BTL - Stick or twist?

[Winky2024]

Some advice needed please!

I have a small one bedroom house with a long term tenant in. He’s paying under market value but he is extremely reliable. Not the tidiest of people but ok.

I now could do with selling the property as I’ve barely broken even since interest rates increased.

I’ve had three desktop valuations ranging from £90k to £150k?????

I want to offer it to the tenant and have settled on £117.5k.

My dilemma is if he doesn’t want to buy it do I evict him and wait for it to sell or delay for 12 months in the hope things improve in the UK and globally?

It will cost me £575 per month it is standing empty which is a substantial expense that I’m nervous about. Help!

If your tenant wants to buy it but can’t right now (mortgage offers withdrawn is an issue) you could agree to wait 6 months for them to get to a position they can buy. You could also agree to a modest increase in rent for a 12 month contract

@hahabahbag yes, I thought about saying I would wait until he was in a position to buy. Thanks for confirming it as an option!

Charge market rent for a start.

Landlords are selling their properties left right and centre at the moment before the new rules come in so the market is potentially flooded with similar small properties/flat?

If you’re not breaking even with the rent he’s currently paying, you’re subsidizing him-which is fine if you can afford to, but it doesn’t sound as if that’s the case.

Id let him know that you’re considering selling and give him an opportunity to buy. If that’s not an option, the rent needs to increase until you’re breaking even.

That also means that if you don't sort it out now it may be very difficult to do anything in a few months time.

What's the backup plan if the OP leaves it, the tenant can't buy and won't move out willingly?

@PrincessofWells it would be a substantial increase. I’m not sure I can even ask him to pay that much but I could check with the letting agent if I can??

@houseofisms there are a few flats up but the market is in a niche area. The middle of the road agent (£120k) said it would sell as obviously unlike a flat it has a private front door and no one above/below etc.

I am nervous though as we all know that it’s only worth what someone wants to pay and who a loves it!

You can increase the rent to market value at anytime. Have a chat with the tenant first and warn him then use s13. It's a business - you're not doing him or yourself any favours by being a long way below market rent. Mine I allow to drop £25 to £50 below (by inflation) but no more.

@PrincessofWells thank you. I will approach the agent who manages it for me about an increase on Monday.

I last raised the rent in January this year though…not sure I can review it again so soon??

You can but I wouldn't raise it more than every 12 months. After 1st May you can only raise it once a year and you have to use s13 anyway. You should know this stuff as a landlord.