Over the last six months, I have seen a noticeable increase in landlords asking me for advice on how they can put their rented property onto the sales market, to see what interest can be generated. These enquiries are almost always from landlords who believe they need to give their tenants notice in order to do this, which would mean, most likely, that their tenant would start looking for somewhere else to live and eventually move out, leaving an empty property with no rent coming in. Of course, this is fine for a short period of time, but what if the property does not sell for many months, or not at all!
Disaster! One great tenant gone, no money coming in,
no purchaser in sight and perhaps a mortgage to pay!
Tenants Moving Out
My advice to landlords who contact me about this scenario is simple:
If you are a landlord and you want to test the sales market, the most important thing that you can do is keep your tenants as happy and as reassured as possible. Call them, discuss the situation with them, possibly offer them a minimal rent reduction for the period you wish to test the sales market as it is in your interest to keep tenants in-situ for as long as possible. Remember, it is your tenants who will be keeping your property tidy and in showable condition. They will need to allow access for viewings and will have to bear the disruption of this process, so a small acknowledgement of this goes a long way, hence the suggestion of a rent reduction.
Always reassure your tenant that when a buyer is found and an offer has been agreed, that you will give a minimum 2 months’ notice to end the contract (in accordance with the dates and type of tenancy you have of course) and that Sewell & Gardner, who are well practised with this type of scenario, will be able to find your vacating tenants some suitable alternative accommodation. We are very often able to coincide time-wise with the sale so everyone is happy and long periods of time with no rent coming in are avoided. Do bear in mind though that the sales process is often lengthy and there really is no need for your tenant to panic and look elsewhere right away.
The positives, as a landlord, if you follow this advice is that you would continue to have happy tenants who are paying the rent and will continue to live in the property until such a time that you sell it. The added benefit of this is when a property is lived in, it is also being cared for so any leaks or maintenance issues can be easily resolved. Prospective viewers see what the property looks like ‘lived in’ and this is often better than seeing a property empty and cold.
Your tenant will be happy, as they do not have to move out immediately and they have plenty of time to find somewhere else if required, plus they possibly get a small rental deduction at the same time!
Everyone saves money!
Of course, the sales market at the moment is still unstable particularly as gross mortgage lending tumbled by 19% in April, driven by the ending of the first-time buyers ‘Stamp Duty’ holiday. It is anticipated that this situation will only worsen if the current Eurozone crisis deepens. The enormous problems that the financial markets face, has increased the cost of funding mortgages by 40% since February. Banks have passed these costs onto consumers with higher rates and fewer loans to low-income borrowers. Lending to borrowers with deposits under 15% has fallen for the last four months, and loans to first-time buyers fell to their lowest level for nine months in April.
With the rentals market being so strong at the moment and rents increasing in the majority of cases, I would always suggest that you keep renting your property for the foreseeable future, but obviously this is not always possible, so if you need to sell, use the advice given or contact me a call to discuss, as I am always happy to help.
Rochell Latham, Renewals Manager FARLA
