Buying a Property With a Tenant Already Living In It: A Cross-Border Buyer's Guide

Published on: July 10, 2026

Last verified: 9 July 2026. Tenancy law is highly jurisdiction-specific and changes frequently. Verify before acting.

Most international property guides assume the same thing: that on completion day, the seller hands you a key and you walk into an empty apartment. A large and growing share of listings do not work that way. The property is occupied. Someone lives there, pays rent every month, and has a signed contract that will outlive the sale.

Listings describe this in different ways depending on the market: tenanted, sold subject to tenancy, tenant in situ, sitting tenant, occupied, vendu occupé, venduto con inquilino, arrendado. In every case the same thing is true: you are not buying an empty box. You are buying a building and stepping into one side of a contract that someone else negotiated, in a legal system that is probably not yours, with a counterparty you may never meet.

Done well, this is one of the better-priced entry points into a foreign market. Done badly, it is how people end up owning an asset they cannot enter, cannot re-let, cannot renovate, and cannot sell at anything close to the price they assumed.

Key takeaways

• A sale almost never terminates a lease. In most civil-law and common-law systems, the tenancy binds the new owner. The buyer inherits the landlord's obligations, not a blank slate.
• The discount to "vacant possession value" is not free money. It is the market's price for two things: the gap between the contract rent and the market rent, and the uncertainty around when, or whether, you can obtain vacant possession.
• Tenant pre-emption rights can unwind a completed sale in several European jurisdictions. This is the single most under-researched risk in the category.
• You may never see the inside of the property before you buy. Structure the deal accordingly: retentions, indemnities, condition evidence.
• Financing is the quiet blocker. Ordinary residential mortgages generally require vacant possession. Tenanted stock usually needs investment or buy-to-let lending, at lower loan-to-value.
• Model the exit before the entry. Time-to-vacant-possession is the master variable, and in several markets it has become dramatically longer since 2024.

What "tenanted" actually means, and the terminology trap

Two English words that sound identical carry completely different risk in the UK, and the same trap exists in most languages.

A tenant in situ is usually a renter on an ordinary, modern, market-rent contract. A sitting tenant or protected tenant, strictly speaking, is someone on a legacy statutory tenancy: a below-market rent set by law, security of tenure for life, and in some systems the right to pass the tenancy to a family member.

These are not variations on a theme. They are different assets. A modern tenancy might shave a modest percentage off the price. A legacy protected tenancy can trade at a large discount to vacant value precisely because nobody knows when the property will become available, and in the meantime the rent is frozen at a level set decades ago.

Before you look at a single number, establish the statutory classification of the tenancy. It determines the rent, the notice periods, the grounds for possession, the succession rights, and the price. Everything else is detail.

The legal foundation: the sale does not break the lease

Continental systems inherited a Roman principle, emptio non tollit locatum, "purchase does not remove the lease." Common-law systems arrive at broadly the same place by a different route: a tenant in actual occupation typically holds an interest that binds a purchaser.

Some illustrations of how differently the same principle is implemented:

• Portugal. The sale of a property does not extinguish the tenancy. The buyer acquires the property with the tenancy in place and remains bound by its terms until it reaches its natural end. Recovering possession for owner-occupation involves long statutory notice periods.
• Spain. The lease continues with the new owner. But there is a registration wrinkle that catches almost every foreign buyer: whether the lease is inscribed at the Registro de la Propiedad changes the strength of the tenant's protection against the purchaser. Most leases are not registered, which cuts both ways, and is exactly why you need a Spanish lawyer to read the register, not a summary.
• Netherlands. The maxim is literally proverbial: koop breekt geen huur, purchase does not break the lease.
• England and Wales. The tenancy binds the buyer. And since 1 May 2026, the Renters' Rights Act 2025 has abolished Section 21 "no-fault" possession and converted all assured shorthold tenancies into periodic assured tenancies. There is now no route to vacant possession simply because you want it.
• Turkey. The tenancy continues, but the Turkish Code of Obligations gives a new owner who genuinely needs the property for themselves or specified close relatives a defined notification-and-litigation route with statutory timing. It is a route, not a switch.

