Loading...

Selling to your tenant, the advantages to gain and pitfalls to avoid

Selling to your tenant, the advantages to gain and pitfalls to avoid

Selling to your tenant, the advantages to gain and pitfalls to avoid

If the time has come to sell a buy to let property then it may seem like selling to the person - or people - currently living in it is an obvious move. Maybe you have had a request to consider selling to a tenant and they have made a pretty attractive offer. If this is something you're thinking about, what are the advantages and the potential pitfalls to look out for?

The advantages of selling to your tenant

  • An easy sale. You won't need to market the property to sell it or to pay fees to try and get it in front of people who might be looking to buy it. Instead, you already have a willing buyer.
  • No logistics to work out. If you're selling to your tenant then you won't need to deal with arranging viewings or handing over keys. There's also no need to consider the process of removing a sitting tenant or selling the property in the middle of a lease.
  • The current stamp duty cut. As of July this year there is no stamp duty to pay on home purchases (the 3% surcharge still applies when purchasing a buy to let). As a result a buying tenant will be paying less in purchasing costs and may be willing to consider a higher purchase price.
  • Selling your property to people who will take care of it. If you know the tenants love the property and really want to live there it can make the sale process much more straightforward in terms of peace of mind.

Pitfalls to avoid

  • Some tenants may look to avoid paying the market price for the property. They may justify this on the basis of lower costs for you and less hassle. The reality is that they are going to end up with a valuable asset and so should be paying the market price for it.
  • Accepting the market price for the property. You may find that if you do market the property more broadly someone out there is actually willing to pay more for it. So, it's important to work out what it's actually worth.
  • Tax and fee liabilities. These are not exactly pitfalls but make sure you're well informed about any tax that will arise on the sale, such as Capital Gains Tax (CGT). If you've been letting the property via an agent then you may also find that there is a fee to pay to the agent if that letting arrangement is converted into a sale.
  • A too-informal approach. If your tenants have been with you for some time and you know each other well then they may look to complete the sale informally, for example without the support of professionals. The justification for this is often to save money but it can go badly wrong. It's essential to ensure that you have the support of a good agent and conveyancer to make sure you can negotiate the right deal and that your interests are protected.

Selling to a tenant could work out well - it's something to consider and take some professional advice on.

21 August 2020Written by Andrew Blythe

Hear what our clients have to say

Declan

Google reviews

Francesca

Google reviews

Services

Residential lettings
We pride ourselves on being genuine industry experts, providing a positive experience, from enquiry to after care. Storeys focuses exclusively on lettings, and we value properties, we don’t just list them. Knowledge and innovation mean we can be competitive on costs while also delivering an individually tailored service.
Property management
Storeys is a bespoke offering based on the fundamental principle of value for money – we want happy customers. Paperless tech and eSigning deliver efficiency and convenience, no high street office minimises costs. The result is a streamlined service nimble enough to tailor what we do to suit your needs.
Valuation
Aesthetics, natural light, building quality, and overall finish – these aren’t ‘extras’ in a Storeys valuation, they’re as much a part of the process as size, condition and location. We look at individual property potential, not generic criteria. Factors like space for modern living arrangements, such as flexible working, are incorporated too. Our valuations are all the more accurate and successful for it. There is a perfect tenant for every property if you know how to find them.
Short-term lettings
Providing value for tenants and continuity for landlords, Storeys short-term lets run from 4 weeks to 6 months. We work with major London relocation teams and a global contacts network to match international tenants to perfect London properties.
Vacant property Management
We can manage your vacant property in-between tenancies or refurbishment, giving you peace of mind that the property is being looked after and inspected on a regular basis.
Superior Marketing
There is just no comparison between static photos and VR when it comes to property marketing. VR allows tenants to do a virtual walk around and get a realistic feel for the property - their expectations are grounded in reality, and properly managed. This makes VR a very effective tool, not just for generating interest and viewings but also converting those to offers. That’s why we partner with VRPM to create a virtual reality perspective for every property we handle.
Airbnb Management
We can manage your Airbnb account and make sure each booking runs smoothly, keys are always available for handover and the property is ready for the next occupation. This can run very well alongside our short-term corporate letting service.
Rent Protection
If your tenant defaults on the rent, Storeys have you covered. We also cover your legal expsenses and pay you rental income if your property is vacant whilst we remarket for new tenants. Don’t worry Storeys have your back.*ask a member of the team for more info. This service is included for every Storeys managed property.
Right Move
Zoopla
The Property Ombudsman Lettings
TDS
CMP