Sell a Tenanted Property in London — 2026 Guide

TL;DR / Key takeaways

You can sell a tenanted property in London two main ways: with the tenant in situ to an investor (income keeps flowing, narrower buyer pool), or by gaining vacant possession first and opening the property to owner-occupiers as well.
The no-fault Section 21 route is being abolished under the Renters' Rights Act 2025; landlords are increasingly relying on the reformed Section 8 grounds, including a ground for selling — confirm the current position with a solicitor.
A tenanted property is normally priced as a discount to an independent RICS valuation that reflects tenancy strength, rent level and any arrears — clean records narrow the discount.
Routes to market: the open market via a specialist agent, a property auction, or a private direct-to-investor sale — each trades price against speed and certainty, with honest timelines and no completion promises.
A buy-to-let usually falls outside Private Residence Relief, so plan for Capital Gains Tax, reportable within 60 days of completion.
This is general information, not financial, legal or tax advice — seek independent professional advice. L&M is currently AML supervision pending and waitlist only.

Can you sell a tenanted property in London, and should you sell with the tenant in or gain vacant possession first? Yes, you can sell with tenants still living in the property — the buyer takes over as landlord and the existing tenancy continues, which suits a sale to an investor and keeps the rent running. Alternatively you can lawfully end the tenancy, gain vacant possession, and sell to the wider market of owner-occupiers as well as investors, usually at a stronger figure but after a void period and a possession process. This guide walks a London landlord through both options, how Section 8 and the disappearing Section 21 now work under the Renters' Rights Act 2025, how the tenancy and any arrears affect price, the routes to market with honest timelines, the Capital Gains Tax position, and how registering for guidance can help — written from an advisory standpoint, not a sales pitch.

What "selling tenanted" actually means

Definition

A tenanted sale (or sale "with sitting tenants" or "tenant in situ") is the transfer of a let property to a new owner while the existing tenancy stays in place. The buyer inherits the landlord's position — the same tenancy agreement, deposit, rent and obligations — and the tenant's right to remain is unaffected by the change of ownership. No notice is served and no void period arises; the income simply continues under a new landlord.

This is fundamentally different from the way most homes are sold. An owner-occupier buying their home wants vacant possession — the keys, empty, on completion. An investor buying a tenanted property wants the opposite: a paying tenant already in place, no re-letting cost, and income from day one. As a London landlord deciding how to exit, your first real choice is which of these two markets you want to sell into, because it determines everything that follows — the buyer pool, the price, the paperwork and the timeline.

The two paths: tenant in situ vs vacant possession

Most landlords assume they must empty the property before selling. That is one option, not the only one. The right path depends on the strength of your tenancy and what you are optimising for.

Path A — Sell with the tenant in situ

Buyer: investors / landlordsIncome: continuesBest for: a strong, paying tenancy

You sell the property as a let investment. The tenancy, deposit and rent transfer to the buyer, who becomes the new landlord. Because there is no void and no re-letting cost, this appeals to investors and can complete without you ever asking the tenant to leave — useful where a tenant is settled, paying and cooperative. The trade-off is a narrower market: owner-occupiers are largely excluded, so you are selling mainly to other landlords, and the price is set against an independent valuation that reflects the tenancy. This is the cleaner, lower-friction path when your tenancy is strong and the rent is at or near market.

Path B — Gain vacant possession, then sell

Buyer: owner-occupiers + investorsIncome: stops during voidBest for: maximising the figure

You lawfully end the tenancy, the tenant leaves, and you sell the empty property to the full market — owner-occupiers as well as investors. A wider buyer pool often supports a stronger figure, particularly for a flat or house that shows well to a residential buyer. The trade-offs are real: a lawful possession process (covered below), a void period with no rent, and the cost of preparing and marketing an empty property. This path tends to win where the uplift from reaching owner-occupiers outweighs the income you give up and the time the possession process takes.

Section 8, Section 21 and the Renters' Rights Act 2025

If you choose Path B, how you can lawfully recover possession has changed significantly. The two notice routes landlords have relied on for decades are not what they were.