Treat every one of the above as an illustration, not as advice for your transaction. These regimes change, they differ within countries (Scotland, Wales and Northern Ireland each diverge from England; Spain's autonomous communities layer rules on top of national law), and they turn on facts specific to the contract in front of you.

Why the price is lower, and what the discount is actually paying you for

Tenanted stock trades below vacant possession value. In the UK, brokers commonly quote a discount in the range of roughly 10-20% for a modern tenancy, while properties subject to legacy regulated tenancies have sold at auction in a band of roughly three-quarters to five-sixths of vacant value. Irish valuation work has attempted to formalise the relationship, finding that the discount scales with the rent gap, the monthly shortfall between contract rent and market rent, rather than with the mere fact of occupancy.

That is the crucial intuition. The discount has four components:

1. The present value of the rent gap. If the tenant pays 30% below market, you are buying a below-market income stream. Capitalise the shortfall over the expected remaining term and you have most of the discount.

2. The option value of vacant possession. A tenanted property is worth its income stream plus an option to convert into a vacant asset at some future date. The further away and less certain that date, the less that option is worth.

3. The buyer-pool restriction. Owner-occupiers, usually the buyers who pay the most, cannot buy an occupied home. You are competing only with investors, and you will sell only to investors unless the property empties.

4. Information asymmetry. You may not be able to inspect. The market prices that uncertainty.

The failure mode is buyers who treat the discount as arbitrage, "I'll buy at 80, get possession, sell at 100", without pricing components 2 and 4 honestly.

If you can never lawfully obtain vacant possession, you have not bought a house at a discount. You have bought a bond, and you should value it like one.

The risk almost nobody researches: tenant pre-emption rights

In several European systems, the tenant has a statutory right of first refusal when the landlord sells. Two mechanisms exist, and the second is dangerous:

• Tanteo / preferência / prelazione (right of first refusal). The landlord must notify the tenant of the full terms of the proposed sale, price, payment conditions, everything, and the tenant may match. In Portugal, for example, the notification must include all terms of the sale and the tenant has a short statutory window (a matter of working days) to exercise.
• Retracto (right of redemption). If the landlord fails to notify properly, the tenant may, within a statutory period after completion, step into the buyer's shoes, taking the property at the price the buyer paid. Spain's Ley de Arrendamientos Urbanos contains such a mechanism.

Read that again. In a retracto jurisdiction, a procedural failure by the seller can strip the buyer of the property months after the notary signed the deed. Your protection is not optimism; it is documentary evidence that the notification was correctly served and either waived or expired, held on file before you complete.

Similar rights exist outside Europe. Washington, D.C.'s Tenant Opportunity to Purchase Act is the best-known U.S. example. Some commercial leases create contractual rights of first refusal that behave the same way.

Rent control is not a temporary condition

Where the in-place rent is below market, ask why. If the answer is "the previous landlord was generous," you have upside. If the answer is "the law caps it," you have a permanent feature of the asset.

Rent-setting law comes in many forms: reference-rent systems that benchmark against a published local index; caps on the size and frequency of increases; designated "stressed" or "tense" zones with hard ceilings; and legacy statutory tenancies whose rents were fixed under regimes abolished decades ago but grandfathered for existing occupiers. Under England's Renters' Rights Act 2025, for instance, contractual rent-review clauses in assured tenancies were swept away in favour of a single statutory procedure, usable once every twelve months.

The practical test is simple: can you lawfully raise this rent to market, on what timetable, and by how much per step? Get that answer in writing from a local professional before you model a single year of yield.

The inspection problem: buying what you cannot see

A tenant in most jurisdictions has a right to quiet enjoyment. A seller cannot compel viewings, and a co-operative tenant during a sale is a courtesy, not an entitlement. Many tenanted purchases complete with the buyer having seen nothing but the hallway.

What hides behind that door: deferred maintenance the tenant never reported; alterations made without consent; more occupants than the lease permits; unauthorised subletting or short-letting; damp, pest or hoarding conditions; and appliances at the end of life.

