What Do You Need to Know About Selling a Rental Property?
You can sell a rental property with the tenant in place, or use Ground 1A to get vacant possession on four months’ notice once the tenancy has run twelve months. Capital gains tax on the profit is due within 60 days of completion, and your insurance has to stay live until the keys change hands.
Since 1 May 2026 there is no Section 21 route to an empty property, so the sale plan and the tenancy plan are now the same plan. Get the order wrong and you can lose the buyer, the tenant and a year of letting income at once.
Your landlord policy also has to survive the process, including any weeks the property stands empty. Insurers treat a property on the market very differently from one with a paying tenant in it.
You can sell with the tenant in place or use Ground 1A for vacant possession, which needs four months’ notice once the tenancy has run twelve months. Selling tenanted keeps the rent coming but narrows your buyers to investors, while an empty property opens the market up and costs you the income. The buyer’s solicitor will want the tenancy agreement, deposit protection details, safety certificates and the rent record, so gather them before you list. Keep the policy running until completion, because the risk stays yours until the keys change hands.
Compare landlord insurance quotes and keep cover running until completion.
- Can you still get vacant possession without section 21?
- Should you sell with the tenant in place or empty?
- Who buys a tenanted property?
- What paperwork will the buyer's solicitor ask for?
- What Happens to the Deposit and the Tenancy at Completion?
- How much tax will you pay on the sale?
- How long does it take and what does it cost?
- Do you need to keep your insurance going until completion?
- Frequently asked questions (FAQs)
Can you still get vacant possession without section 21?
Only through Ground 1A, and it takes four months’ notice plus a tenancy that has already run twelve months. Section 21 was abolished on 1 May 2026, so an empty property is now something you plan for months ahead rather than something you serve notice for.
How ground 1a works
Ground 1A is the mandatory sale ground written into Schedule 2 of the Housing Act 1988 by Schedule 1 to the Renters’ Rights Act 2025. It applies where you intend to sell the freehold or the leasehold, or grant a lease of more than 21 years.
Mandatory means the judge must order possession, but only on evidence that you genuinely intend to sell. A signed agency agreement, marketing particulars or solicitor correspondence is what courts expect to see.
The two twelve-month rules
The first protects the tenant at the start of the tenancy: possession cannot be required until the tenancy has run a full twelve months. Serving notice in month eight is the earliest that gets you a possession date on the anniversary.
The second bites afterwards. Use Ground 1A and the sale collapses, and you cannot re-let the property or even market it to let for twelve months, a restriction the government’s guide to the Renters’ Rights Act sets out alongside the ground itself.
That restricted period is the trap in the whole exercise. Breaching it is a separate offence and a council can impose a financial penalty of up to £7,000.
What it costs if the tenant stays put
If the notice expires and nobody moves, you apply to the county court. The EX50 fee schedule, updated on 13 July 2026, puts a possession claim at £415 with a warrant of possession at £152 on top.
Court fees are the small part. A defended claim runs to £2,500 to £6,000 in solicitor costs, which is what legal expenses cover is there to fund.
Should you sell with the tenant in place or empty?
Selling tenanted is faster, keeps the rent running and skips Ground 1A entirely, but you sell into a smaller pool of buyers and accept less for it. Selling empty reaches owner-occupiers and the best price, at the cost of four months’ notice, a void and that twelve-month re-letting ban if the deal falls over.
Where the price difference comes from
Only investors can buy a property with a tenant in it, and investors price on yield rather than on how the kitchen looks. A property let at a strong market rent narrows the gap, and one let cheaply to a long-standing tenant widens it.
Owner-occupiers pay a premium for a home they can move into. That premium is exactly what you give up by keeping the tenancy running through the sale.
| Question | Sell with the tenant in place | Sell with vacant possession |
| Who can buy it | Landlords, portfolio buyers, auction bidders | Owner-occupiers, investors and cash buyers |
| Price achieved | Below vacant value, priced on the rent | Full open market value |
| Notice required | None | Ground 1A, four months, tenancy must have run a year |
| Rent during the sale | Runs to completion | Stops when the tenant leaves |
| Void risk | None | Weeks or months of an empty property |
| Buyer’s mortgage | Buy-to-let only | Residential or buy-to-let |
| If the sale falls through | Tenancy simply carries on | No re-letting or re-marketing for 12 months |
| Typical time to completion | 3 to 4 months | 7 to 12 months |
When the tenanted discount is worth taking
Price the two routes against each other before you instruct anyone. Four months of notice costs you nothing while the tenant keeps paying, but a two-month void, council tax on an empty house and a repaint certainly do.