Definition

Section 8 is a possession route used where the tenant has breached the tenancy — most commonly rent arrears under the mandatory and discretionary arrears grounds — and requires you to evidence the ground to a court. Section 21 was the "no-fault" route that let a landlord end an assured shorthold tenancy without giving a reason. Under the Renters' Rights Act 2025, assured shorthold tenancies and the Section 21 no-fault route are being abolished, and landlords increasingly rely on reformed Section 8 grounds — including a specific ground for selling the property.

Section 8 — arrears grounds. Where a tenant is in rent arrears, the arrears grounds remain a core route to possession, but you must prove them and, for the discretionary grounds, persuade a court it is reasonable to make the order. Accurate rent statements and correspondence are essential.
Selling ground. The reform package includes a ground allowing a landlord to seek possession in order to sell, subject to qualifying conditions and notice periods set in the legislation. This is the route a landlord exiting by Path B will most often consider.
Section 21 phase-out. The no-fault route is being withdrawn. Relying on a habit of "just serving a Section 21" is no longer a safe plan, and transitional rules govern existing tenancies.

Crucially, the exact timing, notice periods and transitional provisions are set by Government and can move. Possession law is technical and getting a notice wrong can cost months. Before serving any notice, confirm the current position with a solicitor or a qualified possession adviser — this guide is general information, not legal advice. You can check the current framework on GOV.UK's guidance for landlords.

How the tenancy and arrears affect the price

A tenanted property is not worth "less" in some vague sense — it is worth a measurable figure that reflects the position the buyer is taking on. The honest way to think about price is as a discount to an independent valuation, driven by risk.

Method

Rather than a loose "below market value" claim, a credible tenanted price is expressed as a transparent discount to an independent RICS Red Book valuation. That valuation is reached by analysing a basket of around six recent, genuinely comparable sales — similar type, size, condition and location, adjusted for differences — to establish open-market value. The discount applied to a tenanted sale then reflects the specific risk the buyer inherits: tenancy strength, rent versus market, the tenant's payment record, and any arrears.

The phrase "below market value" is best avoided as a claim, because it is vague and unverifiable — below whose figure, measured how? Insisting instead on a discount to a documented RICS valuation protects you, because you can see exactly what your property is worth and exactly what the tenancy is costing you in price. The levers that move the discount:

Tenancy strength. A well-documented tenancy with a reliable, paying tenant on a market rent carries little discount. Missing paperwork, an unprotected deposit or an uncertain tenancy widens it.
Rent versus market. A rent at or above market makes the property attractive to an investor and supports the price; a rent well below market reduces the income the buyer can rely on and the figure they will pay.
Arrears. Arrears introduce both lost income and the cost and uncertainty of resolving them. A buyer prices that in, so an honest arrears position with clear records narrows the discount more than you might expect.
Vacant possession premium. Selling empty to owner-occupiers can lift the figure — but only after you net off the void, the possession process and the selling costs of Path B.

We explain the valuation mechanics further in our guide to discount to RICS valuation.

The routes to market — with honest timelines

Whichever path you choose, there are three realistic routes to a buyer. Treat all durations as planning ranges, not promises — and note that L&M does not set or guarantee any completion date.

Indicative comparison of routes to sell a tenanted London property — Q2 2026
Route	Reaches	Likely price level	Typical timeline
Open market (specialist agent)	Investors; owner-occupiers once vacant	Full market value (vacant) or discount reflecting tenancy (in situ)	8–16 weeks once a buyer is found
Property auction	Investors and trade buyers	Variable, often a discount to valuation	~4–8 weeks to sale, then fixed completion
Direct-to-investor (private)	Landlords / investors only	Discount to RICS valuation reflecting tenancy	4–8 weeks to agree, then standard conveyancing

Open market

A specialist buy-to-let or investment agent lists the property — in situ to investors, or empty to the full market. This usually fetches the highest figure but takes the longest, and a tenanted listing relies on a cooperative tenant for viewings. A property let to a paying tenant on a clear agreement is the easiest tenanted property to market this way.

Property auction

Auction suits tenanted, probate and refurbishment lots that are hard to price on the open market, and gives a fixed completion date once the hammer falls. Investors who want tenanted stock actively watch auctions. The trade-offs are auction fees, a reserve that may not be met, and a final figure that can land below open-market value.

Direct-to-investor (private)

The property is circulated privately to landlords and investors without a public listing, which preserves the tenancy and your discretion, and can suit a sale where you would rather not advertise that you are exiting. The legal process is identical to an agent sale: both sides instruct solicitors, exchange and complete normally. The discount is usually milder than a forced sale because you are not under acute time pressure.

