How to sell my property portfolio
“I want to sell my property portfolio”
There may be a number of different reasons why you’re considering selling your property portfolio. Perhaps you’re keen to offload a number of your less profitable properties in favour of investments with a better return? Maybe you want to minimise your financial vulnerabilities in light of rising interest rates and a predicted recession? Perhaps you’ve decided that it’s time to retire from property investment and you want to cash in your properties? Whatever your reason from wanting to sell your property portfolio, this guide will take you through the options available to you and highlight what you should consider along the way.
In this guide
Why sell your property portfolio?
According to recent research, an increasing number of landlords are selling up. Propertymark claims that the number of available rental properties has halved over the last three years, largely due to landlords selling their rental properties.
But why are so many buy-to-let investors choosing to sell their property portfolios?
There have been many legislative changes for landlords over the last few years. Many, such as the additional 3% stamp duty, mortgage interest relief changes and scrapping of the ‘wear and tear’ allowance, have impacted the profitability of buy-to-let property investments. The government’s attempts to improve the private rented sector and protect tenants have been widely criticised and made things untenable in the eyes of many landlords. This is illustrated by a new poll of landlords that says a quarter of them will sell up if Section 21 no fault evictions are abolished, as proposed. This figure rises to 32% where landlord have large portfolios of more than 20 properties.
Rising interest rates and inflation
Over the last 18 months, the Bank of England has increased their base interest rate from 0.1% to 1.75%. The interest rate was increased by 0.5% in July 2022 – the highest single rise in nearly 30 years – and further increases are predicted for the coming months. Rising interest rates, and the resulting impact on mortgage costs, would be enough to concern many property investors, but there are other issues to consider. The reason interest rates have been rising so rapidly is that they’re being used to try to stem rapidly rising inflation.
Inflation is currently 9.4%, which is a 40-year high. Even with the interest rate rises, some economists are predicting that inflation could reach 22% by next year. This will have an impact on rent payment, as Generation Rent group warn that millions of tenants may not be able to pay their rent this winter.
Retirement or moving on to different investments
There will always be a natural movement of landlords entering and exiting the private rented sector. You may be reaching retirement or just feel that a buy-to-let property portfolio is no longer the right investment fit for you.
Things to consider before you sell your property portfolio
Before you sell your property portfolio there are several things you will need to consider.
Should I sell my property portfolio as a whole or split it?
Whether it’s better for you to sell your property portfolio as a whole or as individual properties will depend on how large your property portfolio is. If you have just a handful of properties, it may be manageable for you to sell the properties individually and chase the best price for each one. If you have a larger portfolio, the extra you may achieve from individual sales may not be worth the time and hassle involved in separating your portfolio.
Should I sell to another buy-to-let investor or on the open market?
Selling a property on the open market will mean you have a wider net of potential buyers. This will mean more demand for the property and therefore potentially a higher sale price. To sell on the open market, however, the property will need to be vacant. No fault evictions under Section 21 can be difficult and time consuming and, if proposed legislation goes ahead, they may soon be banned. If your tenant moves out before the sale completes, you will also be left to cover the expense of a vacant property.
Selling to another buy-to-let investor means your audience of potential buyers will be limited, and therefore you may achieve a lower selling price, but you will be able to maintain the income the property provides until the day the sale completes.
What’s more important to me, the price I achieve for my properties or how quickly I sell them?
When you think about selling your property portfolio, it’s important to consider whether price or speed are your top priority. You’re more likely to achieve a quicker and more straightforward sale by selling your property portfolio as a whole, but you may well achieve more for the properties by selling them separately.
How to sell your property portfolio if some of the properties are tenanted
If some of your properties are tenanted, you will need to decide what to do with them before you sell. You can either serve your tenant notice (if the conditions of their tenancy allow you to do so) or decide to sell your properties with tenants in-situ to other investors. If you have some vacant properties and some with tenants, you may choose to split your property portfolio. Those that are vacant can be sold on the open market and those that are tenanted can be sold as a smaller property portfolio to another investor (or investors).
Ways to sell your property portfolio quickly
Currently, a traditional property sale takes around 3-6 months from offer acceptance to completion. Of those agreed sales, around one in three will fall through before completion. If you can’t afford the time or uncertainty associated with a traditional property sale, you may want to consider your options for different ways to sell your property portfolio quickly.
Sell your property portfolio with a property buying company
Selling your property portfolio to a property buying company is likely to be the quickest and most convenient way to sell. Whether you want to sell just one of your properties or your whole portfolio, a cash property buying company should be able to buy on a date of your choice and in as little as a week. With a team of property consultants to manage the sales through to completion, a cash property buying company offers a hassle-free solution that will take up very little of your time. A genuine company will buy your properties at a discount of around 15%, so it won’t be the right fit for those wanting to achieve market value for their properties, but it does offer a quick and stress-free solution for those who are keen for a fast and simple sale.
Sell your property portfolio with a property auction
Property auction can be a great way to sell if your properties will appeal to other investors. Setting a reserve price means you can ensure your properties don’t sell for less than you’ll be happy with, but it is worth noting that only around 70% of auction properties successfully sell on auction day. So, although property auctions do give you the potential to achieve a higher price for your properties if there is lots of interest in them, there are no guarantees on sale price or success.
Sell your property portfolio with an investor-to-investor sales agency
If you want to sell your properties with tenants in situ, you could explore selling them via an investor-to-investor sales agency. Although the process itself is much like selling on the open market via a traditional estate agent, an agency of this type deals exclusively with investors and therefore will maximise your audience of potential buyers. Having access to a larger audience of investors will likely maximise your chances of achieving the highest possible price for your tenanted properties, but as it’s effectively an open market sale you will potentially need to deal with the uncertainty that brings, and it may be a more time-consuming sale process.
If you have a portfolio of former buy-to-let properties to sell and would like to explore your options, call Quick Move Now on 0800 068 3366 to discuss a no-obligation cash offer.
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