What to do if you need to sell in 2023
A lot has changed in the past 12 months. As well as a change of monarch and two new prime ministers, 2022 has seen the Bank of England raise the base interest rate no fewer than eight times, in a bid to curb inflation that soared to more than 11%.
With the latest increase adding another £50 a month to the cost of a typical tracker mortgage, more and more landlords will be feeling the pinch, and many might be considering slimming down their portfolios in 2023. As the official property sales partner of the NRLA, Movewise is on hand to help – but we're also aware that the UK is facing a potentially serious shortage of private rented property.
Here are four tips for landlords thinking of selling up next year.
1. Consider selling with tenants
Selling property with tenants in place has benefits all round: as a seller, you benefit from rental income right up to the point of sale; the buyer gets a guaranteed income from Day 1; and the tenants get to stay in their home. That said, there can be pitfalls when selling property with sitting tenants. Delays can often be caused by tenants refusing access to the property, so it pays to make sure you are on good terms with them. Reassure them that you do not intend to evict them, and consider offering a gift or discount on the rent in return for their co-operation.
However, while having good tenants in place will make a property attractive to investors, they will also have a keen eye on the yield, which brings us to my second tip:
2. Make sure your rent is realistic
Rent increases are never going to be popular, but price inflation is a fact of life at the moment. Even with the current cooling down of the property market, house prices have risen by more than 20% since the start of the pandemic. However, average rents have not kept pace with this rise: over the same period they have risen by 6.8%, according to government statistics. This is largely down to long-term lets, which make up about 75% of the market. By contrast, the cost of new lets has risen by 12% in the past 12 months alone, according to Zoopla. Difficult as it may be, increasing rents by a realistic amount is still likely to be more affordable for tenants than finding a new home to rent in the current market.
3. Use the right sale method
Over the last couple of years, demand for property has outstripped supply and the majority of homes for sale have been snapped up. Now that is changing, so sellers need to be more careful about how they sell. For rental property, selling through the nearest high-street agent may not be the best option, especially if you want to sell with tenants. Many estate agents are not used to selling tenanted property and will encourage you to offer vacant possession. If you do want to sell through an agent, it pays to do your research and use one who is experienced in selling rental properties. At Movewise we can do that research for you and provide recommendations tailored to each property.
An alternative sale route is to market directly to property investors. While some landlords may be ready to slim down their portfolios or exit the market altogether, there are still plenty of buyers looking to capitalise on the increasing shortage of property for rent in many parts of the country. Again, Movewise can offer this option to landlords.
4. Be wary of cash buyers
There are lots of property buying companies offering a "guaranteed quick sale", hoping to tempt desperate sellers. Our advice is that there is almost always a better way. After all, if these companies can afford to take the property off your hands (and at a hefty discount to market value), they must be getting value from it – and that value should be going to you as the owner of the asset. As a partner of the NRLA, our aim is always to get the best deal for landlords, as well as keeping property within the private rented sector wherever possible. So we are always happy to advise on the best approach to selling property, whether that is through an agent, direct sales to other landlords, or auction. In rare cases it may be that a quick cash sale is needed, in which case we can refer you to a recommended firm.
If you'd like to speak to one of our team to find out how we can help you in 2023, you can call us on 020 3409 4350 or fill in our contact form here and we'll get right back to you.
