The UK rental market has reached an unusual point. Some landlords are deciding that it is time to sell, while others believe that today’s combination of restricted rental supply, sustained tenant demand and more negotiable property prices creates an opportunity to buy.
Neither group is necessarily wrong.
The decision depends on the landlord’s borrowing, property condition, location, tax position, future plans and willingness to operate in an increasingly regulated market.
What is clear is that rental property is changing hands. NetRent’s new Property for Sale service gives landlords, estate agents and members of the public a genuinely free way to advertise properties that are currently let, were previously let or could be suitable for letting.
Why are some landlords selling?
The financial calculation has become more difficult for many landlords.
Higher mortgage rates have placed considerable pressure on owners who purchased or refinanced when borrowing was much cheaper. A property that previously generated a comfortable monthly surplus may now produce only a small profit—or none at all—after refinancing.
Mortgage payments are only part of the calculation. Landlords must also allow for insurance, repairs, safety inspections, licensing, management costs, letting fees, service charges and periods without rental income.
Tax changes have also affected personally owned properties, particularly for landlords with significant borrowing. Individual landlords cannot generally deduct their full residential mortgage interest before calculating taxable rental profits. Instead, they usually receive a basic-rate tax credit. The effect can be especially severe for higher-rate taxpayers.
Regulation is another factor. The rules differ across England, Wales, Scotland and Northern Ireland, but landlords throughout the UK are dealing with more extensive legal, safety and administrative responsibilities.
Some owners are comfortable adapting to this increasingly professional environment. Others, particularly those approaching retirement or holding only one or two properties, have decided that the additional work and risk are no longer worthwhile.
There are also personal reasons for selling. A landlord may need to release capital, repay borrowing, simplify an estate, fund retirement or reduce exposure to one area of the property market. Selling one property does not necessarily mean leaving the sector completely; it may be part of a wider portfolio review.
Why are other landlords still buying?
The factors encouraging some landlords to sell can create opportunities for others.
Rental demand remains strong in many parts of the country, while the number of homes available to rent is still restricted. Although rental growth varies considerably between locations, well-maintained and realistically priced properties can continue to attract tenants quickly.
For an investor with sufficient capital, limited borrowing or access to suitable finance, this can support a long-term purchase.
The wider sales market can also offer buyers more negotiating power than during periods of rapidly rising prices. Some properties are taking longer to sell, and owners with a genuine reason to move may be prepared to consider realistic offers.
Experienced landlords are often highly selective. They are not simply buying because a property appears cheap. They are looking for sustainable rental demand, sensible maintenance costs, achievable rents and a purchase price that works after every expense has been included.
Properties being sold by other landlords can be particularly interesting. A home with an existing tenant may offer immediate rental income and avoid an initial letting period. The buyer may also be able to examine the property’s rental history before proceeding.
However, thorough checks are essential. The tenancy agreement, deposit protection, payment history, safety records, licences and compliance documents should all be examined as part of the buyer’s legal due diligence.
Should a landlord sell with or without the tenant?
A landlord planning to sell generally has two main choices: sell the property with the tenant remaining or wait until the property is vacant.
Selling with a sitting tenant can help preserve the tenant’s home and maintain rental income while the sale progresses. It can also appeal to landlords who want an investment capable of producing income from completion.
The potential buyer market will, however, be more specialised. Most owner-occupiers require vacant possession, so a tenanted property will usually be marketed principally to other landlords and investors.
A vacant property can be offered to a much wider audience, including first-time buyers and existing homeowners. It can be easier to arrange viewings, prepare the property for sale and present every room at its best.
Vacant possession can nevertheless carry a financial cost. The landlord may receive no rent during marketing and conveyancing, while continuing to pay the mortgage, insurance, council tax, utilities and other expenses.
Landlords must follow the correct legal process when seeking possession. They should obtain professional advice and never assume that a tenancy can be ended simply because they wish to sell.
What does it cost to sell a rental property?
The traditional route is to appoint a high-street or local estate agent. Fees are commonly charged as a percentage of the final selling price, although the exact rate varies according to the agent, location and type of agreement.
Even a fee of 1% represents £2,500 on a £250,000 property before VAT. At 1.5%, the fee would be £3,750 before VAT. Sole-agency, joint-agency and multi-agency agreements can carry different charges, so sellers should read the contract carefully.
Online estate agents may charge a fixed fee. This can appear cheaper, but sellers must check what is included, whether payment is required upfront and whether an additional fee applies for accompanied viewings, photographs, floor plans or progression of the sale.
Auction is another option. It can provide a defined timetable and may attract investors, particularly where a property requires work or is being sold with a tenant. Auctioneers may charge an entry fee, a seller’s commission or both. Some auctions place additional charges on the buyer, which can affect what purchasers are willing to bid.
A private sale may avoid estate agency commission, but the seller remains responsible for finding a buyer, handling enquiries, arranging viewings and negotiating the price.
Whatever route is used, legal conveyancing fees will normally be payable. Sellers may also face Energy Performance Certificate costs, mortgage redemption charges, early repayment penalties, preparation or repair expenses and removals or clearance costs.
Capital Gains Tax may also be payable when a rental property is sold for more than its allowable acquisition and improvement costs. Tax treatment depends on individual circumstances, so specialist advice should be obtained before completing a sale.
A genuinely free way to reach rental-property buyers
NetRent’s Property for Sale service provides an additional advertising route without charging the advertiser.
It is open to:
- Landlords selling individual properties or complete portfolios
- Estate and letting agents acting for property owners
- Members of the public selling a property with rental potential
- Sellers of currently let properties
- Sellers of previously rented homes
- Sellers of properties that could be suitable for letting
Advertisers can list as many suitable properties as they wish. There is no listing fee, commission or charge for receiving an enquiry.
Every enquiry is emailed directly to the advertiser. NetRent does not place itself between the buyer and seller and does not charge a fee if the property is sold.
The service can be used alongside an estate agent, auctioneer or another property portal, subject to any contractual restrictions imposed by those services. It is intended to provide additional exposure to landlords and other buyers who are specifically interested in properties with rental potential.
Selling and buying are both rational decisions
The idea that every landlord is leaving the market is too simplistic. So is the suggestion that strong tenant demand automatically makes every rental property a good investment.
Some landlords face genuine pressure from refinancing, taxation, regulation and rising costs. Selling may allow them to protect the value they have built and move their capital elsewhere.
Other landlords see limited rental supply and continuing demand as reasons to expand. They may be able to purchase properties from retiring or restructuring landlords and continue providing homes to existing tenants.
At this crossroads, the right decision is not determined by headlines. It is determined by the figures for the individual property.
For those who decide to sell, NetRent now offers a genuinely free way to reach potential buyers. For those looking to buy, it provides a new source of properties that are already rented, were previously rented or could become valuable additions to a portfolio.
Advertise or explore Property for Sale on NetRent
NetRent does not provide financial, tax or legal advice. This article represents our general understanding of the UK rental and property market and is provided for information only. Buyers and sellers should obtain appropriate professional advice before entering into a property transaction.