Recently I represented a local buy to let investor who wished for me to source and manage the process of not only finding a good investment, but also negotiating and ensuring the smooth handover. It got me thinking about the concerns existing landlords have about selling their property with a tenant in situ. It doesn’t necessarily have to be difficult but unless you take the right steps, it can be somewhat hazardous. Tenants do have rights and just because you wish to sell the property, it does not give you the right to disregard your legal responsibilities. So it is essential that where possible, you keep the tenant on your side.
I’m not one for the promotion of evicting tenants unnecessarily, so I’m going to concentrate more on how to sell to another buy to let landlord, rather than a ‘vacant possession’ scenario.
Your right to show potential purchasers around the property are somewhat limited but not impossible. As you will no doubt be aware, this is an essential part of selling a property – if they can’t see it, they are very unlikely to buy it!
Firstly, I would strongly advise that you take a good look at the agreement you have with your tenant and see if there is a clause that will allow you access to the property, regardless of the reason. If there is such a clause, you must give the tenant 24 hours’ notice prior to your intended visit and having done so, the tenant must comply with your request. If there is no such clause, then the tenant does have the right to refuse you access. If this happens, then it would be far better if you can create a relationship with the tenant that will permit viewing to take place. If your property is managed by an agent then I would suggest you communicate your intentions clearly to them, so that they are in the best position to advise the tenant effectively.
Obviously when a tenant is in a fixed term tenancy they have the right to remain in the property for that term, whether you sell it or not. So my advice here would be to discuss with your agent as to the type of buyer you are trying to attract, as the only real option is to sell to another landlord. This does work quite well and going back to the client I dealt with recently, I was able to source a property that had a tenant in situ on a long term contract. This not only meant that the tenant was happy with a new landlord but it also meant the investor had instant income from day one. On the other hand, if a tenancy is coming to end, this would open up options to sell to a residential buyer in readiness for the tenant moving out and the new owner moving in.
If your only option is to sell to other investors then you need to ensure your asking price falls within their target rental yield figures, if these don’t stack up then you’ve lost potential buyers immediately. Ask your agent what buy to let investors are looking for and ask for their feedback on the target rental yields they are generally looking for. The formula is straight forward enough – Monthly rent, times by twelve (months in the year), divide this by the purchase price and then times it by one hundred to give a gross rental yield.