Selling a property with a sitting tenant

A sitting tenant (or protected tenant) is someone who has a regulated tenancy under the Rent Act 1977 of a rented property which dates back before the Housing Act 1988 came into force in January 1989.

A protected tenant has the right to:

• security of tenure – the landlord can only repossess the property in certain circumstances (see below);
• the right to have the rent fixed by the rent officer and to have rent increased only in certain circumstances;
• the right to have the accommodation kept in a reasonable state or repair;
• the right of their spouse, civil partner, other partner or another family member living with the tenant to take over the tenancy on their death;
• the right not to be treated unfairly because of their disability, gender reassignment, pregnancy and maternity, race, religion or belief, sex or sexual orientation.

Sitting tenants make selling a property much more problematic since they have more rights than assured shorthold tenants and are often paying less than market rent. A landlord is not allowed to increase the rent of a protected tenant if it has been registered as a fair rent by the Rent Officer. If no fair rent has been registered, the landlord cannot increase the rent unless the tenant agrees formally in writing, or either the tenant or landlord apply to the Rent Officer and the Rent Officer fixes a fair rent.

Buyers usually want to buy a property with vacant possession but, if there is a binding contract between the tenant and the landlord, the tenant does not automatically lose his rights after the property changes ownership.

In addition, a landlord cannot even show potential purchasers around the house without the tenant’s consent unless the tenancy agreement specifically provides for this: the right is not implied and without it the landlord must get vacant possession before they even put the house on the market.

If a landlord does manage to sell the property with a sitting tenant still in situ, the new purchaser will become the new landlord of the tenants. The purchaser ‘stands in the shoes’ of the vendor: he won’t have any additional rights and some grounds of eviction below will no longer be available.

To evict a protected tenant, the landlord must obtain a possession order from the courts and this will only be granted if the landlord can show that one of the grounds listed in the Rent Act 1977 applies.

Some of the grounds are discretionary and some are mandatory. If a discretionary ground applies, the court will only allow the eviction if it thinks this is reasonable. If a mandatory ground applies, the court must grant the landlord a possession order.

The discretionary grounds for possession are:

• the tenant has not paid the rent, or has broken some other term of the tenancy;
• the tenant has caused a nuisance or annoyance to neighbours, or has been convicted of immoral or illegal use of the premises;
• the tenant has damaged the property or allowed it to become damaged;
• the tenant has damaged the furniture;
• the landlord has arranged to sell or let the property because the tenant gave notice that he was giving up the tenancy;
• the tenant has assigned or sublet the whole of the property without the landlord’s consent;
• the tenant was an employee of the landlord and the landlord requires the property for a new employee;
• the landlord needs the property for himself or members of his family to live in and greater hardship would not be caused by granting the order than by refusing to grant it (this does not normally apply if the tenant was a sitting tenant when the landlord bought the property);
• the tenant has charged a subtenant more than the Rent Act permits.

The mandatory grounds for possession are:

• the landlord let his home with the intention of returning to live there again;
• the landlord let accommodation to which he intends to retire;
• the accommodation was let for a fixed term of eight months or less, having been let for a holiday at some time during the previous 12 months;
• the accommodation was let for a fixed term of a year or less, having been let to students by a specified educational institution or body at some time during the previous 12 months;
• the accommodation was intended for a member of the clergy and has been let temporarily to an ordinary tenant;
• the accommodation was occupied by a farmworker and has been let temporarily to an ordinary tenant;
• when some agricultural holdings were amalgamated, accommodation previously occupied by a farm manager has been let temporarily to an ordinary tenant;
• the accommodation was previously occupied by a farm manager, widow or widower and has been let temporarily to an ordinary tenant;
• the property was let on a protected shorthold tenancy and the shorthold term has ended;
• the landlord was a member of the regular armed forces at the time the letting was made and intended to live in the house at some future date.

Even if the court does grant possession to the landlord it can suspend possession, meaning the tenant can’t be evicted provided they adhere to certain conditions set by the court, eg, paying a certain amount each week towards your rent arrears.