Buying a Property with a Sitting Tenant: Mortgage, Yield and Legal Considerations

What buying "with a sitting tenant" really means

When a property is marketed as sold with a sitting tenant (sometimes called "tenant in situ"), it means an existing tenancy agreement is already in place, and the buyer takes over as landlord subject to that existing tenancy — not with vacant possession. This is a distinct category of purchase, common among portfolio landlords selling individual properties, or where a landlord wants to exit without disturbing their tenant.

Why sellers offer properties this way

• Continuity for the tenant — avoiding disruption, particularly valued by tenants who've been in place a long time
• Immediate rental income for the buyer — no void period while finding a new tenant
• Faster, simpler sale for the seller — no need to serve notice and wait for the tenant to leave before marketing
• Appeals specifically to investor buyers, who often prefer not to interrupt an income stream

The mortgage angle

Because the property comes with an existing tenancy, this is unambiguously a buy-to-let purchase, not a residential one — even if you might have considered living there yourself, you cannot do so while the existing tenancy remains in force. Lenders will assess:

• The actual current rent being paid, compared with their required rental cover ratio (commonly 125-145% of the mortgage payment at a stress-tested rate)
• The terms of the existing tenancy — type of agreement, length remaining, rent review provisions
• Standard buy-to-let deposit requirements, typically a minimum around 25%

You inherit the tenancy — you don't get a fresh start

This is the single most important thing to understand. As the new landlord, you step into the existing tenancy on its existing terms — you cannot unilaterally change the rent, alter terms, or gain vacant possession simply because ownership has changed. Ending the tenancy requires following the same legal process any landlord must follow, using valid legal grounds and correct notice periods.

Why these properties can sell at a discount

Sitting tenant properties commonly sell below the equivalent vacant possession value, for several reasons:

A meaningful discount to vacant possession value doesn't automatically make the purchase a bargain — it needs to be weighed against the actual rental yield the existing tenancy generates, not the market rent a new tenancy might achieve.

Due diligence checklist before buying

1. Review the full tenancy agreement — type, start date, rent, review clauses, and any special terms.
2. Check deposit protection status — confirm the deposit is registered with an approved scheme and that this will properly transfer to you as the new landlord.
3. Request a rent arrears and payment history report from the seller/agent.
4. Compare the current rent to market rent for similar local properties — a significant gap affects your real yield.
5. Check EPC rating and any licensing requirements (selective licensing, HMO licensing) apply and are up to date.
6. Ask about any ongoing disputes — repair complaints, deposit disputes, or communication issues with the existing tenant.
7. Understand current eviction law thoroughly if part of your investment thesis depends on eventually regaining possession.

The upside: immediate income, no void period

Set against these considerations, buying with a sitting tenant offers a genuine practical advantage many investors value highly: rental income starts from day one, with no void period, no marketing costs, and no uncertainty about finding a suitable tenant. For investors focused purely on yield and cash flow rather than eventual owner-occupation, this can be a significant benefit that outweighs the discount-to-market-rent trade-off.

Bottom line

Buying a property with a sitting tenant offers immediate rental income and often a purchase-price discount, but it comes with real constraints: you inherit the existing tenancy on its existing terms, cannot simply evict for vacant possession, and need a buy-to-let mortgage assessed on the actual (not hypothetical) rent. Thorough due diligence on the tenancy, deposit protection, arrears history and current eviction law is essential before committing.