Do I sell house to tenants

[Movingon2024]

Asking here as no-one else to ask for advice really.

moved abroad 2024. Uk house rented to some lovely tenants. Is in a v desirable area and a v nice property.

trnants approached after Xmas and asked to buy the house. Tenancy ends November.
they made an offer of 420, I am out of touch w uk housing market so asked for EA valuations. Came back at 500-550.

called both EAs and asked for reasons for valuations. They both said local market has increased significantly in last year linked to changed schools admission criteria (local schools are outstanding). Both said 500 would be low offer for the property.

informed tenants who then increased offer to 485. Estate agent fees (I asked) are around 1 per cent.

am very torn. Have accepted that the house needs to be sold, it’s too big for me now that kids have moved on. The tenants are a lovely family and would be great owners of it.

But the price difference if it sold at 550 would make a massive difference to our lives - I could give the kids some cash to help them with a house deposit of their own for example.

Any advice? Said I would get back to them by end weekend. thankyou so much.

Hmm I'm not sure I'd risk a guaranteed easy sale for £15k...

I don’t understand why you would gift your tenants th price difference and not your children. It could also be life changing for your children and who knows what is around the corner for any of us.

i m saying this as someone who has really struggled to get on the housing ladder.
there are many great tenants and may families that may love to buy your property. However if I could insure to give my children a nest egg however large or small I would choose that.

put it on the market and get going rate for it, offer tenants first option but keep a broad eye on offers and best prices.

Yes, apologies. You’re quite right landlords must serve a tenant a section 8 notice 4 months, rather than the current 2 months, in advance of eviction. It is the tenants that must give 2 months notice to end a tenancy which is up from the current 1 months notice.
Don’t know who will police it other than Local Government who have been given new enforcement powers and probably no resources to deploy them!
Under the circumstances it sounds like OP has drawn a wise and low risk position. A bird in the hand is worth 2 in the bush. Any delays in completing the sale could soon consume any potential extra £1000s gained by putting it on the open market. Not to mention all the additional stress! Seems like a good outcome.

It's stressful selling properties and dealing with estate agents etc. I advise you to look closely at Rightmove's and Zoopla's data. They have records of prices achieved and you can watch how fast properties in this locale are being sold. I think I'd sign up with them now so you can keep a running total of current prices and interest, whilst you consider your next move. I'd seriously consider selling to your tenants and circumvent all the noise around selling. Also it's nice to sell to and deal with nice people!

Just thinking about tenant buying is less likely to delay the sale of faff around. They also don't have the issues of a property to sell and a chain that could collapse.

I think its a no brainer. Yes you could evict them and put it on the open market but then you have issues of no tenant paying rent and your liable for council tax and insurance etc etc.
And you might not grt what you are hoping for.

No EA's don't always overestimate. We've always priced ours at the price we wanted to achieve with a knowledge of the local market. Know your value!

Sometimes EA's just want throughput/turnover and will underprice the property to try to sell quickly knowing full well the house is desirable due to the high rating schools.
A quick sale, quids in!

Given OP has likely informed the EA's she's living abroad, she's already at a disadvantage. If the house is put onto the open market likely the EA will be doing the viewings. The person doing the viewings could be a 19 yr old inexperienced salesperson the boss sends out on the day. You'd be amazed!

EA's are not working for you, you have to be on the case ALL the time. They are in business for profit.

If you live abroad and are ever intending to return don’t sell it. You’re very unlikely to ever be able to buy again.
or buy something smaller with the proceeds and rent it out again.

Get them to increase their offer to align with valuations or put on the open market.

If the area is as you said your house will sell quickly for the price you have been told it's worth. If you sell to the tenants 18 months of renting to them will cost you dearly.

Lots are saying it will be an easy sale, you don't know that. Do the tenants have an agreement on principle or proof of available funds? Could be total fantasists, you may get down the line and they reduce their offer or pull out same as anyone else they may be about to mess you around.

Also no reason for you to lose rent while selling, reduce their rent so that they will allow viewers around and then they will be happy and you won't have an empty property. If it's £2k reduce to 1.5 and they allow the EA to show people around.

Put the house on the market.
See what actual hard offers you get - agents often exaggerate.
Check whether letting agency contract covers sales too, which would be a pain but is entirely possible.
Then reconsider.

(Fwiw, I don’t like the very low initial offer they made when they thought you were aboard and out of touch.)

It's the tenants that'll be paying the stamp duty, not OP, so it will be THEIR main residence.

