Are you concerned that the new rules and regulations coming into play for landlords may make it all not worthwhile? If you’re considering your exit strategy, have a read of this first to see if it’s right for you.
What does the survey show?
Simply Business, an insurer, conducted a survey looking into landlords’ plans in 2020.
They questioned 800 landlords and discovered that a quarter are considering selling at least one property this year. Their main reasons were tax relief changes and government licensing reforms.
One third of buy-to-let owners claimed they had seen their rental yields fall last year, and a quarter said they expected yields to decrease in 2020.
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Decision factors if you’re selling
If you have decided to bite the bullet and sell your property, there are a few things to think about before you launch into it. You need to have a thorough plan in place!
Are you going to sell your property vacant or with tenants already residing there?
If you’re selling your property containing the tenants, you’re likely to attract an investor as a buyer. This means they could be buying outright without a mortgage, and therefore you may be looking at a cash sale without a chain. This means it’s more secure. A tenanted property can also attract investors more quickly because they wouldn’t need to spend money looking for people to rent the home, and they will be receiving income from day one. However, a property which comes with tenants does limit the pool of possible buyers, because anyone looking to buy to live in themselves couldn’t consider it.
If you plan to sell your property empty, there will be more potential buyers on the open market. However, you’d have to hold your horses until the tenancy agreement ends for any current people living in the property, and this will cause the building to be void while you’re trying to sell it.
As with many things, there are costs involved with selling your buy-to-let property. These costs include estate agents fees, and you may be liable to any council tax fees while the property is void.
As well as costs associated with the actual sales process, you may also need to give the property a bit of TLC before you try and sell it. This could range from just a lick of paint, or maybe it needs new doors and a professional clean.
Remortgaging could be an option if you aren’t certain yet that you want to sell up. This could allow you to refinance your property portfolio.
Currently, the buy-to-let mortgages are at great rates of around 3% so it could be a good time to seriously consider remortgaging. If you do, speak to a mortgage adviser to help you get the best deal you can.
What about the opposite; purchasing more buy-to-lets?
It was found that 8/10 landlords aren’t looking at purchasing any other buy-to-let homes this year. However, if you are willing and a bit of a gambler, there could be some great opportunities.
We’re seeing a slower market with less people purchasing, but this can be great for those wanting to grab a bargain. However, if you do succeed in this, you’d need to ensure that you were making a decent rental yield.
Here’s a checklist if you’re looking for a new property to let out:
- Check the local area, are house prices increasing or decreasing?
- Does the property sit comfortably within your budget, or is it a stretch?
- What do tenants in the area want in a property, and what type of tenants are they?
- How much are similar properties being rented out for, and is this cost rising or falling?
I began writing for Property Press Online in October 2019. Particular areas of interest are housing market news and new developments in the market.