Practical mitigations, in rough order of usefulness:

1. A negotiated inspection, arranged with the tenant's consent and appropriate notice, ideally with a surveyor. Offer to make it worth the tenant's time.
2. A retention or holdback, a portion of the price held in escrow against condition on first vacancy.
3. Seller warranties and indemnities on condition, compliance and the accuracy of the tenancy file, with real remedies attached.
4. A tenant estoppel certificate (the commercial-property standard, increasingly used in residential portfolio deals): a signed statement from the tenant confirming the lease terms, the rent, the deposit, arrears, and the absence of undisclosed landlord defaults. It "estops" the tenant from later contradicting it.
5. Dated photographic and video evidence from the last available inspection, and the condition report from tenancy inception.

The tenanted due-diligence file

This is the list. If the seller cannot produce it, the price is not the problem, the deal is.

The tenancy itself

• Original lease, every amendment, renewal, side letter and addendum
• Statutory classification of the tenancy and, therefore, which possession grounds exist
• Start date of the current tenancy (in England, the twelve-month protected period for possession runs from the tenancy start date, not from the sale)
• Succession rights: can this tenancy pass to a relative?

Money

• Rent roll and 12-24 months of bank evidence, not a summary spreadsheet
• Arrears history, payment plans, any write-offs
• Whether the current rent is lawful under local rent-setting rules
• Rent-increase history and the date of the last increase

The deposit

• Where it is held, in whose name, under which statutory scheme
• The legal mechanism by which it transfers to you on completion, this is a common and expensive omission
• Whether any prescribed information was correctly served (in some systems, defective deposit handling blocks possession claims entirely)

Registration and public records

• Is the lease registered on the land register or with the tax authority? Registration frequently changes whether and how the lease binds a purchaser, and in several countries an unregistered lease is a tax problem for the seller that becomes your problem
• Land register search for pre-emption rights, charges, and any noted occupancy

Notices and disputes

• Every notice served by either party, with dates and proof of service
• Any live or concluded court or tribunal proceedings
• Any suspension of enforcement (moratoria, vulnerable-occupant protections)
• Evidence that any tenant pre-emption right was correctly served and lawfully waived or expired

Compliance

• Safety certificates (gas, electrical, fire), energy performance certificate and any minimum-rating rules
• Licensing: many cities license houses in multiple occupation or short-term lets; unlicensed operation can trigger rent repayment orders
• Building or condominium rules on letting

People

• Who is actually living there, and under what right
• Subletting, lodgers, family members with independent rights

Financing: the constraint that decides the deal

Ordinary residential mortgages are underwritten on the assumption of vacant possession. A property with a sitting occupier usually requires an investment or buy-to-let facility. Many mainstream lenders decline tenanted stock entirely; those that lend typically require a larger deposit, and legacy protected tenancies are frequently uninsurable and unlendable in the mainstream market.

Layer cross-border lending on top, a non-resident buyer, income in another currency, no local credit file, and the practical outcome is that most tenanted purchases abroad are cash purchases, or they do not happen. Establish your financing before you negotiate, not after.

Model the exit before you model the yield

There are exactly three ways out of a tenanted asset:

Hold for income. Perfectly rational, provided you have underwritten the rent as regulated, not as market. Do not model an increase you cannot lawfully make.

Negotiated surrender. A financial incentive in exchange for a voluntary, documented handover. Common, generally lawful, and far faster than litigation. It must be genuinely voluntary: pressure, harassment or utility interruption is a criminal offence in most developed jurisdictions and will destroy any later possession claim.

Statutory possession. This is where buyers underestimate the calendar. Take England as a concrete example of how the arithmetic now works: the ground for possession on grounds of sale requires four months' notice, cannot be used within the first twelve months of the tenancy, requires the landlord to prove a genuine intention to sell, adds court time on top, and, if used, imposes a restricted period during which the property cannot be re-let or re-marketed for letting. A landlord who serves notice, obtains possession, and then abandons the sale is exposed to penalties and to an empty property they may not re-let.

That is not a loophole to route around. It is the design. And it means "I'll just serve notice" has stopped being a plan in a growing number of markets.

