Buying a property with a tenant already in place has become one of the more common routes into buy-to-let investing, typically at a genuine discount to vacant possession value. This guide covers what that discount should actually look like, why the market for tenanted sales shifted in 2026, the mortgage reality, and the single due diligence check that matters more than almost anything else.
Figures below reflect the Renters' Rights Act 2025 (in force 1 May 2026), and published 2026 specialist landlord and conveyancing guidance, current to mid-2026. This is general information, not legal or financial advice; a solicitor experienced in tenanted purchases should review the specific tenancy documentation before you proceed.
- The core legal principle: you inherit the tenancy
- "Tenant in situ" versus "sitting tenant"
- Why 2026 made tenanted sales more attractive
- The discount you should actually expect
- The mortgage reality: harder to finance, suits cash buyers
- The due diligence checklist, and the one that really matters
- The tax picture
- Frequently asked questions
1. The core legal principle: you inherit the tenancy
Under English law, a sale doesn't end an existing tenancy. The incoming buyer takes the property subject to the tenancy, stepping directly into the previous landlord's position, inheriting the same rights, and the same obligations, that landlord already held. This is the single most important fact to understand before buying: you aren't simply buying bricks and mortar with a temporary inconvenience attached, you're taking on the full legal relationship with that tenant exactly as it currently stands.
2. "Tenant in situ" versus "sitting tenant"
Property listings frequently use these terms interchangeably, but it's worth being precise. A tenant in situ is almost always on an ordinary modern tenancy, which since 1 May 2026 means a periodic assured tenancy under the Renters' Rights Act framework. "Sitting tenant" is an older term that historically referred to tenancies with considerably stronger, more restrictive rights, including some regulated tenancies with rent controls and near-permanent security of tenure. Confirming exactly which category applies to a specific property, rather than assuming from the listing's choice of words, genuinely changes both the valuation and the practical possession position.
3. Why 2026 made tenanted sales more attractive
Since Section 21 was abolished from 1 May 2026, a landlord who wants vacant possession to sell must use Ground 1A under Section 8, which requires four months' notice and can't be used within a tenancy's first 12 months. Crucially, once a Ground 1A notice has been served, the landlord cannot re-let the property, even as short-term or serviced accommodation, for at least 16 months afterward. This removes an option many sellers previously relied on: serving notice, testing the market for a vacant-possession sale, and simply re-letting if a buyer didn't materialise. That option is now considerably riskier, which has made selling with the tenant already in place, to an investor rather than an owner-occupier, a comparatively more attractive and predictable route for many sellers.
4. The discount you should actually expect
| Tenancy type | Typical discount to vacant possession |
|---|---|
| Periodic tenancy at full market rent | Smallest discount; represents close to pure value with no void period |
| Long-established tenancy at below-market rent | Larger discount, reflecting the rent shortfall against current market rates |
| Older or regulated tenancy with restricted rent increases | Largest discount, often 20-25% or more depending on the tenant's likely length of stay |
As a general range, expect somewhere between 10% and 30% below vacant possession value, with the specific figure driven by the length and terms of the tenancy, how the actual rent compares with what the property could achieve on the open market, and how restrictive the tenant's rights are to remain in place.
5. The mortgage reality: harder to finance, suits cash buyers
Tenanted properties are generally harder to mortgage than an equivalent vacant property, which itself suppresses buyer demand and reinforces the discount available. This makes tenanted purchases particularly well suited to cash buyers, and to experienced landlords comfortable with tenancy law who are investing for steady long-term income rather than a quick refurbishment and resale, since a sitting tenant will typically prevent fast access to the property for renovation work.
6. The due diligence checklist, and the one that really matters
Before completing, your solicitor should verify that the tenant's deposit was properly protected in a government-approved Tenancy Deposit Scheme within 30 days of receipt, with the Prescribed Information served to the tenant. If the previous landlord failed to do this correctly, it can block a future Section 8 possession claim entirely, whatever ground you might later need to rely on, exactly the same deposit protection requirement covered in our Section 8 vs Section 21 Notices guide. The deposit itself must also be formally transferred from the seller to you as the new landlord as part of the sale.
Beyond the deposit, your solicitor should confirm an unbroken chain of annual gas safety certificates, and, for any tenancy that started before 1 May 2026, that the correct version of the "How to Rent" guide in force at the time was served (this guide was withdrawn entirely once Section 21 was abolished, so it's no longer relevant to tenancies starting after that date).
7. The tax picture
Most investors buying a tenanted property will pay the standard 3% buy-to-let Stamp Duty Land Tax surcharge on top of standard rates, exactly as they would on any other investment purchase. Mortgage interest relief remains restricted to a 20% basic-rate tax credit under Section 24, regardless of the property being tenanted at purchase. One subtler point worth flagging: because you're buying at a discount, your capital gain when you eventually sell is calculated from that lower purchase price, meaning the discount that made the deal attractive today can translate into a larger taxable gain further down the line.
8. Frequently asked questions
Does a tenancy end when a property is sold in the UK?
No. Under English law, a sale does not end an existing tenancy. The incoming buyer takes the property subject to the tenancy and steps directly into the previous landlord's position, inheriting both the rights and the obligations that come with it.
How much of a discount should I expect when buying a tenanted property?
Typically somewhere in the region of 10% to 30% below vacant possession value, though the exact figure depends heavily on the specifics. A tenancy at full market rent with no arrears represents close to pure value, since there's no void period to fund, while a tenancy at below-market rent, or one with a longer-established or more restrictive arrangement, generally commands a larger discount.
Why has the Renters' Rights Act made buying tenanted property more attractive?
Since Section 21 was abolished from 1 May 2026, a landlord using Ground 1A to sell the property cannot re-let it, even as short-term or serviced accommodation, for at least 16 months after serving notice. This removes the option many sellers previously had of testing the market for vacant possession and simply re-letting if a sale didn't happen, making selling with the tenant already in place a comparatively more attractive and predictable route.
What's the single most important thing to check before buying a tenanted property?
Whether the tenant's deposit was properly protected in a government-approved scheme within 30 days of receipt, with the Prescribed Information served. If this wasn't done correctly by the previous landlord, it can block a future Section 8 possession claim entirely, regardless of the ground being used, so verifying this is essential before completing a purchase.
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