Selling Your Rental Property

In many ways, selling your rental property is the same as selling the house you live in. But there are some differences that can make it a little more complex.

How complicated the process gets usually depends on whether you have sitting tenants. Their rights will be one of the most important factors to consider, which can affect the sale timeline and how the property is sold.

Selling with tenants in situ

If you have tenants in situ, you’ll need to decide whether to sell the property with them still living in it or if you’ll have to get them to vacate. The first thing to do is talk to your tenants. Make them aware of your intentions and reassure them that you’ll make things as stress-free as possible. You may even get lucky and they may offer to buy the property themselves.

Selling a property with tenants in situ can make the process more difficult as only other landlords will be interested. But the advantage is that you won’t have to think about evictions in this case. It also means you won’t be left without any rental income, leaving you struggling to pay the mortgage and bills.

Meanwhile, selling without any tenants will open your home up to the rest of the market. But if you want to sell with vacant possession, you’ll have to make sure you’re terminating the tenancy legally. That could involve serving a Section 21 notice, which would mean the tenants have the right to stay in the property until their tenancy is over.

There are rules around ending tenancies – it’s not as simple as just evicting the tenant. Ensure you’re doing all the necessary research before going ahead.

Arranging viewings

Managing viewings when your tenants are living in the property will be more challenging than if you were selling your own home. Co-ordinating everyone’s schedules – particularly if you’re the landlord of a house of multiple occupation – can be tricky.

But it’s important to keep your tenants up to date about what’s going on. The property is still their home and they’re entitled to live in it for the duration of their tenancy. Give them as much notice as possible of scheduled viewings.

You might want to carry out some improvements to the property before arranging any viewings. Ask you tenant for a list of things around the house that need fixing. You could also arrange to visit the property to check if you need to do any redecorating before you put the property on the market.

But bear in mind that any repairs or redecorating can cause disruption to your tenant, so work with them to find the best time to carry it out.

Consider the financial aspects

Preparing the financial documents showing your rental yield can make the process of selling simpler. New owners will want to know what level of income and outgoings they can expect. Having this ready early in the process can help.

You may have to pay Capital Gains Tax on your sale income. If you sell a property that isn’t your home, you’ll have to report and pay the tax within 30 days. The allowance is £12,300 – or £24,600 for married couples or those in civil partnerships – and you’ll pay a percentage on anything over that. The percentage rate for 2020-21 is 18% for basic rate tax payers and 28% for higher rate tax payers.

You’ll also want to consider the implications for your mortgage. You might be in a fixed-rate period, which would result in early repayment charges. Check the details of your mortgage, if you have one, before making a final decision on whether to sell.

If you need help during the conveyancing process, just get in touch. Our property experts can ensure you have all the knowledge you need and keep things moving in the right direction.

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