Buying a property with tenants already living there—often referred to as “tenants in situ” or a “sitting tenant”—can be an attractive option for landlords looking for immediate rental income. But in 2025, financing this type of purchase comes with some important caveats.

Whether the tenants are on an Assured Shorthold Tenancy (AST), a long-term regulated agreement, or a rolling contract, lenders will want to know exactly what they’re inheriting—and how that impacts their risk.

What Is a Sitting Tenant?

A sitting tenant is someone already living in the property at the time of sale. They may be:

• On a fixed-term AST
• On a periodic tenancy (rolling month-to-month)
• Under a regulated tenancy (more common in older properties pre-1989)
• Informally residing without clear documentation

Each scenario affects how lenders view the property and your ability to take possession, refinance, or change use later on.

Why Lenders Are Cautious in 2025

Lenders care about control and risk. A sitting tenant introduces questions like:

• Can the new owner remove or change the tenant if needed?
• Is the rental income sufficient to meet affordability requirements?
• Is the tenancy agreement legally valid and up to date?
• Could the tenant’s rights affect the property’s market value or resale potential?

Regulated tenants, in particular, may have lifetime rights of occupation and pay below-market rent, which can make the property unmortgageable for some buyers.

What Kind of Mortgage Can You Get?

Most lenders will only offer buy-to-let mortgages on properties with sitting tenants. Residential mortgages are generally not available unless:

• The property will be vacant at completion
• You’re related to the tenant and it’s a regulated arrangement
• You intend to live there and can confirm vacant possession

For landlords, a standard BTL mortgage may be possible, but it depends on:

• The type and terms of the tenancy
• The rental income (usually stress-tested at 125–145%)
• Your experience as a landlord
• The condition and value of the property

What Lenders Want to See

In 2025, lenders usually require:

• A copy of the tenancy agreement (AST)
• Confirmation of rent amounts and frequency
• Evidence of tenant deposit protection (if applicable)
• Confirmation that no legal disputes are ongoing
• A property that meets buy-to-let valuation standards

Regulated Tenancies: A Special Case

Regulated tenancies are historic contracts, often with:

• Below-market rent
• Lifetime occupancy rights
• Limited or no eviction rights for the landlord

Few lenders will finance properties with regulated tenants, and those that do often:

• Cap LTV significantly (e.g. 50–60%)
• Require the borrower to acknowledge the limited resale potential
• Apply a yield-based valuation, not open-market value

Real-World Example

A Willow client was purchasing a two-flat freehold block, one of which had a long-standing tenant paying under £500/month—well below market rate. The buyer wanted to retain the tenant short term but eventually refurbish and increase yield.

We sourced a specialist lender that accepted tenancies in place and based the lending on actual income, with a flexible view on future refinancing. Without this approach, the buyer would have faced significant deposit demands or been forced to walk away.

How Willow Private Finance Helps

We support investors with:

• Buy-to-let mortgages on tenanted properties
• Portfolio restructuring when existing tenants are in place
• Bridging loans when short-term ownership is required prior to refinancing
• Valuation strategy to reflect actual vs. potential income
• Navigating the legal and lender considerations around complex tenancies

We know which lenders work well with in-situ tenancies—and how to build an application that reflects the real-world situation on the ground.

📞 Want Help Navigating Today’s Market?

Book a free strategy call with one of our mortgage specialists.

We’ll help you find the smartest way forward—whatever rates do next.