Are you looking to sell your buy-to-let property? It’s a big decision, and you need to be properly prepared.
Before selling your buy-to-let property, make sure you understand the issues and know how to begin.
Here, we’ve put together a list of the basic steps required to sell a buy-to-let property. Below, you’ll find more information on specific factors such as tax and selling with tenants.
First, you need to get an idea of what your property is worth. It may be that you are selling because you have to, but you should be aware of changes in the market and the direction of property prices. S
ale prices are going down in many parts of the country, and the market is saturated in places like London. Do your research first and make sure that you know what your property might fetch.
Of course, selling your property might be more complicated if it currently has tenants. However, it is still possible to sell a buy-to-let property with tenants. You’ll need to take some extra steps though – read more in the dedicated section below.
It’s crucial that you understand the tax implications of selling your buy-to-let property, and that you remember that they will be different to the implications of selling your main home. Read the section below for more on the tax aspects.
There’s no legal requirement to sell your property through an estate agent, but most sellers choose to do so for ease and security. You should think carefully before making a choice of agent.
First, it’s likely that you’ll want a firm with solid knowledge of the local area and market. However, if you’re selling a tenanted property, you might also choose to go with an agent that has experience specifically in this field.
You’ll need a solicitor or conveyancer to help you with the legal side of the sale, and to transfer the ownership. Remember that there will be a charge for this; you should make sure that you get a range of quotes.
You need to make sure that your property is in a suitable condition for viewings. This can be more complicated if the property is tenanted. Either way, you should consider fixing any minor snags and potentially adding a new lick of paint.
Check out our top rental property renovation tips for a little more information.
Once you have an offer, you’ll need to decide whether to accept or negotiate it. Remember that your agent must forward to you every offer received.
You’re not legally obliged to follow through on an offer that you accept, but buyers reasonably take a very dim view if you fail to do so.
Once you’re committed, you exchange contracts. This is the point at which the sale becomes legally binding.
After this comes completion, when payment is accepted, keys change hands, and the ownership is legally transferred.
Aside from the rental income generated on your buy-to-let property, you will also have to pay Capital Gains Tax.
If you sell your property for more than you paid for it, less stamp duty and agent and solicitor fees, there will be a CGT liability.
For the 2017/18 tax year, your first £11,300 of capital gains are tax free. After that, higher rate taxpayers pay 28 per cent on residential property. Basic rate taxpayers’ liability will depend on a number of other factors; guidance is available here.
It may be more complicated to sell your buy-to-let property if it currently has tenants in it. However, it’s still possible, and indeed is often preferred as you can continue to receive rental income while the property is on the market.
If you are selling your buy-to-let property with tenants, there are two parties you need to deal with:
You need to explain to your tenants what is happening from at the earliest possible opportunity.
You should give your reasons for selling, and reassure them that their tenancy still stands. You may also consider offering them the chance to buy the property; even if they are not in a position to do so, this will help to show them that you are acting in good faith.
You need your tenants on side, especially during the viewing period, so try to remain reasonable and courteous throughout.
If you’re selling a tenanted property, you’re probably looking to sell to another landlord.
In these cases, you should be prepared for the buyer to carefully examine the terms of the existing tenancy, and the tenants themselves – they may, for example, want to carry out their own referencing.
Again, as we explored earlier, if you’re selling a tenanted property you may wish to find an estate agent who is experienced in this type of transaction.
Having trouble selling your buy-to-let property? Let us know below.
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