Selling a BTL

[abbey44]

I’ve got a couple of BTL properties - don’t shoot me! - and I’ve decided, like many others, that now would be the time to get rid of them. I want to simplify my life, so…. I’ve got good tenants and I want to be fair with them, so when they go on the market I’ll only consider selling to professional investors so that the tenants don’t have to move out. However, it would be ideal if they were able to buy, it’d suit both of us.

The price for selling would be 10% below the market value for similar owner-occupied houses, and I’m prepared to accept a lower price than that from my tenants. One has said they’d love to buy and it’s all going ahead. The others have said they’d really love to buy theirs but don’t have the deposit. That’s obviously a hurdle. However, I’ve spoken with my mortgage broker and you can get mortgages designed for just this situation, whereby the landlord can gift the tenant the deposit and they get their mortgage. I’m very happy to do this if it makes the difference, and the monthly repayments will be about the same as the rent they’re currently paying, so it’s affordable. They’re thinking about it. They’ve been thinking about it for a couple of weeks…

I can understand that it’s a big decision, but it seems a bit of a no-brainer to me - given the figures, if they buy they instantly gain a 20% equity in the house, plus it’s theirs for the same price as renting. I don’t want to hassle them, but I would like to know soonish so I can move on with this - how long do I give them…?

I think you made them a kind offer. Maybe they know they can't buy - possibly they have more debt than they let on to you, or have bad credit files.
On the other hand they may be smart enough to realise that 10% under current market price might still leave them in negative equity in a years time.
Or maybe they just don't know which direction life is going to take them and they like the flexibility of renting.
I would assume they are a no - but worth actually asking in case they have been working behind the scenes to make it happen.

I think I'd give them another 2 weeks, at which point theyve had a month. Id say thats plenty of time to decide.

It's only a no brainer if they want to stay there or like living there.

Maybe the neighbours aren't great. Or maybe they want 6 more kids. Maybe they are due to inherit half a million quid in the next ten years. Or maybe they are going to go abroad to work.

I guess the point I am making is just because it looks like a no brainer to you doesn't mean it is for them.

Maybe it is worth asking them why.

Woah - I’ve not known of a landlord to gift a deposit so fair play to you.

They’ve had a couple of weeks to consider, I would chase up again and ask them where they’re at with it - Are you only going to sell to a BTL investor or whoever offers you the most?

Ah, that’s some food for thought - thanks.

To answer queries, they like living there, they’re settled and it suits them (very near good schools for their children and shops etc), they’ve said they’d like to stay there and buy it if they could. I don’t know about their debts or credit history, so that’s a fair comment. They might be in line for a large inheritance, but I think it’s unlikely!

And yes, I would only consider selling to another BTL investor if the tenants don’t buy - their security is important to me. They’ve been good tenants and as I said, I want to be fair to them. I’ll give them till the end of the month, I think…

Remember you will have capital gains tax to pay and the annual allowance has been reduced to £6,000 pa now. Return needs to be submitted and tax paid within 60 days too. But maybe you made a loss?

Fair play to you for offering them what seems like it might be a good deal.

From a capital gains tax point of view its better to sell one per tax year. Then you can use your full annual allowance in each year.

@largeagegapWLW yes, that’s something I’m bearing in mind - I’ll get my accountant to make sure I don’t fall foul of HMRC! Houses in that area haven’t made huge gains over the last few years and it’s not an expensive house anyway, so there’ll not be a huge amount of CGT.

Wow. That IS generous. I'd give them til the end of the month.
Have they agreed to viewings if they don't want to buy? Have the other tenants? That's always an issue as they don't have to, even if it's in their own best interest. However they may be expecting their new landlord to increase the rent and not be so amenable.

We haven’t talked about viewings yet as I want to give them the chance to buy before I put it on the market. The other tenants jumped at the chance to buy their home (same terms) and that’s all going ahead. I suppose they could refuse viewings, but they’d have no reason to as I’m trying to find another landlord if they don’t buy. Unfortunately, I will have no say in what happens to the rent with any future landlord, which is why I’d like them to buy and protect themselves against this.

just had a thought…maybe they think it’s a suspiciously good offer and don’t believe a landlord might actually be trying to help them…? (I know half of MN think landlords are evil personified and the scum of the earth 😁)