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Selling a Buy to Let Property

Written by Reviewed by Graham Norwood

27th May 2020 (Last updated on 3rd Jul 2020) 7 minute read

As the name suggests, a buy to let property is one obtained with the purpose of renting it out to tenants. Many landlords are able to pay their mortgage repayments with the rent charged and for some landlords, buy-to-let is highly rewarding. 

Selling a Buy to Let property will differ from selling a standard vacant home, so you will need to make sure you are prepared before proceeding. Compare My Move work with property, legal and financial experts to bring you all the facts and crucial information you need. 

Whether you are downsizing your Buy-to-Let portfolio, selling to buy a new Buy-to-Let property or wanting to leave the property investment world altogether, this article can help you. We will guide you through the most important aspect of selling a Buy-to-Let Property, giving you the tools you need for a successful sale.

This article will cover the following:
  1. Getting a Valuation
  2. Selling a Property With Tenants
  3. Selling a Property Without Tenants
  4. Capital Gains Tax
  5. What Are the Mortgage Implications of Selling a Buy-to-Let
  6. Conveyancing Fees
  7. Save on Your House Selling Costs with Compare My Move

Getting a Valuation

The first step in the selling process is getting an accurate valuation. You can do your own research, including checking sold prices via property portals such as Rightmove or Zoopla and market comparables for direct comparable properties. Alternatively, you can seek the assistance of an estate agent, get a valuation report or organise an appraisal if you are selling your property at auction

Estate Agent Valuation

An estate agent can provide a valuation for your property. When it comes to choosing an estate agent, opt for one with experience and a good reputation in selling buy-to-let properties in the same area as your investment. These agents will have a better idea of how to accurately value your buy-to-let and be able to advise you on setting an asking price. 

The estate agent will visit your property to review the exterior and interior of the building to get an estimated value of the home. Local markets and demand for the type of property will also be considered during the valuation. This step will give you a good starting point for deciding on an asking price. 

Valuation Report

A valuation report is an inspection of the property undertaken by a RICS registered property surveyor. Although this is not a mandatory part of selling a Buy-to-Let, it will give you an indication of your property’s estimated value. This will be based on a number of factors including the condition, size and location. 

The Valuation Report will cost in the region of £300 to £400 so keep this in mind when reviewing the cost of selling your property

Auction Appraisal

If you opt to sell your property at auction, an approved auction valuer from your chosen auction house will visit the property as part of the appraisal. They will be able to advise you with regard to a reserve price based on their findings. 

A Buy-to-Let property is often a good fit for auction, with potential landlords or developers looking to invest in a rental property - with or without sitting tenants. Auctions have become particularly popular for selling ‘tired’ BTL units in need of substantial improvement. 

If You Decide To Sell

Once you have taken the in-principle decision to sell, you should inform your mortgage lender and your freeholder, if you have one. You should also inform your letting agent: if that company is not handling the sale as well, the letting agent will have to deal with the estate agent in terms of exchanging keys for a viewing.

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Selling a Property With Tenants

Once you have decided to sell your Buy-to-Let property, you need to be clear on whether you want to sell the property with or without sitting tenants. 

It is entirely possible to sell the property with tenants. Properties can exchange hands without much disturbance or change to those renting the property. Both experienced and budding landlords would be keen to take on a property with existing tenants. 

Sitting tenants will add to the investment, guaranteeing rent payments from day one and as properties can often take months to sell, putting it on the market vacant could mean a loss of rent payments over the course of that time. 

That said, selling a property with tenants can potentially make the sale more complicated. The prospective buyer will likely want to examine the terms of their existing tenancy. In some cases, they may want to carry out their own referencing on the sitting tenants. 

The Tenancy Agreement

If you are selling the property with sitting tenants, reassure them that although the property is for sale, their tenancy still stands. Whilst the property is in your hands, you will need to stick to the terms of the tenancy agreement between you and your tenants. 

When it comes to the logistics of selling a property with tenants “in situ”, there are a few factors to bear in mind. Their tenancy contract will usually contain a clause to specify that if the landlord intends to sell, the tenants must allow viewings. Ensure you give appropriate notice for each house viewing - typically 24 to 48 hours. 

Maintaining communication and goodwill between you and the sitting tenants is crucial. This is not only out of respect for the tenants but for the sake of the sale. The condition of your property will have a huge impact on the viewings and in turn, the sale. 

The tenancy agreement will probably also include a reminder that the seller must arrange for the transfer of the deposits paid by the tenants to the new owner. 

Selling a Property Without Tenants

Although there are advantages to selling a property with sitting tenants, your target market will be limited to landlords. 

Selling the house vacant opens up the property to other buyers, for example, those looking to live in the property full time. As a result, this can potentially mean a higher selling price. 

If you wish to sell the property without tenants, for example to someone who wants to live in the house themselves, it is important to tell your tenants at the earliest possible convenience. This gives them the opportunity to find alternative housing - and they may even be interested in buying the property themselves. 

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Capital Gains Tax

Capital Gains Tax is a tax on any profit made when selling your property if it has increased in value. It is only the “gain” that is taxed, not the overall amount the property is sold for. This is not applicable to those selling their main home, but it will apply to your Buy-to-Let property. 

If your property has increased in value by more than the Capital Gains Tax allowance, you will be required to pay tax on the additional “gains”. 

There is a tax-free allowance of £12,300 a year but the tax will need to be paid on any amount beyond this. For residential property, this could be 18% or 28% of the gain.

What Are the Mortgage Implications of Selling a Buy-to-Let

If you have a mortgage on the property, you may be subject to penalties if you sell before the end of the fixed term on your mortgage. 

Longer-term fixed-rate deals especially can come with higher repayment charges. Check where you stand with your mortgage provider so that you can prepare for any penalty fees before proceeding.  If you are selling to buy another property, it may be possible to “port” your mortgage. Porting a mortgage essentially means taking your existing mortgage with you to the next property. Your lender will be able to advise you on the best option for you.

Conveyancing Fees

As with selling any property, you will need to hire a solicitor to help you with the legal side of the sale and transfer ownership of the property to the buyer. This will be an extra cost to consider when selling your Buy-to-Let property.  Conveyancing costs for selling a freehold house costing between £100,001 and £200,000 is roughly £1,000 inc. VAT.

Save on Your House Selling Costs with Compare My Move

With Compare My Move, you could save up to 70% on your conveyancing costs when selling your property. You can also save on removal companies and surveyors by filling out our easy-to-use forms and comparing our trusted partners.

Adele MacGregor

Having written for PerformanceIN, WalesOnline, Grazia Magazine and The Olive Press, Adele now writes advice articles for home movers, first-time buyers and house sellers alike.

Graham Norwood

Reviewed by Graham Norwood

Property Journalist and Editor,

With over 15 years of experience in residential property journalism, Graham is currently the editor for both Estate Agent Today and Letting Agent Today.