviction proceedings | Possible resistance from tenants |
When considering these factors, landlords must carefully assess their individual circumstances and long-term goals.
How Regulated Tenancy Affects Property Value
The impact of a regulated tenancy on property value is significant and depends on several factors. To give you a clearer picture, here’s how different scenarios typically affect property values:
| Tenant Situation | Average Reduction in Value | Key Factors Affecting Value |
|---|---|---|
| Regulated Tenant (younger) | 35-45% | Age and health of tenant, longer expected occupancy |
| Regulated Tenant (elderly) | 25-35% | Shorter expected remaining tenancy |
| Recently Succeeded Tenant | 30-40% | Depends on age and circumstances of new tenant |
| Multiple Tenants with Succession Rights | 40-50% | Complicated succession situation, very long timeline |
These figures represent typical value reductions based on our experience in the market. The specific reduction for your property will depend on various factors including the property’s location, condition, and the particular circumstances of your tenant.
The main reason for these substantial discounts is that investors are effectively buying a future interest in the property. They must wait – potentially for many years – before gaining full control of the asset, while also receiving below-market rent in the meantime.
Can You Evict a Regulated Tenant to Sell for Full Value?
One of the most common questions we hear from landlords is “can you evict a regulated tenant?” Unfortunately, the legal protections for regulated tenants are extremely strong, making eviction very difficult unless specific conditions are met.
Landlords can only regain possession through a court order, which is typically only granted under very limited circumstances such as:
Substantial rent arrears
Breach of tenancy conditions
Landlord providing suitable alternative accommodation
Landlord requiring the property as their main residence (and can prove it was previously)
Even in these circumstances, courts tend to side with regulated tenants, making successful eviction rare. This is why most landlords ultimately choose to sell with the tenant in place, accepting the necessary discount.
The property is subject to a life tenancy at nil rent: What does this mean?
This rare situation refers to a property where the tenant has the right to live there for life without paying rent. It’s an unusual arrangement that can significantly impact the property’s value and saleability.
How to End a Regulated Tenancy Legally
If you’re determined to end a regulated tenancy, there are a few legitimate paths to consider, though none offer guaranteed success:
Negotiate a surrender: Offering financial incentives to the tenant to voluntarily vacate can be effective. Typical payments range from 10-20% of the property’s vacant value.
Claim for possession: If legitimate grounds exist (substantial arrears, property damage, etc.), you can apply to the court, though success is not guaranteed.
Offer alternative accommodation: Providing suitable alternative housing that meets the tenant’s needs might be accepted by the court as grounds for possession.
Wait for natural conclusion: Unfortunately, for many regulated tenancies, the most reliable option is simply waiting until the tenant passes away or voluntarily vacates.
How can I increase rent on a regulated tenancy?
This is another common concern for landlords stuck with below-market rental income. Rent increases for regulated tenancies are strictly controlled through the “fair rent” system.
Landlords can apply to the Rent Officer for a registered fair rent review, but increases are capped and can only be applied:
Every two years (unless there have been significant improvements to the property)
According to the formula in the Maximum Fair Rent Order 1999
Taking into account the property’s age, condition and location
The regulated tenancy register maintained by the Valuation Office Agency records all fair rents. Increases are typically modest compared to open market rent growth, which is another reason these properties sell at a discount.
Who Can Inherit a Regulated Tenancy?
The little-known succession clause in regulated tenancy agreements means these historic rental contracts could continue even after the original tenant passes away.
Under the Housing Act 1988, certain family members may have the right to take over a regulated tenancy if they were living with the tenant when they died. This typically includes spouses or civil partners, and in some cases, other family members who have resided in the property for at least two years before the tenant’s death.
The law generally allows for only one succession, meaning once a tenancy has been passed on once, it cannot be inherited again. However, determining whether a succession has already occurred can be complex, especially for tenancies dating back decades.
Landlords looking to sell properties with regulated tenants should seek professional advice to understand the succession status of their tenancy, as this significantly impacts the property’s value and saleability.
What Qualifies You as a Sitting Tenant?
The term “sitting tenant” refers to any tenant who is in residence when a property is sold. However, the legal protections available to sitting tenants vary dramatically depending on when their tenancy began and its specific type.
How long before a tenant becomes a sitting tenant with special rights? For regulated tenancies, these rights were established from the beginning of the tenancy (pre-1989), not based on length of residence. Modern assured shorthold tenants are technically “sitting tenants” if the property is sold during their tenancy, but they don’t gain additional rights over time.
For a tenant to qualify as a regulated sitting tenant with extensive rights, their tenancy must have started before 15 January 1989 under a private residential letting. These tenancies cannot be created anymore, which is why they’re becoming increasingly rare.
Can I Live in My Regulated Buy-to-Let Property?
If you’re wondering “can I live in my regulated buy-to-let property?” as a strategy to regain possession, this is extremely difficult. Courts are highly suspicious of landlords who claim they need to move into properties with regulated tenants.
To succeed with this approach, you would typically need to prove:
You previously lived in the property as your main home
You have a genuine need to return to it
You have no suitable alternative accommodation
The court considers it reasonable to grant possession
Even with these conditions met, there’s no guarantee the court will rule in your favor. Most legal experts advise against this approach unless your case is exceptionally strong.
Selling Your Regulated Tenancy Property to Property Saviour
At Property Saviour, we understand the unique challenges faced by landlords with regulated tenancy properties. We’ve helped countless property owners escape the frustration and uncertainty of trying to sell these complex assets on the open market.
When you sell to us:
We pay cash, eliminating mortgage approval concerns
We buy directly with no estate agent or auction fees
We complete in as little as 2-3 weeks
We handle all legal complexities related to the tenancy
We provide certainty in an otherwise unpredictable situation
While our offers reflect the regulated tenancy (typically 60% of vacant possession value), many of our clients find the speed, simplicity and certainty we provide makes this an attractive option compared to the uncertainty of traditional sales methods.
Don’t let your regulated tenancy property continue to be a source of stress and reduced income. Contact Property Saviour today for a no-obligation cash offer and discover how we can help you move forward with certainty and peace of mind.
Sell with certainty & speed
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