I would definitely accept the £485k offer. The potential uplift to a higher sale price is not at all guaranteed and would take enormous effort and expense to achieve and I don't homestly think you would be better off.

To achieve 550k you would need to have the tenants gone before you market thr property, and have perhaps a year with no rent coming in but still paying running costs, and you would need to spend money to style and present the houss to best effect. Without these steps, offers will be much lower.

Marketing and selling a property is stressful hard work. Selling to a tenant is so much less hassle that the relatively low drop in headline sale price is worth it for the additional quality of life you will enjoy more due to avoiding that pain.

Before you do anything, have you checked the contract you have with letting agency? Because you might be liable for a fee if the tenants buy the house as they introduced them.. it might be as much as a normal EA selling fee - especially if the agency is part of an EA business. I’d also establish with your tenants if they have a mortgage in principle arranged because all of this is conjecture until you have all of the facts. You say you’ve spent £100k on improvements on a property you bought for £360k, so your base level for your return on investment starts at £460k, then add in all of your other fees that you incurred to purchase and will incur to sell including your legal fees to establish your minimum sale price. Your buyers stamp duty won’t be affected by your sales price because it is over £250k (£300k if they are a FTB) and less than £925k (assuming the house is in England). I’d also have your solicitor lay out clearly to you the specific circumstances relating to selling to a tenant in situ to ensure your protection and compliance. Good luck!

It sounds to me like you'd have no probs renting if the tenants left. They don't want to leave either.
They're maybe asking you to take account of rent they've already paid in low balling the price. I wouldn't accept the offer.
A compromise is to agree that you get 2 estate agent valuations and take the average price.

Remember though, without property in the UK you will struggle to come back.

Thanks a lot for this, I’ll check the contract tonight.
i’m going to re-do the maths and see if purchase price + investment into it + EA fee + EA who introduced the tenants’ fee = more or less than 50Ok.
from what I’m reading I do need to think w business head more. I am quite a people pleaser plus am very emotionally attached to the house - was refuge for me and the kids after escaping abusive marriage plus first one I’d ever bought (lived in ex’s property before that) / and it’s been a hard enough decision to let it go.

Yes, on UK property, I thought to buy somewhere smaller and more manageable with the proceeds, and also rent it out.

yes it’s true that initial offer was only 515 - that is very low. And also true that they must know local market.
also suggestion to offer them rent reduction to allow people around - Thankyou.
erring more towards open market now.

Echo that EA valuations are always too high and you would be unlikely to achieve top end. I would absolutely do it for a quick and hassle free sale. I would go back to them with a counter offer of 495. Focus on the profit you have made, the easy life you have been offered, and the fact they are not messing you about.

I've only read your posts OP, so not sure if this has been asked. Are you sure you won't want to return to the UK? If you have a property in a desirable area where prices are rising, you may not be able to afford the area again if you sell now.

That aside, I'd go open market with them having first refusal. Yes, they seem to be a nice couple with young kids, who are trying to do the best for their DC and get them into local good schools. Don't forget though that you also want to do the best for YOUR kids. These people are not your friends and have only been there 18 months. You have to take the emotion out of it.

You don’t have to do anything. You don’t need the house sold just yet and you could just continue to rent it out until you have had more time to think it over. I’d leave it a bit and then counter with £520k, with a view to settling around £500k.

Don't do that. Tax rules have changed. You will be liable for more capital gains and more stamp duty. Renting rules have changed a lot. Please do not do anything further until you get proper expert advice

Okay, not I'm concerned. Have you looked at prices for smaller homes?

I've been thinking of downsizing, but was astonished to find that selling my four bedroomed house and buying a three bed semi, would leave me with nothing after the expenses of buying and selling and moving costs, stamp duty etc.

That might just be the market where I live, but you might be putting yourself through all the hassle for no gain.

that was my experience too. Unless you are going to move to a much cheaper area or do a massive massive downsize, there is little or no profit in it.

Yes, the term downsize is used but if youi need to release funds and stay in the same area you need to move from a substantial property to a 2 bedroom. What does work is relocating or in some cases equity release.

CONS
Imagine your tenants becoming possible nightmare tenants.
imagine a long chain falling apart
estate agent fees
imagine your buyers last minute asking for a reduction.
PROS
Tenants already there
tenants already happy with your house.
no estate agent fees
no chain
no last minute cheeky price drops
rent arriving every month whilst sale goes through.

100% this. Never under estimate the hassle of selling on the open market when you don't need to @Movingon2024