Add the court fee, the risk of a defended claim and twelve months of enforced empty marketing if your buyer walks. Against that, a discount on a quick tenanted sale often looks cheap.
Who buys a tenanted property?
Other landlords, portfolio buyers and the auction room. An owner-occupier cannot buy one, because they need to move in and a residential lender will not advance on a property with a tenancy attached.
The investor buyer
Your buyer will be arranging a buy-to-let mortgage, so the lender tests the rent as well as the bricks. A tenancy sitting below market rent can shrink what the lender will advance and stall the sale after the survey.
Investors also want a clean file. Rent arrears, an unprotected deposit or a missing gas record will either cut the price or kill the deal outright.
Portfolio, auction and specialist buyers
A portfolio landlord buying several properties at once moves quickly and rarely renegotiates, but prices hard. Auction is faster still, with completion usually 20 to 28 days after the hammer falls.
A shared house sells into a narrower market again, because the buyer needs the licence, the management and the HMO insurance to go with it.
A leasehold flat brings the freeholder into the transaction, since the block of flats policy schedule and the service charge accounts have to be handed over with the lease.
What paperwork will the buyer’s solicitor ask for?
Everything that proves the tenancy is lawful and the property is safe. A tenanted sale is really two transactions running together, and it is the tenancy file rather than the title that holds deals up.
The tenancy file
- The tenancy agreement or written statement of terms, plus every variation and rent increase notice.
- A rent schedule showing what has been paid, when, and any arrears outstanding.
- The deposit protection certificate and the prescribed information you served on the tenant.
- Right to rent check evidence for every adult occupier, with follow-up check dates.
- Any selective licence or HMO licence, with its conditions and expiry date.
The compliance file
You need a valid EPC to market the property at all, and one lasts ten years. The gas safety record, the EICR and building regulations certificates for any work go into the pack beside it.
Order the EPC before the first viewing rather than after an offer. At £35 to £60 it is the cheapest item on the list and the one that can stop marketing dead.
Missing paperwork is the commonest reason a tenanted sale drags past four months. Build the file before you instruct an agent and you take weeks out of the timeline.
What Happens to the Deposit and the Tenancy at Completion?
The tenancy transfers to the buyer automatically and the tenant keeps every right they had. The deposit has to move with it and be protected again by the new landlord, with fresh prescribed information served on the tenant.
Transferring the protected deposit
A deposit has to sit in an approved scheme, and the prescribed information has to reach the tenant within 30 days. On a sale the money either transfers into the buyer’s scheme account or is repaid to the tenant and taken again by the new owner.
Whichever route you use, the paperwork has to be redone in the buyer’s name. Deal with it at exchange rather than on completion day, because the penalty for getting it wrong follows the new landlord.
Telling the tenant who their new landlord is
The buyer must give the tenant written notice of the assignment and the new landlord’s name and address, by the next rent day or within two months of completion, whichever is later. That duty sits in section 3 of the Landlord and Tenant Act 1985, and failing it is a criminal offence.
An address in England or Wales for serving notices has to be given as well, and rent is not lawfully due until it is. Tell the tenant yourself well before completion and confirm in writing where the rent goes from the completion date.
How much tax will you pay on the sale?
Capital gains tax at 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers, charged on the gain above the £3,000 annual exempt amount. It has to be reported and paid within 60 days of completion, separately from your tax return.
The 60-day reporting rule
The gov.uk capital gains tax guidance confirms both the rates and the £3,000 allowance for the 2026 to 2027 tax year. Miss the 60-day window and HMRC charges a penalty plus interest on the tax you owe.
Your self assessment return does not replace that report. Have the purchase price, the buying and selling costs and the improvement spend ready before completion, not in January.
What comes off the gain
- The purchase price, the stamp duty you paid on the way in and the original legal fees.
- Capital improvements such as an extension, a loft conversion or a first fitted kitchen.
- Estate agent commission, conveyancing on the sale and the EPC bought to market it.
- Your £3,000 annual exempt amount, or £6,000 between spouses who own jointly.
Repairs and maintenance do not come off the gain, because they were already deductible against your rental income. Rental losses cannot be set against a capital gain either, though capital losses on other assets can.
