As all landlords know, buy-to-let property has been put under pressure in recent years. The Government has taken several steps to make it less attractive, including inflated Stamp Duty costs and lower tax relief. This is pushing buy-to-let landlords out of the market, but when many of them have sunk tens of thousands of pounds into their properties, it’s not as simple as just cashing out.
Knowing When To Sell
If you’re not under pressure to sell as quickly as possible, it’s best to wait until spring or autumn. These are typically the easiest times of year to find a buyer, which makes it easier to complete a sale quickly. Remember that it can take several months to prepare your property for the market, especially if you have tenants in residence already.
If you’re planning on selling your property as a BTL, use your local knowledge to work out when the best time to sell is. For instance, student lets are in demand by tenants during August and September. This means you’ll struggle to sell your property during these months, since any landlords looking for a student let will have missed the window of opportunity. Try and have the property ready by late spring, or, if it’s too late, aim for the new year (and the new term).
Vacating The Property For Sale
It is possible to sell a property without asking the tenants to move out. However, this creates two problems; firstly, you’ll probably only be selling to landlords. With the BTL market slowing down, this limits your pool of potential buyers. Secondly, it’s much harder to carry out building work and upgrades when the property is full. If you want to maximise your pool of potential buyers, it’s often the right call to evict your tenants.
You must give your tenants at least 2 months notice if they’re on a standard Assured Shorthold Tenancy or a periodic tenancy, even if the end of their contract is nearer than that. A standard Section 21 eviction notice can be used to bring the tenancy to an end, but in some cases it’s easier to simply negotiate with your tenants. As long as you let them know when you’ll need the property by it may be easier simply to make a verbal agreement, if you have a good relationship with them.
Capital Gains Tax Implications
As a landlord you should be aware of the tax implications when you sell your property. If you manage to sell the home at a profit, you’ll be charged a percentage of the value it’s increased by, known as Capital Gains Tax (commonly shortened to CGT).
There are several ways to minimise the amount of CGT you pay. For instance, you’re entitled to make a profit of £11,300 without paying tax - if you give a portion of the property’s ownership to your partner, you can double this tax-free allowance.
Timing The Sale Of Your Buy-To-Let Property
There are many factors to consider when selling your buy-to-let home. Most importantly, make sure the property is fully prepared for sale, that it’s on the market at the right time, and that it’s marketed correctly.