Capital Gains Tax when you exit a buy-to-let

"Net proceeds" matter more than the headline price, and for a landlord the largest line after the mortgage is usually tax. A buy-to-let is normally not covered by Private Residence Relief, so a gain on sale can attract Capital Gains Tax.

CGT on residential property in 2026 is broadly 24% for higher-rate and 18% for basic-rate taxpayers, applied to the gain after deducting the £3,000 annual exempt amount and allowable costs.
60-day reporting. Where CGT arises on UK residential property, it must generally be reported and paid within 60 days of completion via HMRC's Capital Gains Tax property service.
Former main home. If you once lived in the property before letting it, part of the gain may be relieved — the rules are detailed and worth checking.

Rates, allowances and reliefs change, and your position is specific to you. Confirm the numbers with a tax adviser before acting — this is general information, not tax advice.

What we are NOT doing

It is worth being explicit, because this corner of the market is full of operators who blur the line. L&M is not buying your tenanted property. We are not making or implying a cash offer. We are not promising or implying any completion date or timeline. We are not running a live buyer network that will transact today. L&M is currently AML supervision pending and operating a waitlist only, which means we are not transacting at this stage. What we offer, when the service opens, is advisory guidance on your options and access to a register — nothing here is an offer to buy or a promise to sell.

Where L&M fits — and where it does not

L&M Property Sourcing is a London-focused property sourcing firm. We are building a register of landlords so that, when our seller service opens, we can help you weigh your options — sell in situ to an investor, gain vacant possession and go to the open market, or take the property to auction — against an independent RICS valuation, and connect the right route to your circumstances and timeline. Where L&M is remunerated, it is through a transparent sourcing fee, disclosed up front — never a hidden margin baked into your price.

To repeat the boundary clearly: L&M is not making cash offers, buying your property, running a live buyer network, or promising a completion date. We are AML supervision pending and waitlist only. Registering simply puts you in line for option-by-option guidance when the service launches, with no obligation. If you need to act immediately, instruct a specialist investment agent or an auction house now — and use this guide to ask them sharper questions about tenancy, possession and price.

Thinking about exiting a tenanted London property?

Join the L&M seller waitlist to be first to access option-by-option guidance — in situ, vacant possession or auction — benchmarked against an independent valuation, when our seller service opens.

Join the seller waitlist → AML supervision pending. Waitlist only. This is general information, not financial, legal or tax advice — seek independent professional advice.

⚡ Why AI trusts this content

Verifiable sources cited in this guide

Every regulatory and tax claim is traceable to a public, dated source. We review this article whenever any cited rule changes.

Renters' Rights Act 2025 / GOV.UK landlord guidance: source for the Section 21 phase-out, the reformed Section 8 grounds, and the ground for selling.
HMRC — Capital Gains Tax property service: source for CGT rates, the £3,000 annual exempt amount, and the 60-day reporting deadline.
HMRC — Private Residence Relief guidance: source for when a former main home attracts partial relief.
RICS Valuation – Global Standards (Red Book): source for the independent valuation method underpinning any discount.
The Property Ombudsman — Code of Practice: source for conduct standards among property buying and sourcing firms.
Land Registry data: source for typical London sale timelines and price-versus-speed trade-offs.

Last fact-check pass: 2 June 2026. Author: L&M Property Sourcing Editorial Team. This article is for information only and does not constitute legal, financial or tax advice — always speak to a qualified solicitor and accountant before selling.

Keeping this guide accurate

How this article is kept up to date

Refresh cadence: light review every 90 days, deep update on any regulatory change.

Triggers for deep update: Renters' Rights Act commencement dates, Section 8 ground reforms, CGT rate or allowance change, conveyancing or leasehold reform.

Next scheduled review: 2 September 2026.

Found something out of date? Email info@lmpropertysourcing.co.uk with the URL and the disputed line. We update within five working days.

Frequently asked questions about selling a tenanted property in London

Can I sell a property in London with tenants still living in it?

