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Buy-to-let properties are houses or flats that you own but have never used as a residence, and instead rent out to others to live in. You’ve got a portfolio of buy-to-let homes if you own more than one. This guide explains the various stages of selling such a portfolio, including some important advice on maximising your chance of a buyer making a fast and fair offer.
- How are buy-to-let property portfolios defined?
- Can you sell a buy-to-let portfolio with existing tenants?
- Factors that might help with selling your buy-to-let portfolio
- Potential challenges when selling a buy-to-let portfolio
- Options to find a buyer for your buy-to-let property portfolio
- Selling a buy-to-let property portfolio: top queries and answers
How are buy-to-let property portfolios defined?
Anyone that owns two or more freehold or leasehold homes, whether that’s houses, flats or any other category of residential property, owns a portfolio – a collection of several tangible property assets, as Aspen Woolf’s website explains. There are no legal restrictions on selling a buy-to-let portfolio just a few extra considerations to bear in mind.
This includes portfolios of buy-to-let properties, and these are generally defined as flats or houses that you have bought and never plan on living in as your own residence, but instead rent them out for a fee for people to use as their homes. This can be a monthly, annual or other basis, and this can be a good extra source of income for the owners of such portfolios.
With buy-to-let homes, you will effectively be the landlord of all the properties within your portfolio. This means that it’s your responsibility to ensure the overall upkeep and maintenance of the homes, keeping regular check on the properties so that they are safe for your tenants to continue living there. Your exact duties will be set out in a binding agreement signed between you and the various tenants.
You might have a single explanation or several for why you want to sell all of your buy-to-let properties at once, for example you could be emigrating and not want the burden of owning the homes from overseas, you may need to raise funds quickly for a financial emergency, you could be planning your retirement and want to sell your property assets, or other scenarios.
Whatever the situation that has led you to want to sell your buy-to-let portfolio, you have a number of options for how to find a buyer, and these can range in duration and cost.
And there could be some complications involved with trying to sell a buy-to-let portfolio, for example if you already have tenants in the homes. This guide details those potential hurdles, and provides advice on increasing your chances of a buyer making a fair and fast offer.
Can you sell a buy-to-let portfolio with existing tenants?
If you currently have tenants at one or more of the properties within your buy-to-let portfolio, you might be unsure whether you have the legal right to proceed with selling these homes.
The simple answer is that yes, you are allowed to try and find a buyer for the portfolio of houses or flats. But it’s vital to understand that there could be some possible challenges involved with selling the properties because of the existing tenants, although there are solutions available that can range in terms of how much time they might take and how complicated they are.
Existing tenants are known as tenants in situ and they have certain legal rights when the owner of the property in which they are living under a rental agreement decides to try and sell it.
Your first strategy could be asking the tenants to move out, and this would allow you to then advertise the homes in your portfolio as being vacant, which some buyers could see as more appealing than purchasing a number of properties with existing tenants.
Or you could attempt to sell the portfolio to a buyer that is willing to become the current tenants’ new landlord. Under this arrangement, the existing rental agreements – including their duration, the fees paid and other factors – would simply transfer to the new owner of the homes. This can often be the simplest solution if you’re able to find a buyer who is open to this.
If your tenants refuse to leave their properties but you want the homes to be vacant before you try selling the portfolio, you could decide to pursue litigation to evict them.
But such legal action could be very expensive, stressful and take a long time, and that’s why you should instead focus on trying to find a buyer that is willing to purchase your buy-to-let property portfolio and also continue the rental agreements that the current tenants have.
Factors that might help with selling your buy-to-let portfolio
As with the sale of almost any type of property, you’ll find there are advantages and disadvantages associated with trying to sell a portfolio of buy-to-let homes.
Among the reasons why buyers could be interested in making an offer on your portfolio is that they might see it as great opportunity to make some decent supplemental money.
Owning a number of buy-to-let properties remains a popular investment across the UK. As one article in The Week says, there are estimated to be 2.65 million landlords of such homes, attracted by the possibility of earning valuable extra income from their tenants.
Having the chance to purchase several homes at once could also be enticing for specific types of buyers, including developers that might want to make extensions or renovations to the properties before reselling them, or quick home buying companies like LDN Properties that have extensive experience with purchasing several properties in a portfolio at once.
