What to do when selling a rental property
A rental property is a great way to supplement your income or hold on to an asset, but it is likely that the time will come when you decide to sell it and move on.
A rental property is a great way to supplement your income or hold on to an asset, but it is likely that the time will come when you decide to sell it and move on.
This is not always as straight-forward as it might seem, but to explain further, Mark Burns, Director of Pure Investor, specialists in UK property investment looks at all the things that you need to consider before you can cash in.
Tenants
The key factor with any rental property is your tenants. If the property is unoccupied then you can sell it as normal, however, if you have tenants in the house then you need to decide what to do with them. You may want to serve them notice and sell it as a vacant property if your contract allows it, but as you have no idea how longer it will take to sell, you could find yourself missing out on several months of rental income.
It is possible to sell with the tenants still in situ, but this needs to be managed carefully. It can cause complications with access to the property for maintenance or for viewings. It also means that only other buy-to-let landlords will be interested in investing in the property, which does limit your potential market. Depending on the demand in the area, this may be a popular issue with other landlords looking for an opportunity.
If you have tenants in place, you should make sure that all of your rental documents are up to date including the EPC, gas safety certificate and electrical safety certificates.
Preparing the property
We all want to make a property look its best before putting it on the market, even if it is for rental purposes. However, if your house is currently occupied then any maintenance work that you wish to carry out becomes a lot more difficult. You have to think about the disruption to the tenants and try to make this as easy as possible for them.
Your tenants are under no obligation to tidy up and fill the house with the smell of baking bread whenever you have a viewing so you will need to try and maintain good relationships with them during this time. It is still their home, and they have the right to enjoy it without a steady flow of visitors. You should therefore give them sufficient notice of any viewings to try and gain their co-operation and goodwill.
Paperwork
There are many things that you should do to sell a rental property that are the same as if you were selling your main home. You will need to inform your mortgage provider of your intention to sell and ask them for a final settlement figure.
You will also need to instruct an estate agent, and if selling with tenants, it might be worth looking for one who specialises in selling rental properties. Once the property is up for sale, you will need to instruct a conveyancer who can provide you with the necessary paperwork to complete in advance of the sale.
Once the sale is made and contracts have been completed and exchanged, you will need to provide your tenants with a date by which they need to have moved out or hand over the rental paperwork to the new owner.
If you sell a rental property for profit then you may be liable to pay Capital Gains Tax, so make sure that you are aware of what you will need to pay.
Selling a property is always a complicated business, but when there are tenants at stake, you need to think carefully about the best way to proceed and what you are aiming to get from the property before you make the sale.
About the Creator
Mark Burns
Mark Burns is the managing director of property investment company Pure Investor, who specialise in property investment in the UK and property investment in Manchester, Liverpool, Sheffield and Leeds.
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