Should I sell tenanted or serve notice and sell with vacant possession?

by Readers Question

21:08 PM, 20th February 2013
About 6 years ago

Should I sell tenanted or serve notice and sell with vacant possession?

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Should I sell tenanted or serve notice and sell with vacant possession?

Sell tenanted or with vacant posessionI became a landlord in July 2012 due to a need to move for my job.  Initially a 6 month company let it has now been extended to January 2014.  My tenants are lovely and are normally in the house during the week so wear and tear is low and they pay a good rent.

I would like to sell the house and can give 2 months’ notice from end May.

Is it best to sell the house to an investment buyer who could buy it now knowing that there are good tenants in there until Jan 2014 or to sell it at the end of the tenancy?

The tenancy could be extended beyond Jan 2014.

The house is valued at £350K.

What are the pros and cons and obstacles of doing either/both?

Thanks in advance for sharing your thoughts – Samantha Armstrong



Comments

Mark Alexander

21:16 PM, 20th February 2013
About 6 years ago

Hi Samantha

There is likely to be more interest in your property if you sell it with vacant possession, however, that doesn't stop you advertising it as a tenanted property now and changing your advertising at a later stage.

If the corporate tenancy is until Jan 2014 how can you give two months notice at the end of May? Has your agent written in a break clause perhaps?

If it's not too much of a personal question, may I ask why you want to sell your property?

21:50 PM, 20th February 2013
About 6 years ago

Hi Mark,

Yes there is break clause which becomes effective end May.

The reason for selling is that I would like to buy a house in Scotland which would fit in more with my family and work committments. And perhaps also buy an investment property up there too.

Mark Alexander

21:57 PM, 20th February 2013
About 6 years ago

Hi Sam, I thought something like that might be the case. Have you considered keeping it, remortaging and still buying the two in Scotland? I have no idea whether that's possible as I don't know the figures. However, if you could get say 80% finance you might be able to release nearly as much as the net proceeds of selling after factoring in all the costs of sale. Try this buy to let calculator >>> http://www.property118.com/calculators/BTLQuote.aspx

Let me know what you think please?

3:29 AM, 21st February 2013
About 6 years ago

Thanks Mark. I think ideally I want to be mortgage free on one property - my home - then have an investment property with a mortgage if really necessary. I am not a natural wheeler dealer and am risk averse. Also with the job i have to move around so need to rent!

Mark Alexander

7:38 AM, 21st February 2013
About 6 years ago

Hi Sam, it would be an investment property if you were to continue letting it long term. You could then offset the mortgage interest against the rental income for tax purposes and use the money raised to purchase your next home. Just a thought of course.

Yvette Newbury

7:42 AM, 22nd February 2013
About 6 years ago

We are presently looking for property to purchase to let out and are keen on properties that already have a tenant in situ. However, our experience over the last few months is that it has been difficult for the estate agents to arrange viewings in those proprerties with tenants. On one property, the tenant has cancelled twice within 20 minutes of the viewing and there seems to be little they can do about it. Although your tenants may be perfectly reasonable and lovely people, if the agents get a stream of prospective purchasers, all who want to view at different times it is inevitable your tenants will get tired of a constant stream of strangers coming into their home and interrupting their enjoyment of the property. As we may want to sell our properties one day, and would not want them empty, we have been considering this problem and thought a way round it might be to ask the estate agent to arrange an open day. This tends to be 2 hours, for example on a Saturday, in which multiple persons can view. This reduces the inconvenience to your tenants and can result in a quick sale. The other side of the coin is that by offering the property when tenants are already in situ, it puts off those who would want to live in the property themselves, so you are restricting your potential purchasers down to other landlords until you get closer to the break clause date when you could serve notice and sell with vacant possession. I hope this helps.

Mark Alexander

8:03 AM, 22nd February 2013
About 6 years ago

That's a very interesting point Yvette. There was a thread here a few months ago from a landlord who was looking to sell his properties tenanted. He offered the tenants a triple deposit refund if they could help him to sell the property or £1,000 in cash if the property was sold to another landlord and they decided to stay there. I suspect that focussed the minds of the tenants a bit more. Here's a link to the thread >>> http://www.property118.com/index.php/selling-a-tenanted-property-portfolio-readers-question/31128/

9:18 AM, 22nd February 2013
About 6 years ago

Hi Yvette, Thanks very much for your comment.

It is in my agreement with my tenents that I can show people around on a Friday and Saturday when they are not generally there anyway.

Also, I can go in more or less anytime and give the house a clean and sort out any little jobs which may need doing. I have been doing this once a month. It helps them as well and we have a good relationship, so viewings aren't really a problem. The earliest I could give them the 2 months notice is May. But as I said the tenancy can go on until Jan 2014,

Regards - Sam.

Yvette Newbury

9:36 AM, 22nd February 2013
About 6 years ago

That sounds ideal then, for you to be able to place the property for sale now whilst it is tenanted and you may attract an investor landlord if the yield is of interest to them. If you don't mind me saying, just be a little careful with your visits to the property and 'tidying up' on your visits once a month, even though you have a good relationship with your tenants. There always seems to be some little quirk we all have about our private space of possession that means you may inadvertently overstep the mark at some point and upset your tenants. It is crucial if you do put the property up for sale that you keep in their good books. Good luck with your sale.

11:13 AM, 22nd February 2013
About 6 years ago

That's funny Yvette, they always ask me when I am coming next because they love it!

Perhaps I should explain that the company let is for 4 consultants to be able to stay during the week as they go home to their families at the weekend up north. They don't really have the inclination or time to clean as such but they do like the house to be clean.

Unfortunately the company won't pay for a cleaner.

So I did it for the first 6 months each time i went in and when the contract was renewed we informally agreed to continue in the same vein - and that it helped them and helped me.

I have a similar job to them so i know how lovely it is to come back to a clean place on the Monday.

If I did put the house up for sale I would put in a weekly cleaner, which I know my tenents would appreciate. They hardly bring much with them anyway, and I don't think they are use the washing machine as they take everything home!

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