Selling a Tenanted Property by Auction in 2025

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Key Considerations for Selling a Tenanted Property by Auction in 2025

Selling a property with tenants is more complex than selling a vacant property. Auctions remain one of the most effective methods for landlords and investors looking to sell tenanted properties. This guide explores the advantages, challenges, and essential steps involved in selling a tenanted property through auction in 2025, as well as strategies to maximise value and ensure compliance with legal requirements.

Updated by: Mark Grantham on  13th January 2025

Advantages of Selling a Tenanted Property by Auction

• Targeting Investors: Auctions attract a wide range of property investors who are actively seeking opportunities. A tenanted property is often seen as an attractive option for investors because it provides immediate rental income without the need to find tenants.
• Transparent Process: Auctions provide a clear, transparent sales process. Buyers know the terms upfront, and competitive bidding ensures that the property is sold at a fair price.
• Certainty of Sale: Once the gavel falls, the sale is legally binding, minimising the risk of the deal falling through. This is especially beneficial, as private treaty (estate agency) sales are often delayed or fail due to financing issues.
• Faster Transactions: The auction process is significantly quicker than traditional property sales. From listing to completion, the entire process can often be completed in as little as 28 days.

Legal Considerations

Before selling a tenanted property, it is important to understand the legal landscape to ensure compliance. In 2025, the following legal requirements and considerations must be addressed:

• Tenancy Agreements: Ensure all tenancy agreements are up to date and valid. Buyers will want to review these contracts to understand the rental income, terms, and any obligations they will inherit.
• Renters (Reform) Act 2023:  Sellers must ensure compliance with these regulations, including providing buyers with documentation proving adherence.
• Disclosure Obligations: Transparency is key. Sellers must disclose all relevant details about the tenancy, such as:
  • Rental income
  • Tenant payment history
  • Length of tenancy
  • Any disputes or legal issues with tenants
• Section 48 and Section 3 Notices: If the buyer intends to change managing agents or take over landlord responsibilities, serving these notices to tenants is mandatory.

Preparing the Property for Auction

Preparation is key. Here are the steps to prepare your tenanted property for sale:

• Tenant Communication: Notify your tenants of your intention to sell. While the sale does not legally terminate their tenancy, open communication fosters goodwill and cooperation. Reassure tenants that their rights and tenancy agreement will remain intact.
• Property Documentation: Gather all essential paperwork, including:
  • Energy Performance Certificate (EPC)
  • Gas Safety Certificate
  • Electrical Installation Condition Report (EICR)
  • Tenancy agreements
  • Rent payment history
• Condition Assessment: Conduct a thorough inspection to identify and address maintenance issues. While extensive renovations are not necessary, resolving minor repairs can make the property more appealing to buyers.
• Valuation: Work with a property expert or auctioneer to determine a realistic reserve price. Consider factors such as rental income, tenant stability, and market trends.

Choosing the Right Auctioneer

Selecting an experienced auctioneer is crucial to achieving a successful sale. In 2025, look for auction houses that specialise in tenanted properties and offer digital auction platforms to reach a broader audience. Key factors to consider include:

• Reputation: Research the auctioneer’s track record with similar properties. Read reviews and ask for references.
• Marketing Reach: A good auctioneer will have a thorough marketing strategy, including online listings, social media promotions, and targeted campaigns to attract investors.
• Fee Structure: Understand the auctioneer’s fees, which typically include a percentage of the sale price and a buyer’s premium. Compare these costs across different auction houses.

The Auction Day Process

On the day of the auction, ensure you are well-prepared for a smooth process:

• Attend or Monitor Remotely: The seller doesn;t need to attend the auction, but many auctions are now conducted online, allowing sellers to monitor the bidding process from anywhere.
• Set a Realistic Reserve Price: The reserve price should reflect market value and rental income potential. Consult your auctioneer to strike the right balance.
• Stay Available: Be ready to answer last-minute questions from the auctioneer or potential buyers.

After the Sale

Once the property is sold, there are a few steps to finalise the transaction:

• Exchange of Contracts: The exchange occurs immediately after the auction, making the sale legally binding. The buyer will typically pay a deposit (usually 10% of the purchase price).
• Completion: Completion usually takes place within 28 days of the auction. Ensure all documents, including tenant-related paperwork, are handed over to the buyer.
• Serve Notices: If required, serve Section 48 and Section 3 notices to the tenants, informing them of the new landlord’s details.

Challenges for Selling a Tenanted Property by Auction

While selling a tenanted property through auction is efficient, it is not without challenges:

• Uncooperative Tenants: Tenants who oppose the sale can complicate the process. Open communication and reassurance can often resolve these issues. In extreme cases, legal advice may be necessary.
• Choose the Right Auction Company: Ensure your auctioneer’s marketing strategy is robust. Poor attendance can lead to low bids, which may not meet your reserve price.
• Legal Risks: Non-compliance with tenancy laws can delay or invalidate the sale. Work with legal experts to ensure all requirements are met.

Next steps…

Contact us to find out if your property is suitable for auction Request a free pre-auction appraisal or feel free to call us on 0800 862 0206 – we’ll be happy to help.