Selling to your tenant, the advantages to gain and pitfalls to avoid

Selling to your tenant, the advantages to gain and pitfalls to avoid

Selling to your tenant, the advantages to gain and pitfalls to avoid

If the time has come to sell a buy to let property then it may seem like selling to the person - or people - currently living in it is an obvious move. Maybe you have had a request to consider selling to a tenant and they have made a pretty attractive offer. If this is something you're thinking about, what are the advantages and the potential pitfalls to look out for?

The advantages of selling to your tenant

  • An easy sale. You won't need to market the property to sell it or to pay fees to try and get it in front of people who might be looking to buy it. Instead, you already have a willing buyer.
  • No logistics to work out. If you're selling to your tenant then you won't need to deal with arranging viewings or handing over keys. There's also no need to consider the process of removing a sitting tenant or selling the property in the middle of a lease.
  • The current stamp duty cut. As of July this year there is no stamp duty to pay on home purchases (the 3% surcharge still applies when purchasing a buy to let). As a result a buying tenant will be paying less in purchasing costs and may be willing to consider a higher purchase price.
  • Selling your property to people who will take care of it. If you know the tenants love the property and really want to live there it can make the sale process much more straightforward in terms of peace of mind.

Pitfalls to avoid

  • Some tenants may look to avoid paying the market price for the property. They may justify this on the basis of lower costs for you and less hassle. The reality is that they are going to end up with a valuable asset and so should be paying the market price for it.
  • Accepting the market price for the property. You may find that if you do market the property more broadly someone out there is actually willing to pay more for it. So, it's important to work out what it's actually worth.
  • Tax and fee liabilities. These are not exactly pitfalls but make sure you're well informed about any tax that will arise on the sale, such as Capital Gains Tax (CGT). If you've been letting the property via an agent then you may also find that there is a fee to pay to the agent if that letting arrangement is converted into a sale.
  • A too-informal approach. If your tenants have been with you for some time and you know each other well then they may look to complete the sale informally, for example without the support of professionals. The justification for this is often to save money but it can go badly wrong. It's essential to ensure that you have the support of a good agent and conveyancer to make sure you can negotiate the right deal and that your interests are protected.

Selling to a tenant could work out well - it's something to consider and take some professional advice on.


Residential lettings
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