Selling a Bed and Breakfast

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An increasing number of people are taking their holidays in the UK instead of traveling overseas, which has pushed up the demand for bed and breakfast properties that provide private rooms and on-site meals. Selling this type of home can possibly be more complicated than trying to find a buyer for a conventional house or flat, but it can be done fast.

1. What type of property qualifies as a bed and breakfast in the UK?
2. Questions people may have when selling your bed and breakfast
3. Getting your bed and breakfast prepared for selling
4. Potential tax liabilities with selling a bed and breakfast
5. Deciding how to find a buyer for your bed and breakfast
6. Top queries and answers about selling a bed and breakfast

What type of property qualifies as a bed and breakfast (b&b) in the UK?

A bed and breakfast (b&b) is generally a small freehold or leasehold house where the owner lives, but is used as both their primary residence and also a business. The property will have one or more bedrooms that are rented out on a nightly basis to guests, typically tourists or business travellers, and the average duration of a stay will be just a few days, often a weekend.

These properties are somewhat similar to guest houses, except that – as the name implies – the owner of a bed and breakfast typically provides a morning meal in the price of the accommodation. This is usually served as a breakfast featuring cereal, fried food, juices, coffee and tea. Compared with hotels, bed and breakfast properties tend to be smaller.

Bed and breakfast properties have always been popular in the UK, particularly for people who are looking for a more affordable option than a name brand hotel, because the nightly rates tend to be far lower. That may be because of the reduced amenities, or the fact that some bed and breakfast guest bedrooms might not have private bathrooms, just a single shared bathroom.

For many reasons, including tightening budgets and a desire to explore more of the UK, more British people are looking to spend their holidays domestically, with what’s known as a staycation. And many of these holidaymakers who are hoping, or need to, travel on a budget often look to bed and breakfasts for their accommodation, as the money they save on a cheaper room can be spent on activities during their trip.

If you are the owner of a bed and breakfast and have been thinking about selling, it might be a good time to consider moving ahead with this plan. Although the rise in demand for this type of accommodation could generate more annual income for your from a rise in the number of paying guests, you might be able to make an even greater profit by selling the property.

But before you decide to sell, you should read the rest of this guide so that you can learn about some of the potential extra issues that you might face in trying to sell your bed breakfast – from preparing the home to sale through to deciding which method you’ll use for finding a buyer.

Although you might find that it’s a little more complicated to sell a bed and breakfast compared to a conventional flat or house, the good news is that you’ll still be able to secure a buyer who’s willing to pay a price that will generate a good profit for you, and on a speedy schedule. All it takes is choosing the right method of selling, and being fully informed before doing so.

Questions people mayhave when selling your bed and breakfast

When someone is interested in buying your bed and breakfast property, they will likely have a long list of questions about it during the selling process. Having answers to these questions upfront can help to make a sale smoother, because there’s always the danger that a buyer might get impatient and lose interest in your property if it takes a long time to answer them.

It’s important that you tell the truth to prospective buyers about any potential negative issues with your home, such as a physical problem like subsidence or dry rot, and be honest about the level of demand for your bed and breakfast from guests – although you don’t have to give exact financial figures in some cases. If your property has a problem that you conceal from someone, and they discover it after buying the bed and breakfast, they could sue you for penalties.

Below are some sample questions that potential buyers might have about your bed and breakfast, along with tips on how to answer them.

Do you get a lot of holidaymaker guests throughout the year?

Buyers will ask this question to get a sense of how successful your bed and breakfast is on an annual basis, because they will likely hope to make money from owning it. If you’re able to produce facts and figures showing that your property is popular with paying guests year-round, this could potentially increase someone’s interest in making an offer to buy it.

Is there any potential for expanding the property in the future?

Some potential buyers might have big plans to build additional rooms on your bed and breakfast in order to increase the number of rooms that they can provide for paying guests. If you already have planning permission for an expansion of the property, that can make the bed and breakfast more attractive to some buyers because it removes the hassle of having to apply for it.

Why are you looking to sell your bed and breakfast now?

You may have one or many reasons from selling, such as the work of running a bed and breakfast has become too stressful, you have a desire to live somewhere else, or anything else. Be direct with buyers about the reason behind selling, because they will want reassurance that you are not simply trying to sell the property because no guests ever want to stay there.

