Written by Lewis Ridley
Updated over a week ago
If you didn’t know already, having tenants in situ can devalue a property you’re trying to sell. Not ideal if you’re trying to get as much money back from your investment as possible. But how much exactly does a sitting tenant devalue a property?
A sitting tenant can devalue a property as much as 20 – 40%. The exact percentile amount is determined by type of tenancy. For example, a temporary tenancy, such as an assured shorthold, will devalue the property less than an assured tenancy.
Of course, there will be other factors that come into play. Market conditions will determine house price just as much as sitting tenants will. If there is a lot of interest in that area, you may be able to remove some of the losses.
On the hunt for a tenanted property? Check our tool to discover properties for sale with tenants in situ.
If you’re looking to squeeze as much money out of a property with sitting tenants as possible, there are a few things you can do.
If you have a larger budget, consider doing some large renovations like extensions. Property Reports stated that adding an extension can boost a property’s value by 8%. You can also make the property more environmentally friendly with a new boiler, double-glazed windows, and solar panels.
For small budgets, a simple repaint, a few easy eco-friendly bulbs and thermostats, and a newly renovated garden could give your property a much-needed value boost.
Increasing property value exceeds the scope of this article. For more information, we have a complete guide on increasing property value in our knowledge centre.
If you have a house with sitting tenants and are looking to sell, the process is simple. You have a few options in front of you and they don’t really differentiate with how you’d usually sell a property.
The first is by using an estate agent, preferably one with experience in selling houses with sitting tenants. This is probably the easiest method and the one where you’ll have the most control. With an experienced estate agent, they’ll be able to price the property appropriately and handle the full process. Just bear in mind this process is slower.
The second is via auction. If you’re looking to sell your tenanted property fast, this is the place to go. However, understand there is more risk with putting your property in an auction. You have less control over the final price and individuals come to auctions hunting for a bargain. If your property gets sold for a price you’re not happy with, you can’t pull out of the sale – it’s final.
Thirdly, you can use a home buying company. These will provide the quickest sale but at a heavily reduced price. The company will take over your landlord responsibilities and various other fees associated with the above options. Just be willing to take a hit in profit.
Not many people know this, but you can in fact sell the house directly to the sitting tenants. Landlords can offer the tenants “first refusal”, which basically means offering the property before it goes on the market. This means you’re likely to get a quicker and more straightforward sale without estate agent fees or house viewings.
Tenants are also likely to be happy with this arrangement as they’ll already be moved in, and mortgage payments tend to be cheaper than renting.