Strategies For Divesting Residential Buy-to-Let Investment Property

Tue 22 Dec 2020

Getting into residential buy-to-let can happen with relative ease, sourcing the buy-to-let mortgage (if you need one), making sure the property is regulatory compliant, attending to decorations, dealing with any maintenance and appointmenting an agent to source and select a tenant.

What can be tricky is when the time comes to divest and sell one or more or indeed your entire portfolio, if you have one. The majority of landlords have finance on their properties, so serving notice and selling the property as vacant is not always a palatable or financially viable approach.

So let's consider three options:

1. Sell with vacant possession - If you aim to sell by private treaty it is worth remembering that the buyer demographic of an estate agent leans to owner occupier and furthermore that a conveyancing lawyer acting for a buyer purchasing for owner occupation requires the property to be vacant before exchange of contracts. This poses a risk to the divesting landlord because they have to provide the requisite notice to the tenant applicable, currently under the UK Governments exceptional COVID regulations, this stands at six month up from the normally standard two months. As the private treaty sales process lacks any definite sales certainty until contract exchange, such notice lengths expose the divesting landlord to the risk of voids in the event that the buyer for whatever reason was unable to proceed. 

2. Sell with tenants in situ - A sensible strategy to exit buy-to-let is to aim to sell to an investing landlord. This allows the existing landing to maintain rental income up to the point on contract completion. It's a ‘win’ for the tenant as they get to keep occupation of the property they have made their home and it's a ‘win’ for the investing landlord as they get rental income from day one of ownership. To deliver this all round winning solution, for individual BTL’s, I would recommend Conditional Auction as the process. The Conditional Auction process allows the landlord investor time to get mortgage finance in place but also secures a sound level of buying commitment via a non-refundable deposit.

3. Tenanted portfolio sales - If you are a landlord with multiple properties seeking to divest, it will be the case that some properties are more desirable as others within the portfolio. Maybe the differences are rent yield, property location, accommodation offered, property condition etc. Often acquisitive landlords would look to cherry pick the best BTL’s from the portfolio, buying the ‘brides’ and leaving the ‘bridesmaids’! So often it's best to seek a sale for the entire portfolio. To enable a portfolio sale I have found that Unconditional Auction is the way to proceed. Immediate sale under a binding contract being achieved.

If you are looking to divest your buy-to-let investment, Living Property offers both property sales and auctions services. Contact Martin Cunningham, Director 01502 558538 | martin@livingproperty.co for independent confidential advice.