10:59 AM, 24th June 2022, About A year ago
With inflation at a 40-year high, interest rates are at a 13-year high with more increases predicted, and higher tax bills it’s getting tougher for landlords with mortgages to make an annual profit on their rental income. For many landlords, this leaves them in an asset-rich, cash flow poor situation when running and repair costs are high. A lot of landlords are already choosing to sell some properties to use the equity to pay off mortgages to avoid the uncertainty of interest charges and to release cash in preparation for significant repair costs in the near future to improve all rental properties’ EPC rating to grade C and above or simply to retire now and enjoy the returns on the investments they made decades ago.
The High Street Options
A Property Sale With Vacant Possession
If you only want to sell one or two properties and you are not in any rush to sell, you could wait until the tenancy ends (or multiple tenancies end in the case of HMOs) then wait for a private buyer willing to pay the full asking price if you can afford the running costs while the property is empty and don’t mind waiting months if the tenant agrees to move or years if you need to evict them.
The main advantage of this option is an uncompromised selling price but be prepared to spend a lot of time and money (especially if legal action and bailiffs are required) which will affect the ‘walk away’ funds available after agency fees and legal costs are deducted.
A Property Sale With Tenants In Situ
Alternatively, if your tenants are happy to grant your agent access to arrange photographs and conduct viewings, you may be able to list your property as ‘an investment opportunity with tenants in situ’.
Be aware, most investment buyers will not expect to pay full price for buy-to-let property so sellers should expect to sell below the property market value (85 – 95% of the property valuation) or wait longer for an investment buyer willing to pay more.
Also, most high street agents will only discuss property details with prospective buyers which could leave sellers answering the same questions about rent, references, income and outgoings with every prospective buyer. If you have one property it might be manageable but multiple that even by 2 and it becomes a lot of work. Multiply it by 3 or more and it can become overwhelming – especially if you have other properties to look after or another job.
The conveyancing will be more complicated if mortgage lenders, solicitors and buyers need additional information such as legal proof of rental income and outgoings plus other information such as referee, guarantor, tenancy and deposit details as well as copies of gas, electricity and EPC certificates. The more complications there are, the longer completion will take and the more expensive both sets of legal fees will be.
The advantage of this option (if tenants cooperate) is less VOID time while the disadvantage is the regular need for seller involvement throughout the process and the potential for sales to fall through after months of work.
Alternative Options – A Business Sale
Landlord Sales Agency specialise in selling rental property with tenants in situ. They are experts at selling buy-to-let properties with less disruption to tenants in order to preserve tenants’ legal right to a peaceful life and ensure their continued cooperation throughout the sale.
They have buyers who will make an offer without even viewing properties with the appropriate safeguards Landlord Sales Agency put in place to ensure the data they have is reliable.
They collect signed details of income, outgoings, tenant details, certificate details etc at the same time they collect property details so they can answer buyer question rather than referring them back to sellers and they secure all offers as soon as they are accepted so that buyers do not try to renegotiate later in the process. They will even organise new certificates and any other building work to ensure everything is ready for new buyers to take over and the property sells for the highest price possible.
Unlike some high street agents who provide valuations based on selling in an open market with vacant possession even when selling to investors with tenants in situ, Landlord Sales Agency provide valuations sellers can trust based on selling to an investor market. Offers are typically 80 – 90% of the property value, depending on the market and the complexity of the sale. They include all Landlord Sales Agency fees and £720 (inc VAT) towards legal costs so in most cases, it represents a walk away figure giving our sellers the clarity they need to reliably calculate equity.
The advantages of this type of option are a faster sale, less involvement and more certainty. It is particularly suitable for people who want a reliable estimate of the funds they will have available after the sale and easy access to equity tied into long term investments in a predictable schedule.
David Coughlin founder and CEO of Landlord Sales Agency said:
“We’re all about delivering speed, efficiency, and exceptional customer service. With the rise in popularity of HMOs in the last 10 years, landlords are now finding it more and more difficult to sell ex rental properties with vacant possession without having to wait years for multiple tenancies to end. The simple and obvious answer is to sell to other investors who see established and trusted tenants as a bonus, not a problem.
We sell buy-to-let properties singularly or in groups as readymade portfolios in less time than some high street agents take to sell single properties with vacant possession so if you want a faster, smoother and easier sale, get in touch today by completing the form below.
One of our consultants will need to phone you back to discuss your properties and any other relevant details so we can provide a realistic offer for your property.”