Does the property need any significant repair work?

As mentioned above, you must be honest with prospective buyers about physical problems with the bed and breakfast that will need repair in order for the property to remain habitable. Buyers will then likely calculate the amount of money that the repair work will cost them, and you should be expected for them to ask for a lower sale price that accounts for that future expense.

Getting your bed and breakfast prepared for selling

First appearances can be important, and that’s true with trying to sell a bed and breakfast. Before listing the property for sale, mow the garden if you have own, fix any minor issues like broken windows, missing roof tiles or chipped paint, and rearrange rooms to remove any clutter, because more spacious rooms will help make your property seem more valuable.

If you have the time and money to invest, you might also want to consider in larger-scale improvements to the property that could further enhance its value. This could include a complete renovation of the kitchen and bathrooms in the bed and breakfast with brand new decor, fixtures and fittings, which buyers will likely respond to very favourably.

Of course, not everyone has the resources or time available to do such major work, and there’s no requirement that you overhaul the property before trying to sell it. Some options for selling, such as using a quick home buying company, can still produce a decent profit and a swift sale of the bed and breakfast even if you sell the property "as is" without any large changes.

Potential tax liabilities with selling a bed and breakfast

Tax issues can be an important consideration when you’re getting ready to sell any property, but in particular a bed and breakfast. That’s because not only is the house your private home, it’s also your business because the money you make from guests’ payments is subject to potential tax.

There are also taxes that you might have to pay the UK government after successfully selling your property, and knowing this upfront can make all the difference between a sale that still produces a profit for you and one that results in you breaking even or making a loss.

Knowing the various tax issues with buying, owning, and selling a bed and breakfast property can also be useful for immediately answering questions that potential buyers might have. The longer that you take to answer their queries, the greater the risk that they lose interest.

Value Added Tax (VAT): This is a fee that the government charges for a wide range of services and goods, and that includes situations where guests pay you money to stay in a room within your bed and breakfast. Check with a tax professional to see whether there might be some relief that you can use to reduce your VAT burden, although this will not always be possible.

Income Tax: You will have to pay this tax on a significant amount of the money that you make every year from the payments that guests give you when staying at your bed and breakfast. Potential buyers will likely want to know a rough estimate of how much tax you have been paying each year, because that information can help them to decide if buying your property will be a sensible long-term money making investment.

Capital Gains Tax: This is a charge that applies whenever someone sells an asset, which is a broad term that includes houses, flats, bed and breakfasts, cars and other tangible items. You’ll pay this tax only on any potential profit that you might make from the sale compared to the price that you initially paid for it, and you often won’t be taxed on the entire sale price.

Deciding how to find a buyer for your bed and breakfast

There can be many reasons for why you want to sell your bed and breakfast, from needing a quick influx of money to resolve a financial problem through to wanting the funds for a move overseas, and other scenarios.

Whatever your situation, one very important decision that will be part of the process of selling your bed and breakfast is choosing which method you’d like to use for finding a buyer. There are generally four main options to select from, including attempting to sell on your own, enlisting the services of an estate agent, trying your luck with an auctioneer, or selling the bed and breakfast fast to a legitimate quick home buying company, such as LDN Properties.

You will discover that each of these four methods have their own unique benefits, but some of the choices will also present some major disadvantages. They all have different timelines for the average sale, and some of the methods include fees that will reduce your net sale profit.

To help you pick the right option for your sale, consider writing a budget that includes every detail on the time and money you’re willing to invest in the process, as well as how much profit you want or need to make. Compare those factors against the pros and cons of the four approaches detailed below, as this will hopefully make it easier to select the most fitting option.

Selling a bed and breakfast on your own

This can be a very stressful way to sell your property, because you will have to prepare a listing that describes the bed and breakfast and features photographs of the interior and exterior, advertise that listing online and in local media, arrange and host viewings for potential buyers to visit the property, and field offers from buyers, hopefully through to exchange of contracts.

It’s a lot of work and cannot simply be done in your spare time, and it will require a lot of time, effort and money. Many owners who have tried to sell their homes on their own also report that it can take more than a year before getting a serious offer. For all these reasons, it’s only a good idea if you have experience with selling a property, or have an expert who’ll help for free.

