Selling a House with a Sitting Tenant on a Regulated Tenancy
This is a made-up example. The people, places and numbers are not real.
You can sell a home with a sitting tenant, but at a discount. Who buys, what they pay, offering the tenant a move, and one owner who sold in seven weeks.
- Category
- Tenurial and Occupational: regulated or protected tenancy
- Property
- Two bedroom flat in a converted Victorian house
- Area
- Inner London
- Main problem
- The owner needed to sell, and the tenant could stay for life on a rent about a third of the market rate
- Time to complete
- 7 weeks
- Value added
- About £204,000 for the buyer, when the flat is empty
01The Situation
You can sell a house or flat with a sitting tenant in it. You do not need the tenant's permission, and the tenancy carries on with the new owner. What you cannot do is sell it at the empty price, and with an old Rent Act tenancy the gap is large.
Patricia Moreland, now 77, bought a two bedroom flat in a converted Victorian house in inner south London in 1983 for £34,000. In 1986 she let it to Iris Kemble. Iris is now 74 and widowed, and lives there alone. Her only son lives in Kent and has never lived in the flat.
Because the tenancy started before 15 January 1989, it is a regulated tenancy under the Rent Act 1977. Iris pays a fair rent registered by the rent officer: £800 a month. A similar flat on an ordinary tenancy lets for about £2,350 a month.
Patricia needed the money to pay for care. Her agent said the flat was worth about £560,000 empty. Every buyer who heard about the tenancy either walked away or offered less than half.
02The Diagnosis
What a Sitting Tenant Is
People say sitting tenant for a tenant who has the right to stay, so a buyer gets the tenant with the house. How much that matters depends on the type of tenancy, and the first job is to find out which one you have.
Regulated Tenancies
Most private tenancies that started before 15 January 1989 are regulated under the Rent Act 1977. When the written agreement ends the tenant becomes a statutory tenant, with the same protection. The tenant can only be made to leave on the specific cases in the Rent Act, such as rent arrears or the landlord offering suitable other housing with the same security, and for most cases the court must also think it reasonable. Wanting to sell is not a reason. Pressuring a tenant to leave is a criminal offence under the Protection from Eviction Act 1977.
The Rent Is Capped
The rent officer sets the fair rent below market, because it ignores the shortage of homes. Anyone can look up a registered rent on the government's search by address. A landlord can apply for a new one every two years. The rise is capped at inflation (the retail prices index) plus 5 per cent under the Rent Acts (Maximum Fair Rent) Order 1999, unless the landlord has done work that lifts the rent by 15 per cent or more.
Someone May Inherit the Tenancy
A husband, wife or partner living there when the tenant dies takes over the same Rent Act tenancy. Another family member who lived there for the two years before the death gets an assured tenancy instead, at a market rent but still long term. This one point moves the price more than anything else.
Assured Tenancies Are Different
A tenancy that started on or after 15 January 1989 is assured under the Housing Act 1988. Since 1 May 2026, under the Renters' Rights Act 2025, every assured tenancy is periodic, fixed terms and section 21 notices are gone, and rent rises go through a section 13 notice once a year. A landlord who wants to sell can use the new ground 1A: at least four months' notice, not ending in the first 12 months of the tenancy, and a court order if the tenant does not leave. After using it, the landlord cannot let the home again for 12 months. Because an assured tenant pays a market rent and can be asked to leave for a sale, investors often pay close to the empty price, or somewhere around 5 to 15 per cent less. The Renters' Rights Act did not change regulated tenancies.
What the Buyer's Solicitor Asks for
The tenancy agreement, or proof of when the tenancy started if there is none, the registered rent, rent statements, who lives there, any notices served, the gas safety record, the electrical report, the energy certificate and any deposit and how it was protected. Missing paperwork slows the sale and lowers offers.
Few Buyers and Almost No Lenders
Most investors and nearly every mortgage lender will not touch a regulated tenancy. That means cash buyers who specialise in it, or an auction.
03The Value
A buyer values a regulated flat as two things added together: the rent until it becomes empty, and the empty flat at the end, both brought back to today's money. They choose how long the wait is likely to be and what return they want.
National statistics put the average remaining life of a woman aged 74 at about 13 to 14 years. The buyer used 12 years as the central case, because tenants this age often move nearer family or into care first. They wanted 8 per cent a year, because the timing is uncertain, and assumed flat prices rise 2.5 per cent a year.
The Empty Flat Later
£560,000 growing at 2.5 per cent for 12 years is about £753,000. Less £35,000 to modernise it once empty, that is £718,000. At 8 per cent a year, that is worth about £285,000 today.
