Selling a Buy to Let Property

If you’re selling a buy to let property there’s a lot to consider before putting it on the market, from whether you should sell it vacant or tenanted, what it will cost you and the best way to sell.

Rebecca Gamble Consumer Journalist

There’s a lot to consider when selling a buy to let property, because as well as the usual selling and legal process, you’ll also have to make decisions like whether to sell the property vacant or with tenants. And you’ll need to calculate the costs of selling too. So read on….

Selling a Buy to Let property with tenants

Assuming your tenants don’t want to or can’t buy the property, you’ll need to decide whether you want to sell as a tenanted Buy to Let or sell your rental property vacant. And there are a number of factors you’ll need to weigh up when making the decision.

If you’re selling a buy to let property with tenants in situ:

• You’ll continue to receive rent from your tenants until the property is sold. And the new landlord will start receiving rent as soon as they buy the property which will be appealing to them.
• But by doing this you’ll limit your pool of potential buyers. This means you may achieve a lower sale price than if you were selling a buy to let property vacant.
• You’ll also face administrative hurdles. For example, you’ll need to provide the tenancy agreement to the new landlord, as well as gas safety certificates and Right to Rent records.

Selling a vacant Buy to Let property

If selling a vacant Buy to Let property is more appealing to you, there are also factors you’ll need to consider:

• Selling a vacant buy to let property means you’ll be able to reach a wider group of potential buyers, such as first time buyers and home movers rather than just Buy to Let investors. This means you may sell it for a higher price.
• However, there are steps you’ll need to take if you want to do this. If you’re planning to evict your tenants before selling the buy to let property, you must follow the correct procedures.
• Once your property is vacant you may need to spend some money redecorating it before selling it. Read our guide with tips on how to make your home more valuable and sell faster.
• And an important consideration of selling a vacant buy to let is that you won’t receive any rent from when your tenants move out until you sell the property. So if you have a Buy to Let mortgage on the property you’ll need to ensure you have the cash to make the repayments.

Whichever option you choose, it’s important to keep on good terms with your tenants, especially if they’re still going to be living in the property when you’re doing viewings.

Is a short-term let an option while selling?

If you have a Buy to Let mortgage, you’ll need to keep up repayments while you sell your property, so you may want to consider whether a short-term let is possible whilst you sell your home.

Our partners at Flyp.co offer a service where they handle the sale of your vacant property and sort a short term let for you at the same time. They also manage all of the headache of viewings and ensure that the property is cleaned and viewing-ready at all times. They also have a transformation service if the property needs any enhancements or staging to help it sell. It may be an option to consider to help you to continue to earn rent and sell at the same time. Flyp’s selling service also provides access to multiple agents at a sole agency fee, so they are worth comparing against other local estate agents.

Get in touch with our partners at Flyp to find out more:

Mortgage implications of selling a Buy to Let property

When selling a rental property in the UK, it’s important to consider the mortgage implications. Depending on your Buy to Let mortgage deal, you may have to pay a hefty early repayment charge if you plan to sell the property before the end of your mortgage’s fixed period. These could be as high as 5%, depending on the type of deal and how far into it you are when you sell.

So check the figures carefully. You may find it useful to speak to a fee-free mortgage broker about your options. If you do have an early repayment charge to pay, and if you have, say 8 months left until your deal ends, you may prefer to wait for several months before putting the property on the market so that you can time the sale to avoid having to pay the fee.

Get no obligation fee free advice on remortgaging your buy to let property with our partners at L&C.

Costs of selling a Buy to Let property

There are a number of costs of selling a Buy to Let property to consider:

• Legal costs: You’ll need a conveyancing solicitor to look after the legal side of selling a Buy to Let property. See our guide to conveyancing fees for more detail. The best way to find the right conveyancer or solicitor for your purchase, is to make sure you shop around. You can get instant, no obligation conveyancing quotes today, enabling you to compare quotes and find the best deal.
• Estate agent fees: Estate agent fees typically range from 0.9%-3.6% depending on which estate agents you use, how many are selling your property – and how well you negotiate. So do your research. Try using our free tool to find and compare local estate agents to check typical fees, success rate & asking price achieved.
• Mortgage fees: Depending on the type of mortgage you have, you may need to pay mortgage fees such as an early repayment charge if you’re selling a buy to let before the initial period of your mortgage ends. If you are weighing up your options, our mortgage broker partners offer fee free advice.

