Many landlords are looking to sell some or all of their rental portfolio currently. For some this is a temporary measure or a downsizing exercise. For others it is a total market exit. If you are considering downsizing your portfolio, this process isn’t always as straightforward as a regular property sale, so what is the best way to go about? Here are a few points to consider:
Who is my market?
Selling to another landlord.
If this is the case keeps things as simple as possible. Dress the property or position it in the market in the same way you would let it out. That way the landlord buyer can see its potential as a rental property.
Residential buyer.
In this case make sure you make it feel more homely rather than just an investment opportunity.
Before you market the property make sure you attend to all major repairs.
Tenanted properties
In most cases, it’s easier to sell a vacant buy-to-let. However, if you do plan to sell while your tenants are in situ, you’re limiting your market to other landlords. Selling a property while it is tenanted will mean more admin. You will need to provide the tenancy agreement, gas safety certificates, and other associated rental documents.
You’ll also need to arrange for the tenancy deposit to be transferred to the new landlord (if applicable).
Alternatively, you may wish to plan the sale of your buy-to-let property to coincide with a natural void or give notice to your existing tenant to enable the sale to a wider market.
Tax implications
Buy-to-let properties are subject to capital gains tax. Your tax bill is calculated by looking at how much the value of the property has increased since you’ve owned it. So, if you bought the property for £100,000 and it’s now worth £150,000, you’ll be liable for tax on the profit of £50,000 (less any allowances).
Speak to your accountant to understand what expenses can be offset and your personal tax rate.
What about the mortgage?
If you took out a long-term fixed rate buy-to-let mortgage, you may be liable to pay early
redemption charges (ERCs) once the property sells. Check the details of your mortgage carefully and if possible, time the sale to complete after the period when the ERCs are applicable.
The Property Lifeboat buys, develops, and lets property in Kent, so if you are a Kent-based landlord, why not get in touch to see whether we can help you – admin@lifeboatlettings.com
