Please note: As with anything of this sort, it’s imperative that you speak with a legal expert in order to receive the best, most recent guidance. The material in this article is not legal advice .
The terms “sitting tenant” and “tenant in situ” may come up if you’re planning to buy a home. You’ve come to the perfect site if you’re curious what these terms represent! Here, we’ll discuss what a sitting tenant is, their rights, and what to do if you want to buy or sell a property that already has tenants occupying it.
Definition of Sitting Tenants
Sitting tenants are those who have lived in their home for an extended period of time, often for years or even decades. In some cases, they may have inherited the tenancy from a family member or may have been given the tenancy by a landlord.
However long they have been in the property, sitting tenants are entitled to certain rights.
Rights of Sitting Tenants
Understanding current tenants’ rights and how they could impact the purchase is crucial if you’re considering purchasing a home with a sitting tenant in place. They will be protected by the sitting tenant laws even if there is no sitting tenancy agreement in effect.
Assured Shorthold Tenancy
When purchasing a property with a sitting tenant, the new owner, as the landlord, takes on the existing Assured Shorthold Tenancy (AST) of the tenant. Both parties are bound by the terms of the original tenancy agreement. Only once the fixed term period of the AST has ended can the new landlord evict the tenant under a section 21 notice – which is soon to be replaced by extended grounds under section 8.
Regulated Tenancy
If the tenant entered into the tenancy before 1989, they will benefit from the security of tenure under a Regulated Tenancy. Their rights are that they have a legal right to remain living at the property, in accordance with theRent Act 1977.
If the sitting tenant should die, under rights of succession, the tenancy might be able to then be passed on to another family member. A sitting tenant does not have the right to buy the property that they are renting, except if the property belongs to the local authority. However, this is not to say that a landlord cannot offer their tenant first refusal on the property should they decide to sell. A sitting tenant has the right to remain in the property, provided they continue to pay rent on time and keep to the terms of their agreement. The rent paid could be below the current market value and it is their right to remain paying this lower rental sum.
Benefits of Having Sitting Tenants:
1. Guaranteed rental income: Sitting tenants provide a steady and consistent source of income for landlords.
2. Long-term security: Sitting tenants provide landlords with the security of knowing that their property is occupied for a long period of time, reducing the risk of void periods.
3. Reduced costs: Landlords do not need to pay for costly advertising or find suitable tenants, as the sitting tenants will remain in the property.
4. Reduced legal costs: In most cases, landlords do not have to produce new tenancy agreements, as the existing agreement can be used to continue the tenancy.
5. Familiarity: Having a tenant who knows the ins and outs of the property can be beneficial in the long run, as they are familiar with the property and will be able to alert the landlord to any potential problems.
6. Established relationships: Sitting tenants can build a good relationship with the landlord, leading to a smoother tenancy and a more cooperative tenant.
Drawbacks of Having Sitting Tenants:
1. Limited rent increases due to rent control laws.
2. Tenants may not be able to afford the increased running costs over time.
3. Difficult to terminate a tenancy agreement and regain possession of the property.
4. Tenants may be difficult to contact if they are not active on the rental market.
5. Potential restrictions on modernising or redeveloping the property.
6. Unpredictable rental income due to the uncertainty of the tenure.
7. Difficult to control the quality of tenants.
8. Potential legal disputes over the terms and conditions of the tenancy.
9. Potential for tenants to become overcrowded or cause a nuisance to neighbours.
10. Potential for tenants to sublet the property without the landlord’s knowledge.
Summary
To conclude, a sitting tenant is a tenant who has an existing legal agreement with a landlord to rent a property for a specified period of time and is allowed to stay in the property until the agreement expires. This type of tenancy usually gives the tenant more rights than a standard tenancy agreement, and the landlord is not allowed to evict the tenant unless they breach the terms of the agreement.
Looking to sell a property with a sitting tenant? Or are you a sitting tenant and looking to buy a house? Get in touch with a member of the Belvoir team today.
