When a property is sold while it has a tenant in occupation, a few questions are usually raised. For example, what happens to the tenant if the landlord sells the property? The issue of what rights the tenant will have with regards to cancelling the lease or enforcing it also comes into question.

While all landlords are well within their rights to sell their properties at any time, the tenant’s rights to his lease remain in place before any rights of the buyer, and the tenant can remain in the property until his lease expires.

Some concerns might be raised if the property is sold and the lease passed from one landlord to another.

However, the conditions of the existing lease do not fall away, and if it has not been cancelled, both the tenant and the new landlord are bound by these until such time that the lease is renegotiated or expires.

What needs to be done, however, is that the deposit held by the previous landlord must be transferred to the new owner, and the same rule would apply as with the previous landlord; that he must hold the deposit in an interest-bearing account in favour of the tenant, to be refunded to the tenant with interest when he moves out.

On the other hand, if the tenant decides he would no longer like to live on the property if there is a new landlord, the conditions of the lease could also prevent him from leaving the new landlord in the lurch and cancelling the lease.


If the tenant does decide to cancel his lease, he may incur a penalty, and although the Consumer Protection Act (CPA) allows him to cancel if the landlord is a supplier and lets property as an ordinary course of business, giving 20 business days’ notice, there is still a “reasonable” penalty that the landlord can charge the tenant.

If for any reason, whether on the landlord or tenant’s part, the lease is to be cancelled once the property is taken over by the new owner, it must be by mutual consent, and the first course of action is to have open communication between the two parties so that an agreement can be reached without either party being put at risk financially.

Usually, the penalty charged to the tenant would be the cost of finding a new tenant and one month’s rent, which is how long it might take the landlord to find a new tenant, which is reasonable.

In the case of the landlord being the one who would like to cancel the lease, the tenant should be given enough time to find new premises, which should perhaps also be one month.

Courtesy of Property24

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This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)