Is it legal for a landlord to sell a property with tenants renting it?
It is legal for a landlord to sell their property even with tenants still living in and renting the property, although a landlord may need to offer the right of first refusal to ‘qualifying tenants’. After the sale, the new landlord takes over the Tenancy agreement between the old landlord and the tenant. Despite the new ownership, the tenant's rights are protected based on the pre-existing contract and the new owner is bound to recognise this contract based on existing laws.
However, once the existing contract expires, the new owner has the right to either:
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continue the tenancy with revised terms and agreements
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continue the tenancy based on the old agreement
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start the process for ending the tenancy
Kathryn MacDonell, CEO at Trilby Misso Lawyers, says, ‘The legal responsibilities of a landlord do not disappear during a sale; they merely transfer. That means the agreement is still valid; however, the tenants must prepare for a possible legal Eviction notice in case the new landlord has different plans for the property.’
Your rights if your landlord decides to sell the property
A tenancy agreement between a tenant and their landlord protects their rights. According to the government’s guidance on private renting, tenants have certain rights and responsibilities, which help protect them under the law even if the landlord decides to sell their property.
The right to know who your landlord is
Knowing your landlord is a crucial part of any tenancy agreement. Together with your rights, your landlord is bound by their responsibilities as a property owner, including keeping their property safe, ensuring all gas and electrical equipment is well-maintained, returning your deposit, and more. As a tenant, you have the right to know your landlord, whether old or new, who is responsible for maintaining the property you’re renting, and who you’re supposed to pay rent to.
Jeffrey Zhou, CEO and Founder of Fig Loans, says, ‘If your landlord decides to sell the property, you have the right to demand to know who the new landlord is. Contact the person or the business bank account you pay rent to, and you should know the new landlord’s information after 21 days. Otherwise, the landlord can be fined.’
As a tenant, you also have the right to request significant documents to confirm the sale and ownership of the property to a new landlord to avoid potential conflicts, like continuously paying rent to an unauthorised person.
Simon Healy, Director at Wardrobe Warehouse, says, ‘Some corporate landlords use AI to optimise their property renting business through chatbots and automated tenant requests and reminders through a system, so it is important to know if your new landlord is utilising such system and make the necessary arrangements for proper communication.’
The right to live in the property undisturbed
Also known as the right to quiet enjoyment, tenants are entitled to remain and live in their properties undisturbed, provided an existing and valid contract between them and the landlord.
Andrew Bates, COO at Bates Electric, says, ‘If your landlord decides to sell the property, examine your contract and see if a clause requires you to allow property viewings involving your property. For property viewings, tenants must be informed by the landlord 24 hours before the schedule, and these must be done at a reasonable time.’
A tenant can decline a request for property viewing but may risk a Section 21 notice from the landlord if they have an assured shorthold tenancy (AST) (ie the landlord seeking to evict the tenant).
Rodger Desai, CEO of Prove, says, ‘Landlords, old or new, must place the utmost importance on the tenants' safety and security at any given moment. The landlord must address any potential disturbance to their tenants swiftly.’
The right to be protected from unfair eviction and unfair rent
Not all new landlords may want to continue the tenancy they have inherited from the old landlord. Some prospective buyers may not want to continue buying the property from a landlord with any existing tenancy agreements in place.
In this case, a landlord, old or new, cannot immediately evict a tenant from your rented property if you have a valid and existing tenancy contract. However, they can enforce a Section 21 notice, known as a no-fault eviction notice, against the tenant despite an ongoing contract without needing to provide any reason. However, this might be changing with the Renters’ Rights’ Bill, if it becomes law.
Nick Marshall, General Manager at Window Factory, says, ‘Any landlord can’t just evict a tenant outright. The landlord must give the tenant at least 2 months' notice, or the eviction notice is invalid, and the tenants can proceed with legal complaints by the law.’
Tenants should also be aware of certain provisions within a Section 21 notice that do not allow a landlord to evict them under this procedure, especially if the tenancy only started less than 4 months ago.
If a tenant has broken any terms of their tenancy, a landlord may be able to enforce a Section 8 notice and implement an eviction using a 2 weeks’ to 2 months’ notice period - depending on which terms the tenant has broken and how.
If you are facing an eviction notice from your landlord, you can get free legal advice from the Housing Loss Prevention Advice Service. This service is available for anyone facing possession proceedings of any home.
Rights related to contracts, rent, and deposits for continued tenancies
If a tenancy started after 6 April 2007 and is an AST, your landlord must put the tenant’s deposit into a deposit protection scheme until the tenancy ends and comply with the rules on tenancy deposits. Once the tenancy ends, the landlord must return any (remaining) deposit to the tenant within 10 days. If a landlord fails to protect a deposit correctly, any section 21 notices served will be invalid.
If the new landlord decides to continue with the tenancy instead of proceeding with an eviction, here’s what could happen to the tenant’s rent and deposits:
If there is continued tenancy, the landlord must honour the existing agreement and propose a new agreement with the tenant with the new rate if they wish to increase the rent
If the tenancy is periodic, your new landlord generally cannot increase rent more than once a year without the tenant’s agreement. If the tenancy is within a fixed term, the landlord cannot increase the rent within the period with your agreement – they have to wait for the fixed term to end before proposing a new rate.
Gary Hemming, Owner & Finance Director at ABC Finance, said, ‘Any new rates proposed by any landlord should be realistic, reasonable, and within average local rents, or tenants can seek legal help for excessive charges made by their landlords.’
A tenant’s deposit should remain protected by the new landlord in case of a sale and be returned to them at the end of the tenancy. The new landlord must ensure their deposit is protected within 30 days of receiving it. If they fail to do so, you may be able to receive compensation from them.
Wrapping up landlord and tenant rights when selling property
Due to various economic factors, landlords have been selling more of their properties to avoid the potential impact of increased taxes. This inevitably leaves tenants fearing the possibility of eviction from their homes.
However, tenants are well-protected by the law, provided they have a valid and existing tenancy agreement. Tenants' rights remain in force even in the face of new ownership, including the rights to know their new landlord, have quiet enjoyment of their home, and have protection from unlawful eviction and rent increases.
