Landlords aspire to find a property that achieves high yields and capital appreciation, plus a high-quality tenant who stays for the long term. But part of being a successful landlord is also knowing when to sell one of your assets and maximise its value. We recently sat down with some experienced landlords to find out when they believe it is the best time to sell an investment and how to accomplish a fast sale.
The landlords we spoke to all agree that there is no one-size-fits-all approach to selling, as each vendor’s circumstances vary. Some prefer to sell with tenants in situ, as it continues generating income while the property is on the market. If you are selling with tenants, it’s necessary to provide transparency over the sale, especially as they will likely be present at viewings.
Some landlords prefer an empty property when they list it on the market. A tenanted home may attract other buy-to-let investors, but an empty one appeals to a broader range of buyers, including first-time buyers, home movers and second-home seekers.
And while there’s no definitive time to sell, historically, spring has proven to be a popular season in the sales market. Properties look their best, and the market is usually full of interest– especially after the Easter holidays.
Regardless of the time of year, there’s never a wrong time to sell if your property has grown significantly in value and you stand to make a profit.
Getting everything in order before listing the property can help smooth the sales process. Landlords need to consider more factors than other vendors, especially when it comes to tax and other rental-related aspects.
As one landlord put it, “when landlords sell, there may be tax implications, such as capital gains tax involved, so make sure that you are fully up to date and enlist the help of an accountant if necessary”. Capital gains is the profit you make on the property sale. You will pay 18% capital gains tax as a basic-rate taxpayer or 28% if you pay a higher rate of tax.
Landlords with a mortgaged property will also need to consider the repayment aspect. Most buy-to-let mortgages are interest-only, so the amount owed is likely higher than a repayment mortgage. For example, if your mortgage is £200,000 on an interest-only payment, you will still owe that amount after the sale of the property.
Landlords can sell their property with a tenant in situ, but any new owner would need to keep them if they have a running assured shorthold tenancy (AST), even if the initial agreement is with the selling party. Tenants on a rolling contract can be issued a Section 21 (although this is set to be abolished at some stage) as long as they receive two months’ notice. Communication with tenants here is essential. A tenant who refuses to leave could derail the sale, especially if the new owner doesn’t want to buy the property as a buy to let.
Unlike home movers, who usually need to sell their house to move into another one, a landlord typically enjoys more flexibility. One of the landlords we spoke to said, “there’s rarely a chain with buy-to-let properties, which can make them more appealing. And without the need to move home, landlords can be more selective about when they sell and capitalise on favourable market conditions.”
It’s also important to agree on an accurate asking price based on market conditions if you want a fast sale. Look at similar properties to see how much they’re listed for, as it will give you an idea of what to expect even before instructing an estate agent.
Instructing the right estate agent is vital to the sales process. You should go with an agent who is personally invested in your property and knows the local market like the back of their hand.
Landlords, in particular, have become accustomed to working with professionals directly, be it letting agents, contractors and, to some extent, even tenants. That personal relationship is essential, as it is an estate agent who needs to understand your situation and works tirelessly to achieve a quick sale.
Therefore, it can be worth looking at an independent agent who will be your point of contact throughout the entire sale. Landlords we spoke with were keen to emphasise the importance of finding the right agent, with one saying, “I’m used to building relationships, whether it’s the property manager or tenant. I want that continuation with the estate agent – someone who doesn’t treat it as just another property on their books.
On top of that, you should aim to find an estate agent who takes the initiative. Ask how they plan to market the property and if they already have a list of eager buyers looking for homes in the area. Forward-thinking estate agents can make a real difference while removing stress and securing a quick sale.
Once you have everything sorted and have settled on the estate agent, the property’s aesthetics take priority. An empty home is easier to present, especially if you don’t live there yourself, but not all is lost if it’s tenanted.
Freshen the property up after the tenants left, giving the walls a fresh coat of paint and generally bringing everything up to scratch to make it look presentable and appealing. Also, don’t forget to give any outside space some love and care, removing weeds and decluttering gardens, driveways and terraced areas.
A tenanted property is slightly tricker to maintain as people will still live there during the viewings. It’s important to communicate with tenants and ask them to ensure the property is in good order, tidy and presentable throughout viewings. While you might not have as much input for a tenanted property, viewers may actually prefer looking at somewhere that’s currently lived-in, as they can get a more homely feel from the viewing.
Lastly, you need to consider the type of solicitor. They play a vital role in the progression of the sale, so you want to find a proactive one. The estate agent may have some contacts, which you can review. It’s also worth asking friends and family, as well as performing a Google search. But a local estate agent is usually the best place to start.
This is because they can usually recommend a local solicitor who knows the area. As one landlord put it, “from my experience, I always get better service when I work with local solicitors. They tend to know the area and the type of properties in the postcode, so they’re a bit more knowledgeable than those in other locations”.
Selling your home as a landlord is a different experience compared to typical vendors. Most of the actual sales process is the same, but other factors are at play, such as tenants and tax implications. Once these are sorted, it’s really all about finding a local estate agent with your best interests at heart. They can be the difference between a fast sale and your property sitting on the market.
If you’re a landlord thinking of selling your home and would like more information about each step of the sale, one of our property experts will be happy to assist.
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