Thinking of selling a rental?

The decision that comes before everything else

There is really only one question at the start: do you sell with the tenant in place, or empty? Almost every other decision follows from that one, and most landlords make it by accident rather than on purpose.

Selling with the tenant in situ

You keep collecting rent right up to completion, you don’t have a void, and you don’t have to move anyone. Your buyer is another investor buying an income stream, and a good tenant with a clean payment history is an asset that makes the property more saleable to that audience, not less.

The trade-off is the size of the audience. You have cut out every owner-occupier — usually the buyers who pay the most, because they’re buying with their heart as well as a spreadsheet. Investors buy on yield, and yield maths tends to produce lower offers.

Selling with vacant possession

An empty property opens you up to the whole market, which normally means a better price. But you take on a void with no rent coming in, you may need to spend money bringing it back to a standard buyers expect after years of tenancy, and you have to end the tenancy properly — which is where landlords get themselves into trouble.

The rules on regaining possession have been through significant change and are still settling down. I’m an estate agent, not your solicitor, and I’m not going to pretend otherwise. What I will do is tell you plainly when the possession question is the thing that decides your sale strategy, and send you to someone properly qualified before you serve anything on anybody. Getting this wrong is expensive and slow to unwind.

Your routes out

Most of the alternative selling routes apply to you as much as to any homeowner, but they land differently when there’s a tenancy attached.

To an investor, off-market

A tenanted property with clean paperwork, a reliable tenant and a sensible yield is exactly what a certain kind of buyer is looking for, and they are not browsing Rightmove on a Sunday night. This is the route I’d look at first for a well-run let.

Auction

Auction is well suited to tenanted stock, to properties that need work, and to anything where you want a fixed date and a binding exchange. Investors are comfortable in auction rooms in a way that nervous first-time buyers are not.

Portfolio sale

If you’re selling several, selling them one by one on the open market is rarely the fastest path and drags on for months. A portfolio can be sold as a single lot to one buyer. You’ll take a discount for the convenience — but compare it honestly against a year of drip-feeding properties out one at a time, with voids and fees on each.

Cash buyers

The same warning as everywhere else on this site applies: fast, and expensive. Seventy per cent of market value is the ceiling, and after costs it is routinely less than that. For a landlord exiting a problem property that has already cost you enough, that can occasionally be the right call. Read the honest version before you decide.

Your tenant is not an inconvenience

It’s worth saying this plainly, because plenty of agents don’t. The person living in your property has a home, a life and a legal position. Handled badly, they can also make your sale miserable — access refused, viewings sabotaged, a property that shows terribly.

Handled decently and told the truth early, most tenants are co-operative and some will buy the place. Talk to them before they hear it from a board going up outside. It is the right thing to do and it is also, by a distance, the commercially smarter move.

Tax, and why I won’t advise you on it

Selling a rental can trigger a capital gains bill, and the numbers involved are frequently large enough to change which route makes sense — or whether you should be selling this tax year at all.

I am not an accountant and I’m not going to guess at your tax position. Anyone in my trade who confidently tells you what you’ll owe is doing you a disservice. Speak to your accountant before you commit to a route, not afterwards. If you don’t have one, I know good local people and I’ll happily introduce you.

What I’d actually do

Tell me about the property, the tenancy and — most importantly — why you want out. A landlord who’s simply had enough of the management has completely different options from one facing a deadline, and the answer is different again if the property has problems.

Then I’ll give you a straight view on what it’s worth tenanted, what it’s worth empty, and whether the gap between those two numbers justifies the hassle of getting from one to the other. Sometimes it doesn’t, and the right advice is to keep collecting the rent.