The tax and accounting tail

• Your discount becomes a future gain. Buying at 80 and eventually selling at 100 produces a larger taxable capital gain than buying at 95. Some jurisdictions also assess transfer tax against a minimum cadastral or reference value regardless of the price you actually paid, meaning you can pay full transfer tax on a discounted purchase.
• Rental income starts on day one, with non-resident withholding regimes, restricted deductions, and filing obligations that begin immediately.
• Rent and deposit apportionment at completion needs to appear on the settlement statement. Pre-paid rent belongs to you from completion; the deposit is the tenant's money and must be handled as such.

When tenanted is the right trade, and when it isn't

It works when: the in-place rent is at or near market; the tenancy type is modern and the possession grounds are workable; you are a cash buyer capturing a genuine discount rather than a notional one; you want verified income history rather than an agent's rental estimate; and you have local management on the ground.

It fails when: you need a mortgage; you intend to renovate or occupy; the rent is statutorily suppressed and the tenancy is heritable; you cannot verify the tenancy file; the jurisdiction has a redemption right that has not been cleanly extinguished; or your entire thesis depends on obtaining vacant possession on a timetable you have not stress-tested against the actual notice periods and court queues.

The tenanted market rewards people who read documents. It punishes people who read listings.

Frequently asked questions

Does buying a property automatically end the tenant's lease?
Almost never. In the great majority of jurisdictions the lease survives the sale and the buyer becomes the new landlord, bound by the existing terms. Some systems distinguish between registered and unregistered leases, which can change the strength of the tenant's protection, but the default assumption should be that the tenancy continues.

What is "vacant possession"?
It is the contractual state in which the property is delivered free of any occupier and of any third-party right to occupy. It is the assumption underlying most residential valuations, most residential mortgages, and most owner-occupier purchases. A property sold without vacant possession is a different asset with a different buyer pool.

How big is the discount for a sitting tenant?
It varies enormously with the tenancy type, the rent gap, and the expected time to possession. Market commentary in the UK typically describes single-digit to low-double-digit discounts for modern tenancies and considerably larger discounts for legacy regulated tenancies. Treat any published range as a starting point for negotiation, not a valuation.

Can the tenant block the sale?
Generally no. What tenants can do, where the law gives them the right, is buy it themselves on the same terms, and in some systems, undo the sale afterwards if they were not properly notified. They can also decline viewings, which affects your ability to inspect.

Can I evict the tenant after I buy?
Only on the grounds and timetable your jurisdiction allows, and often not on the basis that you are the new owner. Several markets have removed no-fault possession entirely. Assume you cannot, then verify whether you can.

Do I need a different mortgage?
Usually yes. Residential owner-occupier products assume vacant possession. Expect to need an investment or buy-to-let facility, at a lower loan-to-value, from a narrower panel of lenders. Legacy protected tenancies are often outside mainstream lending altogether.

What happens to the tenant's deposit?
It is the tenant's money, not the seller's asset. Its transfer to you must be documented at completion and, where a statutory protection scheme applies, correctly re-registered. Getting this wrong can expose you to penalties and can invalidate a later possession claim.

Related reading

• Becoming a landlord abroad: tenants, leases and deposits
• Tenant rights and eviction law for international landlords
• The property inspection gap for foreign buyers
• International mortgages for non-residents

See what is on the market now

Tenanted stock rewards buyers who read the file before they read the listing. JanusHermes brings verified listings and country-level intelligence across 50+ markets into one place. Browse listings on JanusHermes.

This article is general information for an international readership, current as of 9 July 2026. Tenancy law, rent regulation and possession procedure are highly jurisdiction-specific, differ within countries, and change frequently. Nothing here is legal, tax or investment advice. Before buying an occupied property in any country, instruct an independent, locally qualified lawyer who acts for you and not for the seller or the agent.

Sources

• Roman-law principle emptio non tollit locatum; national implementations in Portugal, Spain (Ley de Arrendamientos Urbanos), the Netherlands, England and Wales, and Turkey (Code of Obligations)
• UK Renters' Rights Act 2025 (main tenancy provisions in force 1 May 2026): abolition of Section 21, periodic assured tenancies, statutory rent procedure, possession grounds
• Spain: tenant tanteo and retracto rights; Washington, D.C. Tenant Opportunity to Purchase Act
• UK auction and broker commentary on tenanted and regulated-tenancy discounts; Irish valuation research on the rent-gap relationship