Here is a question to the blog clinic from Arnold who is a landlord.
My wife and I have one small BTL house rented out, but with the Covid19 we’ve had to make a temporary rent reduction deal with our tenants, from £800 to £500 per month; the difference repayable when they’re fully employed again.
But with the new 6 month stay of evictions and the courts being choked up, we’re having to consider our options —
- Should we sell up now, whilst property prices are good; or wait until the tenants either both have jobs, or can’t pay at all?
- Can we even sell the house with sitting tenants?
- Would they have to leave if we wanted to move in ourselves, after selling our own flat?
- And finally, the tenants mentioned the word bankruptcy. If we got a county court judgement against them for non payment of rent, would that money be included in a bankruptcy judgement, so we get nothing?
Things are difficult for everyone at this time, and you are at least receiving over 50% of your rent.
I can’t comment on the timing of any sale as no-one knows for sure what prices will do in the future. You would have to sell the property as an investment property with tenants in situ and as they are paying less than the market rent, this would probably affect the sale price you could achieve. The best thing to do is to speak to some estate agents and get their opinion.
But yes, you can sell the property with tenants in situ and this is often done.
If you wanted to live in the property yourself, you would not be able to move in until the tenants have vacated.
If the tenants are unwilling to move out voluntarily, the only way you could force them to leave is by getting a court order for possession. As things stand at the moment the process is likley to take well over a year – bearing in mind that your notice will need to give them six months notice.
If you do this, there is always the danger that they would stop making even the current payments, taking the view that if you are going to evict them anyway, why shoud they bother?
It is always open to people to file for bankruptcy and if they were to do this you would be able to claim in the bankruptcy for your rent (it would not be necessary to get a CCJ) but would be unlikey to get very much if anything.
However it is difficult for landlords to recover unpaid rent anyway, even in normal circumstances, so my feeling is that your chances of recovering the additional £300 per month which they are not paying now under your agreement, is remote.
I suppose you could serve a section 21 notice on them now saying that you are just doing this to keep your options open in view of the long notice period and mention that you may need to sell up for financial reasons.
However think carefully before you do this as it could affect any good relationship you have with your tenants.
My feeling is that your best options are to investigate a sale as an investment property with the tenants in situ and see if you could achieve a price you are happy with, but otherwise to leave things as they are.
What do readers think?