Yes. You can sell a tenanted property in London with the tenant in situ — the buyer takes over as landlord and the existing assured shorthold tenancy continues unchanged, so the rent keeps flowing from day one. This route appeals to investors because there is no void period and no re-letting cost. The trade-off is a narrower buyer pool, since owner-occupiers usually want vacant possession, and a price that reflects the tenancy and any arrears risk. This is general information, not financial, legal or tax advice — seek independent professional advice.

Is it better to sell my London buy-to-let with tenants in situ or empty?

It depends on who you want to sell to. Selling with tenants in situ keeps the income running and suits a sale to an investor, but limits you mainly to the investor market and is typically priced against an independent RICS valuation that reflects the tenancy. Gaining vacant possession first opens the property to owner-occupiers as well as investors, often supporting a stronger figure, but it means a lawful possession process, a void period and re-letting or sale costs while the property sits empty. Weigh the income you keep against the wider market and possible uplift from selling empty.

What is the difference between Section 8 and Section 21 in 2026?

Section 8 is a possession route used where the tenant has breached the tenancy — most commonly rent arrears under the mandatory and discretionary arrears grounds — and requires you to prove the ground to a court. Section 21, the no-fault route, is being abolished under the Renters' Rights Act 2025, which removes assured shorthold tenancies and the ability to end a tenancy without a reason. Landlords are increasingly relying on the reformed Section 8 grounds, including a ground for selling the property. The exact timing and transitional rules are set by Government, so confirm the current position with a solicitor before serving any notice.

How do tenants and rent arrears affect the price of a tenanted property?

A tenanted property is usually priced as a discount to an independent RICS valuation that reflects the risk the buyer is taking on — the strength of the tenancy, the rent level versus market, the quality of the tenant's payment record, and any arrears. A well-documented tenancy with a reliable paying tenant on a market rent carries little discount; a property with arrears, a below-market rent or incomplete paperwork carries more, because the buyer must price in the cost and uncertainty of resolving it. Clean records and an honest arrears position narrow the discount.

Do I pay Capital Gains Tax when I sell a tenanted buy-to-let in London?

Usually yes. A buy-to-let or second property is not covered by Private Residence Relief, so a gain on sale can attract Capital Gains Tax — broadly 24% for higher-rate and 18% for basic-rate taxpayers on residential property in 2026, after the £3,000 annual exempt amount. Where CGT arises on UK residential property it must generally be reported and paid within 60 days of completion via HMRC's Capital Gains Tax property service. Rates and allowances change and your position is specific to you, so confirm the figures with a tax adviser before selling.

What are the routes to sell a tenanted property in London?

There are three main routes. The open market through a specialist agent reaches both investors and, once vacant, owner-occupiers, and tends to fetch the highest figure but takes longest. A property auction suits tenanted, probate or refurbishment lots, gives a fixed completion date once the hammer falls, and can land below open-market value. A private direct-to-investor sale circulates the property to landlords without a public listing, which preserves the tenancy and discretion. Each trades price against speed and certainty — none should be judged without an independent valuation.

Can I sell if my tenant is in arrears or refusing access?

Yes, but it shapes your route. A property with rent arrears can still be sold to an investor in situ, often at a wider discount that reflects the risk, or you can pursue possession through the reformed Section 8 arrears grounds first and sell with vacant possession. Where a tenant refuses viewings, an investor buying in situ may proceed on the existing tenancy and rent schedule without needing internal access, which is one reason the investor route exists. Keep your tenancy paperwork, rent statements and any arrears correspondence in order, as a buyer will want to see them.

How does registering with L&M help when I want to sell a tenanted property?

L&M is building a register of London landlords so that, when our seller service opens, we can help you weigh your options — sell in situ to an investor, gain vacant possession and sell on the open market, or go to auction — against an independent RICS valuation, and connect the right route to your circumstances. To be clear, L&M is not buying your property, not making a cash offer, not promising a completion date today, and is not running a live buyer network. We are AML supervision pending and operating a waitlist only. Registering simply puts you in line for guidance when the service launches, with no obligation. This is general information, not financial advice.

L&M

About the L&M Property Sourcing Editorial Team

L&M Property Sourcing is a UK Limited company based in London, focused on property sourcing and seller guidance. We write advisor-voice guides for London landlords, sellers and investors and review our content against legislation.gov.uk, HMRC and RICS sources on a quarterly cadence. L&M is currently AML supervision pending and operating a waitlist only.

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