What is a Sitting Tenant, and What Are Their Rights?
If you purchase a property from a landlord, and a tenant is currently living there, you may wonder what the next steps are regarding their tenancy. If you want to let the property out, maybe you want to continue the tenancy. If you’re going to live there by yourself, then perhaps not. Here, we’ll explain the ins and outs of a sitting tenant.
What is a sitting tenant?
A sitting tenant is a tenant that is already in occupation of a given premise when there is a change of ownership. In other words, a sitting tenant is a renter living in a property that their landlord decides to sell.
Once the original landlord sells the property but decides not to evict the tenant, the new landlord then assumes the role of the old landlord and takes on the appropriate duty of care, as well as existing tenancy contract.
Are sitting tenants common?
Interestingly it is becoming increasingly popular to purchase properties with sitting tenants as these offer a more secure and reliable proposition for the new landlord in terms of a stable revenue stream from the very outset of property ownership.
These sorts of takeovers prove to be a sound investment for landlords as studies carried out by letting agencies have found that sitting tenants tend to reside in their home considerably longer than the average tenant (25% had signed contracts of 2 years or longer, compared to 5% overall).
What can happen when there’s a sitting tenant?
When there is a takeover in property, the sitting tenant can be subject to one of three scenarios.
No change in the tenancy
Either there is no change which means that the tenancy will continue as before, however, now the rent payments will be transferred to the new landlord rather than the old one.
New tenancy agreement
Alternatively, there may be a new tenancy agreement, which will most often reflect property ownership change (i.e. the new landlord). However, there are instances where the new landlord may want to alter the terms of the tenancy, such as rent or duration, and here it is important to understand your rights so that you can retain the tenancy that represents your best interests. As a sitting tenant, you are entitled to retain the terms of the contract that you originally signed and should not be subject to any forceful changes of contract.
The tenant gets evicted
Finally, the tenant could be subject to eviction. The new landlord may want to bring in tenants of their own, move in themselves, or even undertake renovations across the property. They may see potential in improving the home, which would require its vacation while works are carried out.
As such, the new landlord may issue a ‘Section 21 notice’ that would require the tenant to vacate the property. The only case in which one may retain tenancy is if it is not classified as an Assured Shorthold Tenancy, which would be applicable to those who entered into the tenancy before 1989, which would have granted them the security of tenure under the Rent Act 1977. Evictions of sitting tenants are very rare and not something that should be a major concern for tenants.
A formality that could be helpful for a smooth changeover in landlords for sitting tenants would be to arrange a meeting with the new landlord. In doing so, you will establish a relationship with the landlord and be clear about your mutual intentions going forward with the tenancy.