Auctioneer shares tips for selling a tenanted property

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To help navigate the field and secure a stress-free sale, Andrew Parker, auctioneer and Managing Director at SDL Property Auctions imparts advice on selling a tenanted property by auction, as it offers a range of benefits for landlords.

Whether they are looking to sell a property quickly to avoid financial difficulties, avoid the cost of upgrading a property to meet new EPC regulations or take advantage of the current demand for tenanted properties, auctions provide an efficient, transparent and competitive process. 

Disadvantages

Capital gains tax

A potential, although not guaranteed disadvantage of selling a tenanted property, is that the higher the price achieved, the higher the payments of capital gains tax. Of course, as with any sale of an investment property, if capital improvements have been made during ownership, some of the tax liabilities can be offset.

Problem tenants

Understandably, finding out that the landlord is selling can be a distressing situation for many tenants and many won’t react well to the news which can cause problems. Fortunately, these potentially problematic situations can often be diffused proactively by approaching the tenant and speaking honestly and openly about what’s happening. Worries over their future in the property can often be the primary source of conflict, so taking the time to explain the process and reassure them can go a long way to ensuring their compliance down the line.

Viewing complications

Legally, a landlord cannot enter the residence without permission from the tenant with at least 24 hours’ notice given, except in the case of an emergency and, as a viewing does not constitute an emergency, the landlord technically has no legal right to conduct viewings without prior permission, even with a viewings clause in a tenancy agreement. To avoid risking being accused of harassment by a tenant, viewings must be pre-approved and should be completed in a way that respects the tenant’s right to quiet enjoyment of their residence. 

Benefits

Increasing demand for rental properties

There is an increasing number of new and existing landlords looking to buy tenanted properties, particularly at auction, largely because there is an instant rental income and no need to spend money on the property during the process of readying it for new tenants. In fact, this is likely to not only generate interest but also attract buyers who may be willing to pay more than if it were vacant.

The increasing cost of borrowing

Many landlords may be struggling to maintain their properties and keep up with the increasing cost of borrowing. With the ongoing economic uncertainties and interest rates on the rise, they may look to sell their properties quickly to avoid further financial pressures.

EPC rating changes

The forthcoming changes to Energy Performance Certificates (EPC) – where landlords will need to meet rating C instead of rating E – have prompted many landlords to consider what to do with their portfolios. It means that properties with lower ratings will face increased costs in terms of energy bills, maintenance, and improvement works. This may put landlords under pressure to upgrade their properties to comply with the new regulations, which could be costly and time-consuming. 

Money-saving option for sellers

Just as a buyer will recognise the chance to save money and gain instant rental income on a tenanted property, the seller will also benefit from this as there will be no lost earnings during the sale. Additionally, just as capital gains tax may be a small concern for the seller, the buyer will likely benefit, further increasing their likelihood of purchasing the property.

Selling tenanted properties by auction is a common practice

Auctions provide a transparent and competitive process that enables landlords to achieve the best possible price for their properties. This is particularly beneficial for landlords who are looking to sell a portfolio of properties as they can do so in one go, rather than going through the process of selling each property individually.

SDL Property Auctions

The UK’s most successful live-streamed property auctioneer. We offer a number of different ways in which our customers can buy and sell properties with us via our Auction Events and Timed Auctions. Propertymark members can also benefit from a personalised press release to promote their new white-labelled auction department, alongside the free, white-labelled microsite and collateral.