Selling Ex-Rental Property: Is it as Easy as Falling Off a Log?

As you know, we’re enthusiasts when it comes to selling property with tenants in-situ; it makes so much sense for landlords! However, it’s not always the best option, so when does it make sense to sell with vacant possession?

How much preparation is enough? Does the cost justify the reward? Who do you get to sell your property – a high street estate agent or a specialist? Indeed, are there any specialists who focus on selling ex-rentals?

As property professionals who’ve faced all these questions before, we’re going to look at your options and the potential pitfalls when you decide to sell your rental property as a vacant possession.

Why sell with vacant possession?

We’re far from alone in suggesting that selling with tenants in situ is often the best option for landlords, however we would be disingenuous if we suggested that it was the only option, regardless of the landlord’s circumstances.

To understand which is the better route, you need to appreciate that someone willing to buy a property with a sitting tenant is, by default, a property investor. It’s not an attractive option to anyone else.

Therefore the numbers need to add up, and landlords will sometimes find themselves owning a property where the numbers no longer add up.

Maybe the rent has remained low, there are good reasons why this might be – the eternal income vs capital growth argument may come into play here.

Alternatively, wider economic influences may be having an effect, making it impossible to raise the rent sufficiently to make it attractive to a buyer, without seriously jeopardising your ability to attract a tenant.

At this point, you may be looking at a de facto vacant-possession sale because you cannot make the property pay as a rental.

It’s important to study the numbers carefully before making a decision either way.

As we’ve discussed in previous blogs, you may have to do a certain amount of work to your property in order to see the best return on your investment when selling on the open market.

That might be no more than a professional deep-cleaning of the property, but it might be redecoration and possibly other work as well. All of those costs have to be factored into the equation.

In addition, a vacant property being prepared for sale isn’t generating any income, or covering its costs, so time may be of the essence for you. And just to cheer you a little further, capital gains tax may also be an issue.

All of these need to be taken into account, and literally accounted for, before you can make a decision about the way forward.

Selling ex-rental property

In theory, having taken vacant possession of your property, selling it is as simple as selling any other property on the open market.

To find out if this is the case, we spoke to Danielle Hunterof Macwood Properties, an Edinburgh-based estate agency which, in addition to the traditional business of selling people’s homes, specialises in selling ex-rental properties.

“Often we find that selling ex-rental properties require a little bit of TLC prior to the sale, but in the current climate it isn’t usually the best idea to spend too much money on renovations when a sale is imminent.

We work closely with sellers, letting agents, and a selection of trusted contractors to come up with the most cost-effective solutions to deliver the best results in terms of the overall property presentation.

We try to maximise returns by looking at what is essential vs what might be nice to have, and finding a solution which we think works well across the board to give the property broad appeal on the sales market, across various buyer groups.

At times we may actually recommend doing no work and selling the property as a project – there are discerning buyers out there who are looking for this type of purchase, although this is a smaller buyer market so isn’t always the best option. 

It can be tricky to create a homely and welcoming atmosphere in a rental home which has been designed to be a blank-canvas for incoming tenants, whereas this is naturally fulfilled in occupied homes.

We work with excellent suppliers who can help with full or partial property staging to help bring homes to life and set the right tone, helping potential buyers to visualise themselves living in the space.

Virtual staging is also a great option for unfurnished properties, offering flexibility on presentation and layout, along with lots of different styling options.  

Presenting the property in the right way is absolutely key, and we start by considering who the most likely buyers will be to help guide our recommendations on presentation and property marketing.

What an investor buyer may be looking for could be very different to a first-time buyer, so starting with the end goal in mind is a good way to approach the planning, preparation and marketing of your property.

Our experience has shown us what works (and what doesn’t), and we always take an honest, measured approach with realistic expectations.”

Advice from the property pros

We stand by our predilection for sales with tenants in-situ as more often than not they represent the best business option for landlords, however, there are times where that isn’t the case.

When selling ex-rental property on the open market is the better option, doing your sums and involving an estate agency which understands the particular challenges that can arise with ex-rental homes is your best bet.

Whilst it’s true that an estate agent could handle the sale on your behalf – and you may have a preferred agent with whom you’ve previously worked – there’s no doubt that in this, as in some much else, specialists can help you achieve more.

This is especially true when geo-political shenanigans in the MIddle East are threatening to soften the UK house market.

In summary…

Theoretically, selling ex-rental property is as simple as achieving vacant possession and offering it on the open market via an agent of your choosing.

In practice, as is often true of so much in the property investment sphere, there are considerations to be had and complications to be dealt with.

Some of those considerations we can help with and we’d encourage you to reach out and discuss your plans and proposals with us – we’re always happy to make time to discuss how to achieve the best outcome for you.

If selling onto the open market is the better option, a dedicated agency such as Macwood can both make the process smoother and less traumatic whilst ensuring that you realise the best return on your investment.

Thanks for reading! This is a subject about which little is written, the underlying assumption we guess is that you simply wave your last tenants goodbye and get the property sold.

However, we take the view that there is always a better, or at least optimal, way to approach property investment’s challenges, whether that’s finding your first investment property or finally letting one go.

Written by Chris Wood, MD & Founder of Portolio

Get in touch on 07812 164 842 or email [email protected]