tenant security during landlord property changes
Wed 30 Jan 2019
What do Tenants Want in the Case of a Property Sale?
There is a definite increase in the number of people choosing to live in rented property. More commonly, we are finding that this is a longer-term option for people who are saving the deposit for their first house.
Not everyone who owns a property lives in them. For landlords and property investors, it can be a great benefit to have a more fluid approach to the ability to release the capital in their assets.
A growing number of tenants say they want to stay put in their rented home even if the landlord sells up.
So, on the one hand we have the need to be able to sell a property relatively frequently. On the other, we have the requirements for those living in the property to stay put.
Can these two requirements go hand-in-hand?
How Often Do We Move House in the UK?
Of course, moving house is be a big occasion. Some people move every couple of years due to work commitments or schools, whilst others stay in their homes for their entire lifetime.-
A previous Zoopla report* showed us that, on average, Britons move house every 23 years. That’s a pretty solid reflection of the desire for stability in housing if you ask us!
The desire for stability is a reflection of the typical human need for security. So, why should that be any different for those of us in rented accommodation? If tenants want stability, most landlords will significantly benefit from this in return. A long-term tenant means:
- Fewer void periods;- Less risk of loss of income;
The point is, though, that not every landlord wants their hands tied for long-term commitments. Equally, there is a proportion of tenants for whom renting is a short-term option.
What Happens When A Landlord Sells Up?
The sale of a tenanted property is an attractive opportunity for another landlord looking to expand their portfolio. However, many landlords automatically opt to evict their tenants in order to sell the property.
Research undertaken by Vesta Property** shows that nearly one in nine tenants has been forced to leave their home before they are ready due to a change in ownership. This figure increases to one in five tenants in the 25 to 34-year-old bracket.
70% said of tenants in the survey said they wouldn’t care if their landlord sold as long as their existing contract and rent remained the same.
78% of those asked simply wanted to remain in place!
It’s important to remember that landlords will lose rental income due to “early evictions” ahead of a property sale. In fact, Vesta estimated that this equates to around £550m each year in lost rental income.
Russell Gould, Chief Executive of Vesta Property says:
“If a landlord needs to sell their property, they should absolutely have the right to do that within a time frame that suits them and ideally without losing rental income. But equally, their settled tenants should not suffer and lose their home because of it….offering tenant in place sale and purchase, satisfy both the needs of tenants who want to keep their home and landlords or investors who wish to sell or buy.”
Why is this Interesting?
Well, this research tells us that landlords ought not to immediately think they must evict tenants if they want to sell up. If you sell a property that has a tenant in place to another landlord, there are obvious benefits for everyone involved.
Namely, more financial gain for the departing landlord due to no loss of rental income. Immediate financial revenue from the incoming landlord because they will pick up the rental income from the incumbent tenant without a void period. Security for the tenants as they do not have to relocate if they don’t want to.
We have over 100 live properties on our books, and, they do sometimes change ownership. So if you're thinking of investing or want to sell a property, the Oulsnam Lettings team is well placed to advise you on the options available to you.
** A survey of 600 tenants conducted in August