Selling property advice

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    Selling property advice

    We will shortly inherit a three bed semi with a family of tenants who have rented it via a letting agent from our late mother for over a decade. They're in the south east of England on a periodic AST. We're considering selling the property once ownership is transferred to us.
    • What's the best way to approach the tenants with this information? ... and when?
    • Should we sell with sitting tenants or end the tenancy prior to that? They're decent tenants and would make a very safe bet for any potential landlord who might want to buy.
    • The current AST (2015) is with my mother as landlord. Will we have to get a new one in our names?
    • If so, can we make the fixed term short so that it doesn't jeopardise a sale if we require them to leave prior to selling? I know the current AST was not arranged properly as I've just discovered no EPC was done for the property. That means that if we have to evict, we're going to be disadvantaged by the fact that the paperwork was not in order. If we get a new AST done, we can get all our ducks in a row, just in case.


    It's taken over two years to get to the point where we can transfer ownership. We don't want a potential sale to take another two!

    ... and please do include anything I may not have considered.

    TIA

    #2
    Do you want full market value for the property?

    Comment


      #3
      The first thing anyone on here is going to ask is whether or not the deposit has been properly protected and with the correct paperwork (Prescribed Information) issued to the tenants. Find this out from the agent ASAP as it could jeopardise your ability to serve notice.

      Get an EPC done ASAP, it is a legal requirement. I would be surprised if you got into any trouble specifically for this because you can legitimately claim ignorance (you weren't the owner when it should have been done prior to letting).

      Under Section 3 of the Landlord and Tenant Act 1985 you will need to make the tenants aware that there is a new owner and, under Section 48 L&T Act 1987 you must provide them with an address at which they can serve notice (this may still be the agent's address).

      You can then let them know your intention to sell. How you do this depends on so many things;

      - Do you need the rental income?
      - Are the tenants likely to be awkward over access?
      - Do they present well, or would it be better empty?
      - Would it likely sell to another investor?

      If you like, you can PM me as I work in the South East and I might be able to give you a steer depending on where you are geographically.

      Comment


        #4
        IMO you wii acquire the current Ts & AST on transfer at Probate valuation (ie as if you had purchased it on transfer date). You need to provide Ts with Stat s48 etc and ensure any deposit remains protected. T will continue as SPT and you can evict Ts with min 2 months s21 when you find a buyer.
        OR
        you can require Executor to evict Ts and provide vacant possession, or simply sell the Property and distribute the proceeds of Sale, as per bequest.
        With existing Ts of 10 years, it would be courteous for you to meet with the T now, to explain your intent to sell, they may want to buy. Use the visit to check current condition and unresolved problems.
        Your late mother's Solicitor/Executor is best placed to explain your options.

        Comment


          #5
          thanks for that.

          FYI, I am one of the executors although not best placed to explain anything to myself! I will be asking solicitor what our rights are in regard to selling as executors. We've only just decided that selling is our preference so she has been acting as if we were keeping the property. Would there be any advantages to conducting the sale as executors and then distributing proceeds to ourselves as beneficiaries?

          Probate was granted about a year ago, but the estate has been very complex and so liquidating funds and getting to the stage where we can distribute assets has taken much longer than expected. @mariner: are you saying that they are technically our tenants from the point that probate was granted?

          EPC was done the day after I discovered that it was not. I checked that the deposit had been protected a while ago. It says as such on the AST. I doubt I should take the agent's word for it though. How can I independently check that it really is still protected?

          I visited the property shortly after my mother's death both to meet the tenants for the first time and also to check it over. It needed work in several areas so we've sorted most of the outstanding issues. Tenants may want to buy so I will make sure we offer them that option although I doubt they will be able to afford it. Appearances can be deceptive though...

          The tenants are aware that mum left the house to my sister and me. They're probably in the dark as to who is the legal owner of the property though as technically it's in the possession of the estate. An AST with my mum's name on it was granted them in early 2016 because the letting agents simply did a new one every year. When I discovered this, I told them to let it roll over so the fixed term would expire.

          Comment


            #6
            Originally posted by Mrs Mug View Post
            Do you want full market value for the property?
            sorry... forgot to reply to this. Well, somewhere in the region... why do you ask?

            Comment


              #7
              If you want full market value you will need to evict the tenants, so that you can sell with vacant possession.

              Comment


                #8
                Originally posted by tatemono View Post
                They're probably in the dark as to who is the legal owner of the property though as technically it's in the possession of the estate.
                Surely, it's in the ownership of the executors as trustees, but in the possession of the tenant.

                Comment


                  #9
                  Originally posted by Mrs Mug View Post
                  If you want full market value you will need to evict the tenants, so that you can sell with vacant possession.
                  thanks for that. I take it that means if we attempt to sell to investor landlords with sitting tenants, we're less likely to get full market value.

                  Originally posted by StuartH View Post
                  Surely, it's in the ownership of the executors as trustees, but in the possession of the tenant.
                  Yes sorry... wrong choice of words. Exactly that.

                  Comment


                    #10
                    A landlord will almost inevitably be paying an additional 3% stamp duty and will be less emotionally invested in the purchase.
                    And there are, pretty much by definition, fewer landlords tooking to buy than people in general looking to buy - and there are potential downsides in taking on someone else's tenant.
                    So, you'd expect them to drive a harderargument on the price.

                    On the other hand, they're nearly as good as cash buyers (usually their finance is in place and they're not in a chain) and can usually complete quickly as a consequence.
                    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                    Comment


                      #11
                      good points. Thanks for that.

                      Comment


                        #12
                        Consider the property, itself. Some, because of their location and type, are particularly attractive as rental properties (and may put off owner-occupiers). A property may achieve a higher price (and be easier to sell, particularly if vacant possession doesn't have to be secured) from a landlord than an owner-occupier.

                        The converse can be equally true: higher value houses rarely command a rental proportionate to the additional investment (the rental yield is lower) - so a proper assessment of the particular property is the best way to determine how best to maximise the sale proceeds.

                        Comment

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