Residential conveyancing specialist Elizabeth Kelly, from WHN’s Bury office, offers her top tips for a smooth transaction for landlords wishing to sell a property that is occupied by a tenant under an assured shorthold tenancy agreement (AST).
What is an assured shorthold tenancy agreement?
An AST enables a landlord to let a property to a tenant yet retain the right to repossess the property at the end of the term of the tenancy.
If you are a landlord seeking to sell your property during an AST agreement it is important that you communicate this with the tenant and let them know as soon as possible that you are planning to sell the property. On the completion of the sale, the new owner of the property will then become the new landlord to the tenant.
The right to ‘quiet enjoyment’
The tenant is entitled to ‘quiet enjoyment’, which means the right to make use of their home without disturbance from the landlord or anyone acting on the landlord’s behalf. If you are planning to market the rental property you will require the tenant’s cooperation to obtain photographs of the property.
Access to the property will also be required for potential buyers viewing the property. It is therefore important to maintain a cordial relationship with your tenants and reassure them about their right to privacy and the security of their tenancy due to the property sale.
What documents are required to sell a property and transfer an AST over to a new landlord?
The relevant information and rental documents required to complete the sale of a rental property are set out below, with an explanation of why they are required.
Note that if you use a letting agent for the day-to-day management of the tenancy, you may not hold the information and documentation required to sell the property and will need to contact your letting agent for them.
This forms part of the sale contract. The buyer will become the tenant’s new landlord on completion of sale. The buyer will need to be aware of the terms of the original tenancy agreement and the landlord’s obligations.
Tenant deposit (Government-approved scheme)
It is a legal requirement that the tenant’s deposit is held in a government-approved scheme. There are a few providers of this service. The deposit will need to be transferred on completion between the original landlord and the new landlord. The new landlord has an obligation to ensure the deposit is still entered into an appropriate scheme. If the new landlord is a member of the same protection scheme as the original landlord, this could enable a quicker transfer of the deposit.
See also our blog post that covers government-backed tenancy deposit schemes.
Electrical condition report
The Private Rented Sector (England) Regulations 2020 states that landlords must ensure that all electrical installations at a rental property are in safe working order and maintained. It is a legal requirement to have the electrical installations tested every five years when letting a property. The Electrical Installation Condition Report (EICR) is evidence of this.
Gas Safe Record
Likewise, the landlord must ensure that all gas equipment is safely installed and maintained. It is a legal requirement to have the gas appliances serviced annually when letting a property. A Gas Safe Service Record is evidence of this.
Energy Performance Certificate (EPC)
The EPC sets out the energy rating of the property with a rating scale from A (most efficient) to G (least efficient). To let a property in England & Wales the property must have an Energy Rating of E or above.
Right to rent
The landlord must ensure that the tenant aged 18 or over, has the right to rent the property. Landlords or letting agents should check the tenant’s identity, immigration status, credit history and possibly employment status.
How to Rent Checklist
It is a requirement that the tenant is provided with this checklist.
A list of fittings and contents included in the sale. The buyer will need to have full understanding of what items will belong to them within the property, as opposed to those which belong to the tenant.
In addition to the above documentation, it will be necessary to provide evidence that the tenancy rental payment is up to date. On completion of the sale, apportionment of the rent will be made between the old and new landlord via their legal representatives.
Elizabeth Kelly specialises in residential conveyancing and deals with all aspects of the process of selling and purchasing homes. If you are planning to sell a tenanted property contact Elizabeth for further advice and support on 0161 761 4611 or by email: firstname.lastname@example.org. You can also visit WHN’s residential conveyancing page to find out more about how we can help.