Otherwise, the only noticeable advantage of selling this way is being able to avoid paying a third party – like an estate agent or auctioneer – any fees, which helps to increase your profit. But you can get this same good outcome by instead selling your bed and breakfast to a fast property buyer, who won’t charge you any fees and who can complete the purchase in weeks.

Selling a bed and breakfast via an estate agent

Estate agents prepare listings for properties, advertise them, and organise viewings, along with handling any serious offers. This can reduce your stress and workload significantly when selling, but you’ll still have to pay commission for this work. It’s usually charged as a percentage of a property’s final sale price. This fee will be taken out of the sale proceeds straight away, which means you’ll have to settle on receiving a reduced net sale profit.

Selling this way can also take a long time, and it could be more than a full year before you get a genuine offer from a buyer, which isn’t a match for anyone looking to sell as fast as possible.

Selling a bed and breakfast via an auctioneer

Auctions also minimise the work that you’ll have to do to find a buyer, because the auctioneer will prepare and advertise the listing for your bed and breakfast, and host the auction.

For this work, they expect to be paid as a percentage of a property’s final sale price, which will be deducted from the proceeds, giving you a lower net profit. You should ask individual auctioneers whether you can make the buyer pay some of the fees, because this can be one viable way to shift part of the cost and to protect more of your eventual profit.

The process of selling via an auction is not very fast, because there will be a wait of at least several weeks or months between the day on which you decide to list your bed and breakfast for sale, and the day on which the auction happens. Even if your property manages to sell, the buyer will then have an average of 28 days to complete their required steps to finalise the purchase of your property, which makes it an even slower option compared to a fast buyer.

Selling a bed and breakfast to a quick property buyer

Similar to selling a restaurant, bed and breakfasts might be considered a more niche property to sell, and that’s why it can be harder to find a buyer through other methods of selling. But quick home buying companies are popular with owners of these and other unusual properties because they can make speedy and competitive offers to buy almost anything no matter its age, condition, shape, size or type.

For example, LDN Properties – which makes fast and fair offers to buy all types of freehold and leasehold homes in London and across the UK – has been buying properties since 2003, with a long and varied list of purchases that includes bed and breakfasts, vandalises houses, flats with cladding, mundic homes, properties that have septic tanks, houses with solar panels, flats with noisy neighbours, homes located close to unsightly mobile phone masts, plots of land, lock-up garages, and more.

Quick buyers have that name because they have the financial resources available to make immediate purchases of properties, without having to wait for many weeks or months to initially get approved for a mortgage that will cover the cost of the sale. This significantly shortens the selling process to just a few weeks, and that includes exchanging contracts and paying owners their money – making it by far often the speediest way that you can sell a bed and breakfast.

Another perk of selling to a quick buyer is that the trustworthy companies will never make you pay any fees, so you are assured of receiving the entire sale profit. Compare that with using an estate agent or auctioneer as described above, where you’ll have to pay them fees that will be taken out of the sale proceeds immediately, which in turn will reduce your net sale profit.

To give you extra peace of mind when selling to a fast buyer, ask whether a specific company is registered with an organisation known as The Property Ombudsman (TPO). This third party entity has the responsibility for writing rules that are crafted to protect homeowners against falling victim to scams in the quick home buying industry. Every genuine TPO member must follow these regulations, which gives you more protection when selling.

It’s very simple, fast and zero-cost to find out whether a certain quick buyer is truly registered with TPO. Just visit the organisation’s website and look for the “Find a Member” tab on the left side of the welcome page, click on it, and when prompted, type in the name of a fast buying company. If they are truly a member of TPO, you will be shown their full registration information.

If the fast buyer is not registered with TPO, then no details will appear – and you should always be cautious about selling your bed and breakfast to a company that either refuses to join TPO, or that claims it’s a member but cannot prove this fact, because it could be a scam situation.

Top queries and answers about selling a bed and breakfast

Property owners wanting to sell quickly often have a range of questions for us. These can be about the repairs needed before selling through to selling in a bad condition. Here are some of the main questions we’re asked about selling a bed and breakfast property: