Selling a Tenanted Property?

Most people are familiar with the traditional route of selling a vacant property through an estate agent as it’s the method of sale most people choose when they move house. There is no reason why a tenanted property cannot be sold through an estate agent, it just requires the estate agent to find a property investor who’s prepared to pay a fair price. However, the issue some sellers encounter when they sell a tenanted property though an estate agent (or direct) is that the sale is at risk of falling through (or the price being reduced) because the contract of sale has only been sent to one buyer. A sale fall through or price reduction could be for any reason, including the possibility of the investor having found a better purchase elsewhere! When selling a tenanted property, public auction offers a very good alternative to a (private treaty) sale through an estate agent, not least because the fate of the sale is not at the mercy of the one, individual buyer. Auction offers the ideal way for property owners to sell at a fair price, in the quickest possible time.

When selling a tenanted property, it’s important to know what prospective buyers are looking for. There are 4 key points an investor will take into consideration when buying a property: – Rental income is obviously very important to an investor. The investor will take into account the cost of finance (buy-to-let mortgage) and other outgoings when calculating their return on investment. If you’re selling a property with a yield in excess of 5% in London or in excess of 9% anywhere else in the UK then that will be considered a good return. – Covenant strength of tenant – if you’re selling a property where the tenant has always paid their rent on time and there has been no history of problems, then that will look good to any prospective investor buyers. – Property type – some investors stay clear of certain types property, regardless of the rental yield. For example, some high-rise ex-local authority properties can be difficult to re-finance so won’t be as attractive from an investment standpoint. – Capital appreciation – for some investors this is the most important factor. Many overseas buyers invest in vacant London property (without any rental income) because they know it represents a secure investment.

We’re often approached by property landlords who’ve run into problems with their tenants and have the option of taking legal action against the tenant, or selling the property at auction with the problem tenant still in place. Typical tenant issues include rent arrears, anti-social behaviour, damage to property or subletting the property without permission. Although there are property investors that specialise in dealing with problem tenants, the price they offer will be below market value. Selling a tenanted property at auction can be a quick and straightforward way to off-load a problem, but it’s always worth looking at your options before selling at a discount; negotiating with the tenant or threatening/taking legal action against the tenant are always worth exploring first. It’s worth noting that selling by auction is by no means restricted to problem situations. There are many perfectly good tenanted properties sold at auction, for the reasons stated in the first paragraph.

Why not request a free pre-auction appraisal for your property? It only takes a few seconds. Or feel free to call us on 0800 862 0206 if you have any questions.