The ins and outs of selling a tenanted property

If you want to sell an investment property, having a tenant doesn't put a red light on the deal. In other words, you don't need to wait for your tenant's lease period to be up before putting your property on the market. Jawitz Properties takes a deep dive into everything you need to know about selling a tenanted property.

'Huur gaat voor koop'

The legal term "huur gaat voor koop" is a Dutch phrase, which translates directly to "rent comes before sale". In other words, the terms and conditions of the signed lease agreement supersede the terms of any sale agreement that you may enter into. This means that if your tenant has signed a 12-month lease and you decide to sell your property, he or she will be entitled to stay in your property until the end of the 12 months and the buyer will automatically become the landlord on registration of transfer. From this date, all benefits and risks of the lease will pass to the new owner. Of course, the buyer will need to be aware that there is a tenant living in the property and be privy to the relevant lease agreement information before an offer to purchase is signed.

What if the tenant wants to leave?

In certain circumstances, the tenant may have been looking for a way to cancel his or her lease, and the sale of the property may seem like the perfect opportunity to make this happen. Whether or not this is permissible will come down to whether or not the signed lease includes a sale provision. If such a provision exists, it may allow the tenant to cancel the contract once the property goes on the market. If there is no such clause in the lease, the tenant may face penalties from the new homeowner if they attempt to cancel the lease.

Circumstances in which 'huur gaat voor koop' does not apply

There are certain circumstances in which the "tenant's rights first" principle may not apply. The first of these is the case of a distressed sale where the bank and sheriffs are involved. The second circumstance is where a landlord includes a sale provision in their lease. Depending on the wording of this clause, the landlord may be allowed to end the lease early with a notice period being given to the tenant. Even if the legalities work in the tenant's favour and they can cancel the lease early if they should wish to, there will often be penalty fees to be paid.

In most cases, the simplest and most cost-effective solution for everyone is to allow the new owner to take over the lease. The tenant can rest assured that their monthly rental amount and all the terms of the agreement will remain as is. For a prospective buy-to-let real estate investor, a property with a reliable tenant already in place can be an ideal solution.

Tenants' obligations during the sale process

Once a landlord has told a tenant that they are planning to sell, the tenant must be reasonable in terms of allowing prospective buyers access to their homes. This respect must go both ways, however, and landlords and property practitioners must do their best to arrange viewings at times that suit both parties. By setting dates and times in advance for viewings, a seller can ensure that the tenant has ample time to get their home looking its best.

Selling a property that is currently home to a tenant is a task that must be navigated with care and consideration for everyone involved. Jawitz Properties has decades of experience in managing such scenarios and we are here to help. Whether you're a landlord looking to sell or a tenant looking for reassurance if your home has been put on the market, contact us today.