Inherited a Tenanted Property? Think Twice Before Signing a New Contract

When I took over a rented flat after a family death, my first plan was to sell it. The tenants had been there for years and were fine, but I wasn't ready to be a landlord. I nearly signed a new tenancy agreement with them because it felt like the 'proper' thing to do. Then a solicitor friend asked me one question: do you actually want to sell this property any time soon? If so, that signature just cost you twelve months.

What a new tenancy contract actually does

In England and Wales, most private rentals run on an assured shorthold tenancy (AST). When the original fixed term ends, the tenancy usually continues as a periodic tenancy, rolling month to month or week to week. The tenants keep the same rights, but you're no longer locked into a fixed end date. Signing a new fixed-term contract resets that clock. A typical new AST is for six or twelve months. During that fixed term, you generally cannot use a section 21 notice to end the tenancy without a reason. Section 21 of the Housing Act 1988 is the no-fault route a landlord can use to regain possession, but not until the fixed term has ended. So a new 12-month contract means you're waiting at least a year before you can even serve that two-month notice. That's fourteen months minimum before the property is empty, and that's assuming the tenants leave on time. If they don't, you then have to apply to court, which adds more months.

I've seen this exact mistake. A landlord inherited a house with a sitting tenant, signed a new 12-month contract because the tenant asked for one, and then got a full asking price offer from a buyer three weeks later. The buyer needed vacant possession. The landlord couldn't serve notice for another ten months, and the deal collapsed. He ended up selling to a buy-to-let investor at a much lower price, just to get out.

Selling with tenants still there

You can sell a property with tenants in place. It's legal and sometimes the right move if you want income without the hassle of an empty property. But it shrinks your buyer pool dramatically. Most owner-occupier buyers and their mortgage lenders want vacant possession, meaning no tenants living there when they complete. That leaves you with other landlords as buyers, and they'll pay less because they're buying an investment, not a home. If your goal is a quick sale at the best price, you need the property empty. The only reliable way to empty it without the tenants agreeing to leave is to serve a valid section 21 notice at the right time and, if needed, go through the court process.

If the real problem is the management

Sometimes the urge to sign a new contract isn't about the sale. It's about feeling out of control of a property you didn't choose to own. Maybe your parents let the rent slip below market and never protected the deposit. Signing a fresh agreement feels like taking charge. It doesn't fix any of that. Those legal duties sit with you as the new landlord regardless of what paper the tenant signs. If the place was badly managed, use this moment to sort the basics: check the deposit is protected in a government-approved scheme, get a current gas safety certificate, and make sure the tenant has the right documents. Check your local rules because I'm not a lawyer.

What I'd do in your shoes

If I genuinely intended to sell, I would not sign a new tenancy contract. I'd check the existing agreement to see whether it's still inside a fixed term. If it's already periodic, I'd gather the paperwork needed for a valid section 21 notice: the deposit protection certificate, the gas safety record, the Energy Performance Certificate, and the government's prescribed form. One missing document makes the notice invalid, and you have to start over. Then I'd get advice from a solicitor or a landlord association on timing, because getting it wrong can delay the sale by months. If the tenants are good and you can afford to wait, you could simply tell them you plan to sell and ask if they'd agree to leave early in exchange for a reference or moving help. But don't rely on that. A section 21 notice doesn't require a reason, but it does require you to have met all the legal duties first.

The move from your parents as landlords to you as landlord is the exact moment to get the paperwork straight. If you sign a new contract now, you're locking in the tenancy for at least a year. If you want to sell, don't sign. Get your documents in order and take advice on the notice you'll need to serve. That's the route to a clean sale.