Although rents are going through the roof, yields are getting higher, and there’s massive demand from tenants, many landlords are selling their rental homes. For some, it’s part of their long-term plan, but for others, it’s a reaction against changing rules and taxes.
Even so, not every landlord who’s selling up is getting out. Some are using the climate of stalling house prices, rocketing rents and levelling-up proposals to reset their buy-to-let business for the future.
But what about you?
Are you hanging up your landlord hat for good? Swapping an older home for an energy-efficient modern one? Or converting to a company for tax advantages and easier inheritance planning?
Whatever your reasons, there’s plenty to think about before taking the plunge:
That’s a lot to unpack, and our handy guide is full of answers. So let’s explore whether selling your rental home would be a costly mistake, or the best thing you can do.
Unless you’re selling your rental property as part of a long-term plan (perhaps you’re retiring and want to release funds), it’s worth a quick game of devil’s advocate. If you’re selling up because of changes in lettings law, interest rates or tax policy, consider the following factors first:
So while your heart might tell you to sell, it makes sound financial sense to decide with your head. By digging a little deeper, you’ll reach the right decision for your business and future.
As well as estate agents and legal fees, you’ll need to pay Capital Gains Tax (CGT) on the profit when you sell your rental property (unless you own it as a company and leave the funds in the business). So before you jump in, work out how much selling up will cost you.
Given that selling up can run into tens of thousands of pounds, it’s essential to have a crystal clear picture of all the costs involved to avoid nasty surprises and later regrets.
Legally speaking, you can sell your rental property to another investor without saying anything to your tenant at all. The tenancy simply continues, and it’s up to the new landlord to serve notice about the change of ownership.
However, the reality is that most home buyers and investors want to view before making an offer, which means you’ll need to arrange access with your tenant. So here are some things you need to know:
Get this right, and you should be able to avoid holding an empty property without a buyer, while keeping your rental income flowing until you complete the sale.
A major factor in deciding whether or not to sell your rental home will be how much it’s worth. Fortunately, you don’t necessarily need to disturb your tenant just yet, as there’s more than one way to get an idea of the current value before asking estate agents to visit.
If you do get estate agents to visit, ask them to let you know if you can do anything to improve the value or saleability of your property. There may be some things you can do that increase your chances of selling and how much you achieve without inconveniencing your tenants.
If you sell your rental property to a homebuyer, you’ll need to line up the notice period with exchanging contracts, the completion date and the concerns of the buyer’s solicitor. That’s ok, but we’d suggest exploring other options first.
In terms of who’ll pay more, there’s no definitive answer because so much depends on the makeup of a property. As an example, fire doors and lobbies mean more costs for homebuyers to remove them, but they could be a convenient time-saver for landlords. So ask agents for advice.
What’s your next step?
If you own a rental property in the Wilton & Salisbury area that you’d like to sell or make more profitable, we’re here to help.
To find out if one of our landlords wants to buy your investment, or how you can increase your yield, call us on 01722 580059 or drop us a line at info@piccoloproperty.co.uk for a chat with our team.
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