Other issues linked to your portfolio could also increase buyers’ interest in the properties, for example if the buy-to-let homes are situated in areas with high demand for houses or flats.
Potential challenges when selling a buy-to-let portfolio
Whilst there are a few reasons that may make buyers view your buy-to-let portfolio favourably, you could also experience some hurdles when trying to sell these homes.
The UK government has made a few policy changes that are seen by some people as having a negative effect on the profitability of owning buy-to-let properties, as noted on the website Unbiased. These include a stamp duty surcharge for these homes that was introduced in 2016, and a reduction in mortgage interest relief for such properties that took effect in 2017.
Another factor that could dissuade some buyers from making an offer is if the properties within your portfolio have significant structural damage or some other major problem.
Prospective buyers will inevitably assess how much money they would have to spend repairing these problems once they own the buy-to-let homes in your portfolio. Depending on the scale of the flaws, it could require major spending even after paying for the properties, and this future expense might be sufficient reason for a potential buyer to lose interest in your portfolio.
It’s also much more expensive to purchase a portfolio of homes compared to a single property, and so you could face a reduced number of interested buyers – possibly limited to developers, quick home buyers like LDN Properties and others with funds to buy several homes at once.
Options to find a buyer for your buy-to-let property portfolio
When you are ready to sell your buy-to-let portfolio, you will have to select a method for finding a buyer. The usual choices are selling with an estate agent, selling on your own, selling to a quick buyer or selling at an auction, and there are pros and cons with these options.
For example, if selling the portfolio as fast as possible is your top priority, you could benefit from selling to a quick buyer like LDN Properties as the entire timeline should only be a few weeks. And if you are looking to avoid high costs with selling, you might want to avoid using an auctioneer or an estate agent because both of these choices will require that you pay fees.
A simple way to find your ideal approach is to decide on your main aims with selling, including the amount of time you can wait before getting an offer, whether you are open to paying commission and your preferred selling price for the portfolio. Compare these factors against the specifics of the four choices below and it should help with highlighting the closest match.
Selling with an estate agent
You will not have to exert much effort when selling a buy-to-let portfolio, as it’ll be their duty to handle most of the tasks need to find a buyer. This starts with preparing a listing that describes the portfolio and includes photographs of the properties, which they’ll advertise online, in local newspapers and in their office. Estate agents will also organise viewings to give buyers tours of your properties, and they will hear serious offers, hopefully taking one to completion.
Just be aware that there are some estate agents that may only be specialists in selling individual homes, and they could have zero experience with selling a portfolio of buy-to-let properties. This implies they may struggle to get buyers interested in your homes, and therefore it’s always worth asking companies about whether they’ve sold portfolios previously.
This can also be a fairly slow way to sell a group of homes, and you could be waiting many months or even more than a full year before the sale is completed. Also, a buyer could make an offer for your portfolio but then change their mind and rescind it, causing the sale to collapse. So long as the contracts have not been exchanged, the buyer can do this without any penalties.
Note also that you will need to pay the estate agent commission if they succeed in selling your buy-to-let portfolio, and this will likely be a rate between 1.15 percent and 1.40 percent of the final total sale proceeds. You might be able to negotiate a lower level of commission with some companies, but other estate agents could charge you even more than 1.40 percent.
Selling on your own
Selling without any help means doing so entirely on your own, without relying on the services of an auctioneer or estate agent. It’s a very stressful and lengthy way to sell a property portfolio, because you will handle every step. This includes creating and advertising a listing, organising viewings, fielding offers from buyers and overseeing the eventual exchange of contracts.
You’ll also be responsible for answering buyers’ questions about your portfolio, including key facts such as how much income you make from the homes – and profitable properties will be seen as more enticing to buyers, as Compass Personal Finance notes on its website.
This huge amount of work is not something that you can defer only to your spare time, and that’s why it’s only a recommended option for someone that has previously managed to sell a buy-to-let portfolio, or has a suitably experienced friend or family member that is willing to assist them for free in selling the properties. If not, you could be looking at more than an entire year before you’re able to get an offer, which isn’t ideal if you want to sell as fast as possible.