The Rent Meanwhile
The landlord pays for the structure, the outside, the heating and the hot water (section 11 of the Landlord and Tenant Act 1985). With building insurance and service charges, the £9,600 rent leaves about £6,000 a year. For 12 years at 8 per cent, that is worth about £45,000 today.
Total
About £330,000, or 59 per cent of the empty value.
If Iris moved in 8 years, the same sum gives about £384,000. If she stayed 18 years, about £266,000. At London auctions, flats with regulated tenants usually sell for somewhere between half and two thirds of their empty value, mostly depending on the tenant's age and the rent.
Patricia's own sum was simple. If she kept the flat, her children would inherit it valued with the tenant in it, at about the same figure, and she would have nothing for her care now. Her gain since 1983 was about £289,000. After her £3,000 tax-free allowance, capital gains tax at 24 per cent came to about £68,700, to be reported and paid within 60 days of completion.
04The Execution
Week 1, Ask the Tenant First
Patricia's solicitor wrote to Iris with two offers, each to be looked at with her own solicitor, paid for by Patricia. The first was £50,000 to give up the tenancy and move, with help finding a new home. The second was the chance to buy the flat herself at a price between the empty and tenanted values. A regulated tenant who can raise the money often buys this way, because both sides share the gap. Iris, retired and without a mortgage, said no to both and wanted to stay. Her solicitor's fee was £600. Had she taken the payment, Patricia could have sold empty for close to £560,000.
Weeks 1 to 2, the Paperwork
Patricia's solicitor gathered the 1986 agreement, the rent statements, the registered rent and the safety certificates. A friendly visit, plus the electoral roll, confirmed Iris lived alone, so on what was known there was nobody to inherit the tenancy.
Week 2, the Building
A survey ordered by the buyer (£500) found a 19 year old boiler and rotten sash windows at the back. Both are landlord repairs, and the buyer budgeted £6,500. The flat had a 999 year lease with a share of the freehold, a service charge of £1,400 a year and no big works planned. A short lease would have meant a lower price.
Weeks 3 to 4, the Sale
The valuation, with the sums above, went to buyers whose mandates covered regulated tenancies. Four offered, from £290,000 to £325,000. The highest came from a cash buyer who already owned three similar flats.
Week 5, Tell the Tenant
Patricia and the buyer wrote to Iris together: nothing about her tenancy changes, her rent stays the same, and here is who to call for repairs. After completion the buyer sent formal notice of the new landlord's name and address within two months (section 3 of the Landlord and Tenant Act 1985), with an address in England for notices (section 48 of the Landlord and Tenant Act 1987).
Week 7, Completion
Rent was split to the day. The buyer paid £22,500 stamp duty at the higher rates and £1,500 in legal fees.
The Years Ahead
The buyer replaced the boiler and the back windows in the first year. They can apply for a new registered rent in 2027. If Iris ever wants to move nearer her son, the buyer can make the same kind of voluntary offer, with Iris's own solicitor paid for.
05The Outcome
Bought for
£325,000
Spent
£31,000 on stamp duty, legal fees, a survey, a new boiler and windows
Worth After
About £560,000 once the flat is empty
Value Added
About £204,000, when the flat becomes empty and not before
Patricia received £325,000 and paid £1,800 in legal fees, £600 for Iris's solicitor and about £68,700 in tax, leaving about £253,900 for her care within two months. Iris kept her home on the same terms, with a warmer flat. The buyer paid a fair price for a slow, steady return, and the £204,000 only arrives when the flat is empty.
The Lessons
- You can sell with a sitting tenant without their permission. The tenancy goes with the home, so price for that from the start.
- Find out which tenancy you have. Before 15 January 1989 is usually regulated and costs you 35 to 50 per cent of the empty value. An assured tenancy costs far less.
- Offer the tenant a payment to move, or the chance to buy, before you sell. Make it voluntary, in writing, and pay for their own solicitor.
- The tenant's age and who lives with them set the price. Check who could inherit the tenancy before you market it.
- Look up the registered rent online, and gather the tenancy papers and safety certificates before buyers ask.
- Plan for capital gains tax, reported and paid within 60 days of completion.
- Check your own position with a solicitor before you sell.
Buy Property Like This?
Tell us what you buy and we will only send you deals that fit.
Register a MandateCome Across These in Your Work?
Agents, solicitors, surveyors and accountants: send them to us. The client stays yours.
Introducer Enquiry