What are my tenant’s rights if I choose to sell?

This will depend on what type of tenancy they have. You cannot change the terms of their tenancy and evict them just because you want to sell, so you must check their tenancy agreement.

Will I have to pay Capital Gains Tax when I sell?

If your Buy To Let property rises in value by the time you sell it, you may need to pay capital gains tax (CGT). Capital gains tax charged on second properties is 18% on gains made when selling the property for basic rate tax payers, while the rate for higher or additional rate taxpayers is 28%. This will reduce to 24% from April 2024. However, these rates are only payable on gains that exceed your capital gains allowance. The tax-free allowance is £6,000 per person in 2023-2024. Then down to £3,000 per person in the tax year 2024-2025. An independent financial/ tax adviser can give you their unbiased view on whether your sale could be exempt from CGT or how much you will need to pay.

Are there any deductions you can make to your Capital Gains Tax liability when selling a rental property?

Yes. You can reduce your CGT bill by off-setting costs of buying, selling or improving your property from your gain. These include stamp duty, estate agent and legal fees and costs of improvement works, for example for an extension (normal maintenance costs, such as decorating, do not count). It can be a good idea to get independent tax advice.

What is the best way to sell a rental property?

The best method of selling a Buy to Let property will depend on whether your priority is a quick sale or achieving the best price.

• Estate agents: Most landlords selling a Buy to Let property will sell via an estate agent who will advertise your property on the open market. You’ll reach the biggest audience this way and therefore have the biggest chance of achieving the highest price. However, as well as paying estate agent fees, if you need to sell the property quickly, you should take into account it typically takes around four months to sell a property. If you do plan to sell via an estate agent, make sure you get the best agent and negotiate on the fee. Read our guide on How to find the best estate agent for more information.

• Property Auction: If speed is of the essence, one way of guaranteeing that a sale doesn’t fall down is by selling at auction. Find out more in our guide How to sell your house at auction.

Can you avoid selling your Buy to Let? 

A major factor affecting the number of landlords thinking about selling a rental property in 2023 is the sharp increases in Buy to Let mortgage rates we’ve seen since the end of 2021. Buy to Let mortgage rates are higher than they’ve been for many years, making mortgage payments much more expensive each month.

And some landlords may face difficulties remortgaging a buy to let. But don’t assume you can’t remortgage your Buy to Let property. Take advice from a fee-free mortgage broker first. They may suggest options that mean keeping your Buy to Let property is still a viable way forward for you.

Get no obligation fee free advice on remortgaging your buy to let property from our partners at L&C.

Why are landlords selling buy to let properties?

As well as hikes in Buy to Let mortgage rates, there are other factors leading many landlords planning to sell up.

Loss of Mortgage interest income tax relief

In the past, landlords could offset mortgage interest and Buy To Let mortgage arrangement fees against their income tax bills at up to 45% for the highest earners.  However, this tax relief was phased out between 2017-2020 and has been reduced and capped at 20%, leaving landlords up to £2000 per year worse off than they were, based on typical rents. The loss of tax relief affected the financial viability of many buy-to-let properties.

Buy to Let stamp duty changes

Changes to buy to let stamp duty have also made it more expensive to invest in property. If you purchase a Buy To Let (and you already own a property), in England and Northern Ireland, you’ll need to pay the stamp duty surcharge of 3% on top of normal stamp duty rates. From 23rd September 2022 this is 3% on properties up to £250,000. Higher rates apply on the thresholds in higher bands. Find out more in our guide on stamp duty for buy-to-let.  

There is also a stamp duty surcharge on additional homes such as Buy To Let properties in Scotland and Wales. To calculate exactly how much stamp duty you will need to pay, use our stamp duty calculator.

Long void periods

While every landlord may face some periods when the property is vacant, if you find your property is empty for a long period it will be costing you money, especially if you have a Buy to Let mortgage. However, if you’re planning to sell a Buy to Let property, one advantage of this is that if it’s already empty you won’t need to go through the process of having to evict a tenant to sell it vacant.  

Bad tenants

Finding good tenants can be tricky. And if you have tenants who don’t look after the property or who don’t pay rent on time can, it can be a motivator to sell.

Weighing up whether Buy to Let is still a good investment? Get independent financial advice. Our handy tool will help you find a local Independent Financial Advisor you can trust.

Frequently Asked Questions