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 with tenants in situ. It doesn’t necessarily have to be difficult but unless you take the right steps, it can be somewhat hazardous.
Tenants have rights and just because you wish to sell the property, it doesn’t give you the green light to disregard your legal responsibilities. So, it is essential that where possible, to keep the tenant on your side. I’m not one for the promotion of evicting tenants unnecessarily. 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 advise that you take a good look at the agreement you have with your tenant. Find out 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 visit. Having done this, the tenant must comply with your request. The absence of such a 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.
When your property is managed by an agent, communicate your intentions clearly by telling them you want to sell with tenants in situ. This will ensure your agent is 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. My advice here would be to discuss with your agent as to the type of buyer you are trying to attract.
One of the options will be to sell to another landlord, this can work well. 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.
If your only option is to sell to investors then the price falls within their target rental yield. 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 the target rental yields they are looking for.
A quick and easy formula to find out a rental yield for your property. 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.
If you are thinking of buying or selling with tenants in situ, please get in touch. firstname.lastname@example.org or 02392 550555.