This is general information and not tax advice. Put your own position past an accountant before exchange, particularly if the property was ever your main home or is jointly owned.
How long does it take and what does it cost?
A tenanted sale usually completes three to four months after you instruct an agent. Go the vacant possession route and seven to twelve months is realistic, on selling costs of roughly 3% to 6% of the price before any tax.
The realistic timeline
| Stage | Selling tenanted | Selling with vacant possession |
| Assembling the paperwork | 1 to 2 weeks | 1 to 2 weeks |
| Ground 1A notice period | Not needed | 4 months |
| Tenant leaves, or court if not | Not needed | 0 to 3 months |
| Void, clean and repairs | Not needed | 2 to 6 weeks |
| Marketing to agreed offer | 4 to 8 weeks | 3 to 6 weeks |
| Offer to exchange | 8 to 12 weeks | 8 to 12 weeks |
| Exchange to completion | 1 to 4 weeks | 1 to 4 weeks |
| Realistic total | 3 to 4 months | 7 to 12 months |
The court stage is the variable nobody can price. Possession claims are listed weeks out and a warrant adds more, which is why the vacant route needs the longest lead time you can give it.
What the sale costs you
| Cost | Typical figure | Notes |
| Estate agent commission | 1% to 3% plus VAT | Often lower on a portfolio or tenanted sale |
| Conveyancing on the sale | £800 to £1,500 | Higher where a tenancy transfers |
| EPC | £35 to £60 | Must be ordered before marketing starts |
| Mortgage early repayment charge | 1% to 5% of the balance | Check the redemption date first |
| Possession claim | £415 court fee | Plus £152 for a warrant of possession |
| Defended possession claim | £2,500 to £6,000 | Legal expenses cover may fund it |
| Capital gains tax | 18% or 24% of the gain | Reported and paid within 60 days |
Do you need to keep your insurance going until completion?
Yes, and the void is the dangerous part. Cover has to run to the moment of completion, and most landlord policies cut back what they pay for once a property has stood empty for 30 to 45 days.
Cover through the void
Tell your insurer the day the tenant hands the keys back, not the day you remember. Past the empty-property limit, cover usually drops to fire, lightning and explosion unless you move to unoccupied property insurance.
Your landlord buildings insurance is a condition of the mortgage until redemption, and lenders do check it. Insure for rebuild cost rather than the price you are hoping to achieve.
Selling one property out of a multi-property policy is an adjustment rather than a cancellation, so tell your broker at exchange and ask what comes back in premium.
Who carries the risk between exchange and completion
Under the standard conditions of sale the risk passes to the buyer at exchange, and their lender will want cover from that date. Keep your own policy running to completion anyway, because you still hold the title and the mortgage.
Where a tenant is still in place, keep loss of rent cover and rent guarantee live to the end. A tenant who knows the property is being sold is a slightly higher arrears risk, not a lower one.
Frequently Asked Questions (FAQs)
There is no statutory duty to announce it, but viewings make it obvious within days. Telling the tenant first, in writing, is what keeps access and goodwill.
Yes. The tenant has a right to quiet enjoyment, and any access clause still needs at least 24 hours’ written notice and a reasonable time of day.
No. The buyer inherits the tenancy and has to use a Section 8 ground with its own notice period, and Ground 1A is closed to them for the first twelve months of the tenancy.
You keep the empty property but cannot re-let or market it to let for twelve months from the date possession was sought. That is the single biggest risk in going for vacant possession.
No. Transfers between spouses and civil partners are treated as no gain, no loss, although the gain is measured from your original purchase price when they eventually sell.
No. Rental losses are income losses, but capital losses on other assets can be set against the property gain and unused ones carry forward.
No. It transfers to the buyer on the same terms, with the same rent and the same notice protections for the tenant.
The new landlord, out of the scheme account the deposit was moved into. Keep a copy of the transfer paperwork in case the tenant queries it later.
Not if it is still inside its ten years. The same certificate covers both letting and selling, so check the expiry date before you pay for another.
Yes, and tenanted lots are a normal part of the investor auction market. Expect a keener price in return for completion 20 to 28 days after the hammer.
No. Offers collapse, and a policy cancelled early leaves you uninsured on a property you still own and still owe a mortgage on.
No, stamp duty is the buyer’s tax. Your costs on the way out are the agent, the conveyancer, any early repayment charge and the capital gains tax.