Propertymark has advised its members about the Renters Rights Bill.

The original article can be seen here, and says that with the Renters’ Rights Bill advancing through Parliament, the rules surrounding the sale of rental properties with sitting tenants are evolving, presenting both opportunities and challenges for landlords, buyers, and agents alike. While selling a property with tenants in situ will still be possible once the Bill becomes law, the changes to tenancy reform — particularly around repossession and tenant protections — mean that sales agents will need to be more diligent than ever in advising their clients on the complexities of pricing, compliance, and the long-term implications for both buyers and sellers.

Key Changes to the Sale of Properties with Tenants

1. Extended Tenant Protections:
   • The Renters’ Rights Bill will introduce new protections for tenants, including a 12-month protected period at the beginning of a tenancy. During this period, landlords will not be able to evict tenants to move into the property themselves or to sell it.
   • If the ownership of the property changes within the first 12 months, the new owner will be required to honor the remainder of this period before they can serve notice for repossession or to sell the property. After the 12-month period, the new owner can serve 4 months’ notice to regain possession of the property.
2. Impact on Buy-to-Let Investors:
   • These changes may make buy-to-let properties less attractive to investors due to the reduced flexibility around repossession. The 12-month tenant protection could discourage investors who rely on the ability to repossess properties quickly in case of financial issues or to refurbish and resell.
   • Additionally, the new rules around periodic tenancies, where tenants can give two months’ notice to end the tenancy, may introduce further uncertainty for landlords looking for long-term stability in their rental income.
3. Sales Process Considerations:
   • Property agents will need to clearly communicate to potential buyers that the tenants will remain in the property after the sale and that the new owner will inherit the tenancy. This arrangement can be beneficial in some cases, as it offers a guaranteed rental income from the outset, without the risk of a void period during the conveyancing process.
   • However, it’s important to note that the buyer pool for such properties may shrink as some investors may be deterred by the new tenancy rules, or they may prefer properties without sitting tenants, where they have more control over future rental terms and flexibility.

How Sales Agents Can Add Value

Given these challenges, sales agents will play an increasingly important role in guiding landlords and potential buyers through the complexities of selling a tenanted property. Here are several ways agents can showcase their value:

1. Realistic Pricing and Market Insights:
   • Agents need to be well-versed in the current market conditions and how the new tenancy rules could affect property pricing. With a smaller pool of potential buyers for tenanted properties, agents can provide expert guidance on realistic pricing to ensure that properties are priced competitively while considering the potential downsides for investors.
2. Clear Communication of Material Information:
   • It is crucial that the marketing of properties clearly communicates that tenants will remain in the property after the sale. This includes specifying rental income guarantees and making buyers aware of the long-term responsibilities they will inherit as landlords.
   • The Sale Protocol Toolkit offered by Propertymark will be a valuable resource in ensuring that sales processes are streamlined, compliant with Consumer Protection Regulations, and that material information about the tenancy is disclosed upfront. This transparency can help reduce fall-through rates and speed up transactions.
3. Compliance with Tenancy Documentation:
   • Before agreeing to sell a property, agents should ensure that the landlord has all the correct documentation in place for the existing tenancy. This includes a valid tenancy agreement, all prescribed documents (such as a gas safety certificate, an electrical safety certificate, and an energy performance certificate), and evidence that any tenant deposits have been properly registered with a government-approved scheme.
   • Ensuring this paperwork is in order helps reassure buyers that the tenancy is legally compliant and reduces the risk of complications after the sale.
4. Managing Tenant Relationships:
   • Property agents can assist investors in managing tenant relationships and navigating the compliance issues that will arise under the Renters’ Rights Bill. By handling these challenges, agents can reduce the regulatory burden on landlords, ensuring smooth transitions in ownership while maintaining good relations with tenants.
5. Navigating the Changing Legal Landscape:
   • With ongoing changes in the Renters’ Rights Bill, property agents must stay up-to-date with the latest amendments and developments. Keeping landlords and buyers informed of these changes will be critical, as new rules may affect how tenancies are managed and how properties are marketed and sold.
   • Propertymark is actively supporting agents with webinars and updates on potential amendments, helping them to stay abreast of important changes and providing the tools to guide clients effectively.

The Future of Selling Tenanted Properties

While selling tenanted properties may become more complex with the introduction of the Renters’ Rights Bill, it remains a viable option for many landlords, especially those seeking to offload properties with guaranteed rental income. However, as the rules around repossession and tenant protection evolve, both buyers and sellers will need to be prepared for a shifting landscape.

For agents, this represents an opportunity to demonstrate expertise, not just in property pricing, but also in legal compliance, market trends, and tenant management. By providing comprehensive advice and utilizing the tools available through organizations like Propertymark, agents can help navigate the complexities of these changes while maintaining a high standard of service for all parties involved.

As tenant protections strengthen, agents will become key players in ensuring that both landlords and buyers understand the implications of these changes and how to adapt their strategies accordingly.