How Much Does a Sitting Tenant Devalue a Property?

• Sitting tenants could devalue your home by between 5% and 50%, depending on tenancy type, with most assured tenancies seeing a 20%-30% discount
• The Renters' Rights Act 2025 (due May 1st 2026) abolishes no-fault evictions, making possession harder and lengthening timelines
• The willingness of the tenant, the type of tenancy and the amount of rent paid can all influence how much value is lost
• In the right circumstances, such as a tenant paying market rent, loss in value can be minimal

Selling a property with sitting tenants is one of the more stressful situations a landlord can face. The legal complexity, the uncertainty over timelines and the reduced pool of potential buyers can all make the process feel overwhelming. While investors are often willing to take on a tenanted property, most buyers are owner-occupiers for whom a sitting tenant is an immediate dealbreaker. Those who do consider it will typically expect a discount to reflect the additional risk and complications involved.

That discount can range from as little as 5% up to 50% in the most restrictive cases. For most landlords selling with an assured periodic tenancy in place, a reduction of 20%-30% is the more realistic expectation.

What is a sitting tenant?

A sitting tenant is someone with the legal right to remain in a property after it has been sold.  They become the buyer's new tenant and pay rent to them instead.

The tenancy continues after the sale with the buyer honouring the existing tenancy agreement.

This is a common sales method when selling between landlords, especially when an investor wants to earn rental income from day one. For those looking to buy a property to call home, a sitting tenant can cause complications.

This is because there are various forms of tenancy. The three most commonly used in England today are:

• Regulated tenancies
• Assured (periodic) tenancies
• Company lets

Why do sitting tenants devalue property?

Sitting tenants don’t always devalue property. If they pay rent on time, pay the market rate rent or above, and don’t object to the sale, a house can sell for close to full value, as buyers see it as low risk.

However, this isn’t always the case, and in some instances, landlords selling their properties may face limitations that don’t exist with vacant homes.

The main reasons sitting tenants can devalue property could include:

• Loss of control: Buyers cannot move in or carry out immediate changes without gaining the tenant's permission.
• Uncertain timelines: With the abolition of Section 21, regaining possession must follow a specific legal process. In some instances, especially in contested cases, this could take a year or longer.
• Smaller buyer pool: Many property buyers are owner-occupiers. This means a tenanted property is not even a consideration. This leaves a seller with a much smaller pool of buyers to try to sell to.
• Income limitations: If the tenants are paying below market-rate rent, buyers will factor this into their yield calculations. Rules now mean rent increases are limited to just once per year and limited to market rate, subject to challenge at tribunal. This means it could take a long time to recover costs and make a profit.
• Legal complications: With strict rules around evictions and compliance, some buyers are wary of finding themselves caught in a legal quagmire that they may not fully understand. From deposit protection to EPCs and PAT testing, potential buyers will investigate them all and find issues as justification to make a lower offer.

Put simply, the more restrictions created by the presence of tenants, the greater the reduction in value.

How does the Renters Rights Act 2025 affect a sale?

The Renters Rights Act 2025 is expected to come into force on May 1^st 2026, and for landlords considering a sale, it’s important to understand how it may affect them.

Section 21 abolished

Until recently, a landlord could end a tenancy with two months' notice without giving a reason. This is expected to change with Section 21 set to be abolished. All evictions will have to follow Section 8 rules that provide comprehensive legal grounds for possession.

Strict conditions of sale

This new act still allows landlords to sell and obtain possession, but this legal ground must be in line with specific terms:

• Evidence of intent to sell, such as advertising with an estate agent
• Property cannot be re-let for at least three months after gaining possession
• Cannot use the “intention to sell” ground within the first twelve months of a tenancy

All tenancies are periodic

This new ruling sees the end of Fixed-Term Assured Shorthold Tenancies. The reforms are expected to replace fixed-term tenancies with periodic agreements, rolling from month to month or week to week. Tenants can leave by providing two months' notice, but landlords can only ask a tenant to leave if a valid legal reason can be proved.

For sellers, this removes the option of waiting for a fixed term to expire naturally and then marketing the property before it becomes vacant. This leaves buyers with a property with no pre-determined end date for a tenancy. This can be enough to see a buyer try to negotiate a discount.

Rent increases capped

Landlords can now only increase rent once a year. To do so, they must provide at least two months’ notice. Rent cannot exceed the market rate either. Tenants are given further support by having the right to appeal any increase at the First-Tier Tribunal. For buyers, especially those taking on a property with a below-market-rate tenancy, trying to achieve market-rate rent could take considerable time. This may be factored into any offer to minimise losses.