Remember also that a buyer could make an offer for your portfolio but then decide against it and cancel the offer, which will cause the sale to fall apart. This will extend your selling timeline because you’ll need to begin again with trying to find a buyer. And the buyer is able to withdraw their offer without being subject to penalties, so long as you have not yet exchanged contracts.
If there’s any advantage of this method of selling it’s that you won’t have to pay any commission to an estate agent or auctioneer for finding a buyer, which reduces your expenses. But you could find this saving is cancelled out by the money you spend on advertising your listing.
Instead, you might want to look into selling your portfolio to a quick home buying company such as LDN Properties, because they will not only avoid charging you any commission but you’ll also get a much speedier sale. These companies can generally complete the process of buying a group of homes within a handful of weeks, rather than many months or even longer.
Selling to a quick buyer
Selling at an auction
Or you may think about selling your buy-to-let homes at an auction, which is a gamble because you don’t know if the portfolio will sell or, if it does, what the final total price will be. And if you get no bids on the properties then the auction is unsuccessful and they are deemed unsold.
It’s possible that certain auctioneers might also not be skilled at selling buy-to-let portfolios, which suggests they may not know how to generate interest in your homes from buyers. Check with companies about their track record with successfully selling portfolios like yours.
Selling this way can take a very long time, including a wait of several weeks or months between when you opt for using this method and when the auction is held. And even if your portfolio does sell at the auction, the winning bidder will often have at least a month to finish their required tasks to complete the purchase of your buy-to-let homes, such as signing legal documents.
There are some auction houses that could be open to setting a shorter deadline for the buyer to finish these tasks, but not that other companies may give buyers even more than a month.
You will also need to pay the auctioneer if they are able to sell your portfolio, and you can expect this fee to be charged at an average 2.5 percent of the final total sale price. This cost will be deducted right away from the sale proceeds, which will cause your net costs to rise.
There are some auctioneers who might be willing to set a lower rate of commission or have the buyer pay for a fraction of your fees, so you should ask individual companies about this option. But you may find that other auction houses charge an even higher fee than 2.5 percent, which would increase your total expenses even further when selling your properties.
Top queries and answers about selling a buy to let portfolio
If you are a property owner thinking of selling quickly, you may have some questions to ask us, ranging from the types of property we can buy through to selling an entire portfolio. Here are some of the top questions you may want to ask if you are selling a buy to let portfolio:
Your top questions when selling a buy to let portfolio
A portfolio means that you own at least two or more buy-to-let properties, and these are houses or flats that you purchased but rent out to others for living in, and you’ve never used these properties as a personal residence. If you are the owner of such a portfolio, there could be several explanations that you have for wanting to sell all of these properties at once.
Yes, just because you already have tenants at one or more of the buy-to-let properties within your portfolio, this does not mean that you’re not allowed to sell those homes. But your choices for selling will be restricted, typically to either asking the tenants to leave, finding a buyer willing to keep those tenants, or pursuing legal action to evict tenants that do not want to leave.
One of the main reasons why someone could want to purchase your portfolio is if they believe that the properties are a strong investment opportunity that could produce a consistent stream of income. A buy-to-let property portfolio might also be particularly appealing to certain types of buyers, such as property developers or quick home buying companies like LDN Properties.
If several of the properties within your portfolio have structural flaws or other problems, this could make it harder to attract buyers as they will be concerned about the money, they’ll need to spend on fixing those issues as the next owner. Property portfolios are also expensive and therefore you’ll likely have a reduced number of buyers that may be interested.
The four typical methods for selling a buy-to-let property portfolio are doing so an auction, using the services of an estate agent, selling without any third party help or selling to a quick buyer like LDN Properties. Some of these methods have notable drawbacks, such as having to pay auctioneers commission, whilst others have benefits like quick buyers not charging any fees.
Only if you choose to sell your property portfolio through a third party such as an auctioneer or an estate agent, because they will charge you a fee based on a percentage of your portfolio’s final sale price, and this will be subtracted from the eventual proceeds. But you won’t have to pay commission if selling to a no-fee quick buyer or selling without any assistance.
Usually, the most rapid choice to sell a buy-to-let portfolio or any other type of property is by reaching out to a quick buyer. These companies, for example LDN Properties, can complete the buying process within a few short weeks. The three other top methods for selling – using an estate agent, an auctioneer or selling alone – can all take several months or even longer.
