Wait or Sell?

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Dilemmas – when owning a BTL.

So the government announce yet more changes for landlords making it harder unless you are a professional. Probably not that good for a professional either really.

I have been pondering selling my BTL for a while. I wanted to sell in 2020 but could not due to the pandemic and the ban on evictions during that period and found the rent useful for my own living costs. The tenancy renewal date does not fall well which has hinder my options. I have therefore held on but now looking to sell which looks like the wrong timing as the recession news builds and buyers potentially start to disappear. The new rules being proposed recently is making me want to sell, I am not a professional landlord and do not want the hassle any more. I don’t have multiple properties.

I browsed the properties up for sale in the surrounding area and there isn’t much up at the moment. If I look at sold properties I can see that a few have sold since the start of the year so it looks like there is a lack of properties in the area at the moment. I did see an investment property for sale nearby with tenant in situ but it has now disappeared off the listings and I cannot see it marked as sold so not sure if it has been sold or withdrawn from the market.

I called my letting agent and discussed selling up, “The market is active”. They said I would get the best price by selling as a vacant, no chain property. They gave me a quick valuation over the phone which aligned with my guess – which is less than the prices being quoted on property sites (approx. 10% less). The agent did a quick drive by to have a look at the property and said that an actual valuation would confirm the price. The current tenancy is not up for renewal until November and I would have to serve a Section 21 in September to try and obtain the property back to sell. ( I say ‘try’ as the new rules being discussed by the UK government may hinder this too).

I asked about selling the property with tenant in situ and they said there were a few landlords looking and had a few on their books, mainly ones based in the SE of England but the yield is only 5% based on estimated selling price. It may not be attractive to them. They would want to buy at a lower price point than a first time buyer so “expect to get less” when selling to investors only. They said that by doing the valuation and telling the tenant, it might strike fear in the tenant. I am not sure what they were driving at there? Would the tenant kick up a stink/cause trouble or move out at the end of the tenancy leaving an empty property?

Is it actually a bad time to sell?

I was not sure if the agent’s views are valid or not? I had a look and they have one nearby property up for sale on their site and its a similar size, empty, no chain and up for a slightly lower price than mine. It needs some work doing and does not seem as appealing as mine (I am biased). I am pondering testing the water as its a ‘no sale, no fee‘ process with a free valuation so I can test the market and see what will happen. I can see how the tenant reacts too.

At the moment if it sells at my target price then I would have made more interest on the investment than I would if I had left the money in a bank account. The property would make a little bit of capital growth and that would cover the selling costs/taxes and leave a little left as a small profit.

Am I missing something? Could I do something better? Any tips?

Will the recession hit and buyers disappear in coming months?

Will this become a bad investment? Could I end up making a loss by having to cover a void property during a stagnant UK property market?

UPDATE: I had a dig around and in the area most other houses are renting out at about 5% yield so mine seems to fit the norm for the area. Flats seems to be providing a 6% or 7% gross yield, after ground rents and/or service charges to cover their net yields would also end up being around 5-6%. I found a few flats with tenants in situ up for sale in the area for investors. House-wise most seem to be vacant or with tenants about to leave. There is one rental house up for auction with a min price which equates to a 5% rental yield.

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