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Property Hawk

 

SELL PROPERTY


Long-term investment for landlords

Historically UK housing has demonstrated very good rates of capital growth over a long period of time for landlords.  According to the Nationwide, house prices have increased by an average of 9% a year since 1973.  In comparison, the average rate of inflation over that period has been 7% (Office of National Statistics).  The Halifax Price Index starts from 1983.  It shows increases of 8% per annum or 3.5% above the rate of inflation during the same period.  Some of the latest projections indicate that they could double again in the next 10 years which would be obviously good news for landlords.

Most landlords appreciate that successful property investment requires a long-term approach.  I myself have been doing it for 15 years.  The Association of Residential Letting Agents (ARLA) 1st qtr survey 2006 showed that out the landlord’s surveys almost 70% anticipated that they would hold their investments for at least 10 years.  However, from time to time it may be necessary or prudent for a landlord to sell a property so that they can invest elsewhere or because the landlord may require the funds. 

In these circumstances what’s the best way for a landlord to go about disposing of their investment property?

Landlords Selling an investment

Landlords selling a property investment is slightly different from selling a home.  For a start landlords are not living there and the property may be tenanted.  First of all the landlord will have to make the decision on whether to try and sell the property with vacant possession or with it still tenanted. 

The downside to the former for landlords is that the property will obviously be standing empty whilst a sale is attempted.  This can be a significant drain on a landlords cash resources if they have a mortgage, as money is going out but no rent is coming in to pay for it. 
 

Most landlords still prefer to go down the traditional route of selling a property through an estate agent.  This has advantages to landlords over a purely investment sale where the tenant is still in residence in that the property is also being sold to the far larger owner occupation market comprising of over 70% of households. 


The costs of selling by landlords through an agent begin at 1% for a small independent agent in a suburban location.  More typically the rate would be between 1.5-2% for one of the larger national chains of estate agent.  If a specialist marketing campaign for a prestige property is involved then it could be even higher than this. 

For this commission the agent will conduct the viewings and the negotiations with the prospective buyer.  They will also market the property, advertising in the local press and also on one of the property sales portals such as www.rightmove.co.uk .
The time period for selling a property varies considerably depending on the time of year, the state of the market and the property and price.  The very minimum a property is normally transacted in would be 6-8 weeks.  However, where the market is slow, the property is over priced or it is the wrong time of year – mid summer and Xmas are generally recognised as the quietest, then it could be many months.

There are alternatives for landlords to using a traditional estate agent.  In recent years there have emerged a number of Internet based property marketing sites.  These sites allow landlords to advertise their properties directly to sellers without an agent as an intermediary.  The result is costs are a lot lower for the landlord.  Typical costs to market a landlords property are between £50-100 and for this a landlord will get a number of photos and the ability to write their own description.  However, all enquiries, viewings and negotiations will have to be conducted by the landlord.



The other option for landlords is to sell at auction. 
The advantage here for landlords is that it is possible to sell tenanted properties as well as those with vacant possession.  The other advantage to landlords is that the could guarantee a sale by not placing a reserve price on the property.  I wouldn’t recommend this to landlords as the price that you could end up receiving could seriously undervalue your property.  The attraction for the landlord is a relatively speedy sales process and receipt of your funds.  The costs are not cheap as a landlord will typically have to pay a one off entry fee of say about £700 and then if the property is sold a commission to the auction company based on a percentage of the selling price, say between 1-2 percent.

Conveyancing

Having a good solicitor or licensed conveyancer is going to make the whole process much quicker and easier for a landlord.  Solicitors’ involvement in the buying and selling of land is historic & goes back hundreds of years. 

Have a look at conveyancing to find out more about the buying and selling process.  Alternatively go to the Landlords Bible for detailed explanations of all aspects of residential property investment.

Tax

One of the problems with selling property is that it often gives rise to a large capital gain for a landlord.  For more details about this go to the section on tax.  If a landlord is selling and wondering what to do with the funds they release have a look at section on investment  for alternative homes for your hard earned cash.

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