Landlord database

From late 2026, landlords and their properties must be registered on a national database. Failing to register could restrict access to many possession grounds, giving buyers ample reason to make a reduced offer.

EPC changes

By 2030, all privately rented properties in England will need an EPC rating of C or above. Properties with lower ratings not only fail to comply but may cost significant sums to bring up to standard. Potential buyers will be aware of this additional expense and may use this to justify a lower offer.

What influences the price of a property with sitting tenants?

The level of discount depends on many variables. From tenancy type to rental costs, to location and demand, each can play a part.

Rent v Market rent

This is perhaps one of the most significant reasons buyers may offer below the asking price. If the existing rent is at or above market value, it’s easy for the buyer to see this is a worthwhile investment. However, if the rent is below market rate, a buyer will adjust their offer to ensure their rental yield is still achievable.

Location & demand

A tenanted property in a desirable area may receive plenty of offers. Potentially negating or minimising any discount. However, in areas with low rental demand, higher crime rates or other local challenges, discounts may be more substantial.

Tenant cooperation

Tenants open to viewings or even open to leaving show that the investment is lower risk, making it more appealing to buyers. On the other hand, a tenant who refuses access or indicates reluctance to the sale could make a buyer reduce their offer.

How much will my property lose in value with tenants in situ?

There is no one set answer; however, the tenancy type plays a huge role in the level of discount you could expect.

Regulated tenancies

These tenancies often have the most devaluation. A regulated tenancy under the Rent Act 1977 allows the tenant to remain in the property for life. In some cases, this can be passed on to family members too. Rent is normally set at below market rate and can rarely be increased significantly. Eviction is only possible in specific circumstances and requires a court order.

Lenders will often refuse to lend against these properties, leaving sellers with a very limited pool of buyers.

Assured Periodic tenancies

These tenancies are among the most common in England, and with the abolition of ASTs, all new and existing tenancies are expected to become periodic. A typical discount for these properties can be as high as 30% but can be much lower if tenants pay market-rate rent, cooperate with the landlord and the property is desirable to multiple buyers.

Company lets

Company lets are not bound by the Housing Act 1988 and are instead governed by contract law rather than typical tenancy protections. This gives buyers more flexibility and legal certainty, leading to a smaller discount.

How can you sell a property with a sitting tenant?

If you are a landlord looking to sell with tenants in situ, there are several options you could pursue:

• Selling to a buy-to-let investor: This is perhaps the easiest option. Tenants remain in the property, and buyers have a guaranteed income stream. This straightforward process does mean that a discount may be likely, as buyers diligently check all the legalities and conditions of the tenancy.
•  Negotiate a voluntary surrender: If a tenant is happy to leave, a formal tenancy surrender is possible. You may have to provide a financial incentive, such as covering moving costs. This clears the way for your property to be in vacant possession and improves the chances of reaching market value.
• Section 8: For landlords genuinely looking to sell, Section 8 provides a legal route to possession. The landlord must provide evidence of the intent to sell and ensure the correct notice period is given. If the tenant refuses to leave, court action can commence, but you will remain liable for all mortgage, maintenance and insurance costs. This eventually leads to vacant possession, but due to potential costs and time constraints, it may often be better to sell at a discount with tenants in situ.

How can I reduce the discount a buyer asks for?

Buyers want honesty and transparency. This is one of the easiest ways to reduce the potential discount you may have to offer. By providing reassurance, buyers see less risk and therefore have more confidence in making an offer at market value.

Landlords should have the following ready to help reduce the potential discount a buyer may try to negotiate:

• The current tenancy agreement, clearly outlining terms and tenancy type.
• Rent payment history
• Deposit protection information
• A valid EPC
• An EICR valid for five years
• The current gas safety certificate
• Proof that the Renters’ Right Act Information Sheet has been provided to the tenant (required by May 31^st 2026 for existing tenancies. Fine of up to £7,000 for non-compliance)
• Any correspondence with the tenant relating to the sale

Selling a tenanted property doesn't have to mean accepting a steep discount or navigating a lengthy legal process alone. At Bettermove, we specialise in exactly this situation, removing the complexity and providing a guaranteed sale, regardless of tenancy type. Whether you need to sell your house fast or want a straightforward route through the red tape, speak to our team today and find out how we can help.