Why are landlords selling up?

03 August 2023 7846 Views

The challenges facing the property market right now are well reported; from rising interest rates pushing up mortgage payments to a lower number of sales transactions driving down prices.

Uncertainty is rife, and landlords appear to be feeling the pressure far more than homeowners, with new analysis from Octane Capital showing that the percentage of buy-to-let mortgages falling into arrears is worsening at a faster rate than owner-occupier mortgages.

Despite rents again reaching an historical high as reported in Goodlord’s most recent rental index, landlords are clearly struggling to maintain profitable properties and portfolios, especially when highly leveraged.

At Open Property Group, our half-yearly figures support this sentiment too, with a significant increase in cash purchase enquiries form landlords looking to sell their rental properties and portfolios quickly.

However, it’s not just increasing buy-to-let mortgage rates that are motivating landlords to offload their buy-to-lets. 

1. Higher management and maintenance costs – from letting agent fees to inflation pushing up the price of contractors and repairs.

2. Cutting their losses while they can – before property prices reduce further and Capital Gains Tax allowance is cut.

3. Retirement – a fast way to release equity from property and fed up of being a landlord and all the hassle that comes with it.

4. More attractive alternative investments, such as savings rates and bonds.  

 

Biggest motivation?

By far though, the most common reason given by landlords for selling up is that they no longer want to deal with the constant change in legislation and anti-landlord policies.

For many landlords, they aren’t even sure if their buy-to-let is compliant with existing legislation, let alone prepared for any incoming regulation, such as new minimum energy performance standards or the Renters Reform Bill.

All of this again impacts the cost of owning, managing and maintaining a buy-to-let and makes it extremely laborious, when many landlords were looking for a largely passive investment. 

 

Selling a buy-to-let is not straightforward

While many landlords want to sell, some just can’t face the hassle. Selling on the open market is most successful when the property is vacant, meaning any tenants in situ need to be evicted and then the property cleared and possibly upgraded before being marketed.

This could result in a property being sat empty for months, not generating any income.

An alternative is to sell to a professional cash buyer, which removes the need and costs associated with engaging an estate agent, evicting tenants and improving the standard of the property.

A guaranteed completion to a timeframe that suits you also brings certainty in times of uncertainty.

 

Buy-to-let property purchases

In the first half of 2023, Open Property Group and its group of companies has purchased two properties per week on average.

Single buy-to-lets:

1. 2 x self-contained flats in Harrow, one on regulated tenancy and one on AST. Vendor selling due to retirement and fed up of being a landlord.

2. 2 -bedroom terraced house in Manchester acquired subject to AST and in bad state of repair due to tenant misuse. Management issues too much hassle for landlord.

3. 2 -bedroom flat in Birmingham, bought from landlord who was fed up with constant legislation changes.

        

 

 

 

 

Portfolios and multiple occupancy:

Our sister company, LandlordBuyer, specialises in the purchase of portfolios and tenanted rental properties or any kind.

1. Fully tenanted freehold block containing 8 bedsits in Penzance, Cornwall. Landlord had unperforming pension and needed to boost with sale of portfolio.

2. Victorian, 6-bedroom HMO in Croydon subject to various tenancies and landlord was fed up managing the property and multiple tenants.

3. Undermanaged and non-compliant freehold block of 12 flats in Isle of Wight. Retiring landlord in need of equity.

4. 10 houses in Wigan on various tenancies and in various states of repair, some of which became unprofitable and unmortgageable for the landlord.

            

 

 

 

 

 

 

 

Visit our websites for an instant cash offer for your rental property or portfolio.

Open Property Group

Landlord Buyer