The abolition of Section 21 'no-fault' evictions has sent shockwaves through the UK property market, leaving landlords facing a daunting new reality: sell tenanted or vacant? The change, which came into effect on May 1st this year, has rendered the traditional approach to selling rental properties obsolete.
Landlords relied heavily on obtaining vacant possession before putting their properties up for sale, as it often attracted a broader range of buyers and could result in higher sale prices. However, with Section 8 now the only remaining route for evictions – and that comes with enhanced compliance requirements, longer possession timescales, and increased scrutiny of eviction notices – the risks and costs associated with vacant sales have skyrocketed.
The new 'Renters' Rights Act' has also introduced severe penalties for landlords who market or re-let properties within 12 months of an eviction. An automatic civil penalty of up to £40,000 looms large, with local councils now empowered to enforce compliance. The financial implications are stark: a property generating £900 per month could lose £10,800 annually if left vacant, outweighing any potential sale premium.
In response, many landlords are opting to market their properties while tenants remain in residence. This approach allows them to gauge buyer interest before embarking on an often costly and uncertain eviction process. Some buyers – including professional landlords, portfolio investors, and cash buyers – actively seek income-producing assets with existing tenants, making the sale more viable without the need for eviction.
Even if a buyer ultimately requires vacant possession, marketing the property first provides valuable justification for pursuing an eviction. Landlords can then mitigate uncertainty and financial risk by knowing there's a confirmed buyer waiting in the wings. This strategic shift reflects a broader adaptation within the private rental sector to the Government's reforms, aimed at strengthening tenants' rights and providing greater security of tenure.