It has never been more important to know your landlords options when it comes to selling a buy-to-let. Firstly, let’s start by busting a big urban myth. It is perfectly acceptable and legal to sell a buy-to-let with tenants still living in the property – often referred to as selling with sitting tenants.
How landlords regain possession is changing
This fact is critical as the Renters’ Rights Bill has gained Royal Assent and is now the Renters’ Rights Act. Although there were no changes overnight, a phased introduction of new laws is starting soon, and they will impact how landlords can regain possession.
The headline reform is the scrapping of Section 21 eviction notices and experts predict this will be the first change implemented. A Section 8 will become the only way to ask tenants to leave and a new 1A mandatory ground for possession has been added to cover landlords needing to sell.
Longer waits for vacant possession
The new ground comes with a caveat. A landlord can only serve this notice after the tenant has lived the rental for at least six months. This is a long time if a landlord's personal circumstances have changed, such as enduring unsustainably high mortgage rates or increased service charges .
Selling a buy-to-let as it stands now
Currently, if you want to sell with vacant possession, you’ll need to wait for a fixed-term to end, accept a ‘notice to quit’ letter from the tenant or use a break clause within the contract.
Selling after the Renters’ Rights Act is implemented
Things will change when the Renters’ Right Act is in place. All fixed-term tenancies will automatically switch to periodic ones and Section 8 notices will be the only way for landlords to obtain vacant possession.
Delays are forecast when the industry swaps exclusively to Section 8 notices, especially as a court hearing must take place if a tenant challenges a notice. Worryingly, the court system already overwhelmed and running behind.
Sell vacant vs tenanted
You don't have to wait for vacant possession: selling with sitting tenants can be very simple process if you make the right disposal choice. The following will help you decide the right course of action for you and your buy-to-let:-
Pros of selling a vacant property
- Appeals to a wider audience of buyers, including owner-occupiers
- An empty property allows for maintenance and redecorating to take place
- Increased chance of obtaining a higher sales valuation
- More chance of a quicker sale, especially as offered chain free
- Easier to accommodate viewings
Cons of selling a vacant property
- Having to wait for tenants to leave or a fixed-term to end
- Loss of rental income between tenants leaving and a sale completing
- Receiving a bill for void periods costs
- An empty property devoid of furniture is potentially less appealing
Pros of selling with sitting tenants
- No break in rental income - earn up until completion
- No disruption to the tenant, reducing the risk of homelessness
- The offer of an immediate return to another landlord – no need for tenant find
- Super short-chain for a quick, straightforward sale
Cons of selling with sitting tenants
- Limits the buying audience to almost exclusively landlords
- Condition of the property may be compromised
- Tenants may refuse viewings, making finding a buyer difficult
- Presence of tenants potentially devalues the property
Cash sale v. open market v. auction
Once you have established whether you want to sell a buy-to-let with sitting tenants or with vacant possession, you need to decide your sales method. There are three main routes:
- Cash sale to a professional house buyer
This cuts out the estate agent or auction house and sees a landlord sell directly to a professional cash buyer. There is no chain behind a professional buyer, they don’t need a mortgage and can offer exchange within 7 working days for an assured sale.
Open Property Group also purchases buy-to-lets with sitting tenants – no need for vacant possession. We also make landlords a cash offer if there is a short lease or if the property is a HMO plus we don’t charge any fees!
- Open market sale
You can use an estate agent to sell your buy-to-let, whether it has sitting tenants or vacant possession. Be warned, however. It’s now taking almost 30 weeks to sell a property on the open market, from listing to completion. This timeframe can be markedly longer for buy-to-lets with sitting tenants.
Don’t forget, when selling on the open market, you can be caught up in a lengthy chain below. This increases the chances of a sale falling through.
- Auction sale
Selling a buy-to-let at an auction is an appealing prospect but there are no guarantees. Firstly the audience will need to comprise fellow landlords for there to be interest. Even if there are buyers, a property may fail to sell if the reserve price isn’t met. Finally, the landlord will be expected to pay an average sellers’ fee of around 2% to 2.5% of the sale price plus VAT. Other charges are not uncommon.
Open Property Group is a fantastic option when selling a buy-to-let. Our fee-free proposition, with an average offer-to-completion timeframe of 42 days, applies even if you have sitting tenants.
Let’s get your sale started now – request an online cash offer or contact the team.
