Landlords’ lack of confidence in their business
If you are losing faith in the rental business, you’re not alone. Figures from Statista show that optimism is evaporating across the board. Just 17% of landlords are optimistic about the UK private rental sector – down from 42% in 2021, and just 4% are optimistic about the financial markets – down from 42%. As a result, confidence in their own letting business has more than halved for UK landlords.
“Just 17% of landlords were confident about the rental sector in 2022”
These figures are worrying enough, but it’s worth noting that they reflect the state of play in quarter 3 2022. That’s before the nightmare that was Liz Truss, and before the cost-of-living-crisis had really started to bite. With the country’s finances now in even more of a mess, and the new Renters Reform Bill on the horizon, confidence today will be even lower among landlords like you – and rightly so.
Why now is a good time find a buyer and take your profits
For most landlords, one of the biggest reasons to build a buy-to-let portfolio in the first place was to invest in property, and that investment has certainly paid off in the last decade. Data from the Land Registry and the ONS shows that property prices rose a staggering 71% between July 2012 and July 2022. That took the price of the average UK home from £170,000 to £292,000 – a return of over £12,000 per property, per year. In the year to July 2022, prices rose around 15% in just 12 months.
“Property prices rose 71% between 2012 and 2022 but they are set to fall in the next two years”
While this will certainly make you feel pretty smug about your property investment, don’t get too cocky. That bubble looks set to burst very soon – so the time to crystallise your profits and start looking to sell your portfolio could be now.
The state of the current property market
In November 2022, the OBR predicted a drop of around 9% in the next two years, and that drop has already started. Nationwide reported a fall of 2.7% in house prices for the year to April 2023, and many sellers are having to drop their price to secure a sale.
There have been eleven straight rises in interest rates, from 0.1% to 4.25%, and this has created financial pressures on all sides. So it’s no surprise that Zoopla have reported a drop in demand of between 20% and 50% this year, turning a fast and profitable sellers’ market into slow-moving, frustrating nightmare. The Times reports that sellers are having to discount their sale price by an average of 4.5%, or £14,000 to shift their properties, or risk sitting on the market for months and that’s if you are a private seller selling one property not a landlord looking to sell a portfolio.
Your options when trying to sell your property portfolio – what is the best way to sell?
It’s worrying stuff. If selling one home is that stressful, then the idea of selling your whole portfolio might feel like a nervous breakdown waiting to happen. More than two thirds of all landlords own between two and ten properties, with 18% owning more than ten. The thought of grinding through the mill of selling each property individually is enough to make a grown man weep. But what else can you do?
There are a number of options open to you when it comes to selling a property portfolio:
Do nothing and keep being a landlord
Faced with a grim property market, hiding your head in the sand might be very tempting. However, if you don’t sell your property portfolio, then you risk seeing its value slowly dwindle away, with mounting costs making a big dent in your rental income too. You’ve done well with price rises in recent years, but not cashing in at the top of the curve could wipe out those gains pretty fast. Although if you have a larger portfolio that’s spread all across the uk the process of selling your entire portfolio could be a mammoth task so it is worth really thinking long and hard about your reason for selling before you go all in.
Sell the properties individually through an estate agent
If you are a complete masochist, and think ‘I want to sell my property portfolio for the maximum price’, then you could try and sell them all individually. But be prepared to spend a massive amount of time getting each home ready, listing them with arrogant agents, negotiating viewings with touchy tenants and bartering with picky buyers. You’ll probably need to factor in the cost of a transplant to replace all the hair you’ll tear out along the way. You’ll start out thinking ‘I want to sell my rental property portfolio’ and end up thinking ‘I just want my life back!’
Sell at auction
given the stress of selling multiple properties on the open market, many landlords turn to auctions. This can be a very easy way of selling a property portfolio, but there are drawbacks. Firstly, property auctions take time. A modern auction can take around three months from start to finish, and while a traditional auction is quicker on paper, unless you time it perfectly, you’ll still have to wait for the next auction to roll around. With prices falling fast, the longer you wait, the less your property portfolio will be worth. It’s also worth noting that you’ll probably only get about 85% of your portfolio value at auction, even after waiting two or three months.
If only there was a way to cash in on high property prices right now, without any of the hassle of selling your property portfolio. A quick and easy solution that could put the money in your bank within weeks and not years, so you can relax and enjoy your hard-earned gains. Well actually, there is…
What if I want to sell my property portfolio quickly?
There are some house buying companies that are specialist portfolio buyers. They are geared up to buy a rental property portfolio fast, and with no hidden costs. There are no estate agent’s fees and no solicitor’s fees to pay, which can quickly add up if you are selling a large portfolio, and none of the hassle of arranging viewings or fixing up your properties. If the price is right, then you could sell your property portfolio in a matter of weeks.
“You could sell your property portfolio in just seven days to a cash buyer and take your profits before the property market crashes”
A house buying company will take care of everything when it comes to selling a property portfolio, including determining the value of the portfolio and dealing with sitting tenants. There’s no need for you to worry about evictions as you can sell your properties with tenants in situ. You also don’t have to deal with the uncertainty that comes with selling through an estate agency or auction house. Once you get a cash offer you can sell your portfolio within weeks at a fixed price with no upfront costs or fees to pay.
Why a cash buyer sale isn’t as costly as you think for portfolio landlords
Of course, you’ll get less by selling a rental portfolio to a cash buyer and they don’t pretend otherwise. They’ll offer you between 80% and 85% of the market value for your homes. While this might seem like a big hit to take, but when you compare it to the 70% rise in value you’ve had from your homes, you’ll still be well in profit. What’s more, the hit is not as big as it first appears when you take all your costs into account.
a table comparing the costs of selling a rented property on the open market compared to the cost of selling a rented property to a house buying company.
Problem Tenants – the average cost to evict a tenant in the UK
If your tenant plays ball and goes quietly into the night after the notice period of the section 21 ends then you should consider yourself one of the lucky ones, it will only cost you around £120.
Unfortunately however this is not always the case and you could be stuck with the headache of having to evict your tenants through the courts. In this scenario costs can add up fast. You have court issue fees, witness statements and of course solicitors will need to be involved and there is no such thing as a cheap solicitor (and if there is you certainly don’t want to use them!).
Cash House Buyer Guru