A rising number of buy-to-let landlords are looking to sell at auction, rather than through estate agents.
That is the view of property auctioneer Auction House, which suggests there is evidence to support its claim.
Founding Director of Auction House, Roger Lake, believes that there are now more people selling homes as tenanted investments, rather than serving notice to the tenant and selling as empty homes.
Mr Lake said, ‘the problem for the landlord is how to achieve the best sale price without losing too much rental income. Most estate agents tell their letting clients to decant their tenants before instructing them to sell the property. But that approach comes with some major disadvantages. Not only do landlords stop receiving rent but the property often looks unkempt and might need redecoration. The process is invariably long and sometimes tortuous and will require the landlord to find monthly mortgage repayments from other sources for up to six months or more.’
‘By contrast, an auctioneer will recommend that landlords sell with tenants remaining in place and the properties offered as tenanted investments. This has the prime advantage of the landlord continuing to receive rent while the sale is taking place. The property also usually presents better when occupied-and invariably the tenants will want to stay put rather than be forced out. It’s a win-win for both parties.’
Rise in buy-to-let landlords selling at auction
Lake’s comments come as Auction House’s latest sales results have been published. The results make good reading, with sales in April of 290 lots 402 offered, a success rate 72%. These sales made a total of £44.5m. The first quarter of the year saw 1,027 lots sold from the 1,241 on offer, resulting in a success rate of 76.6% and a sales value of £137.5m.
‘Demand for residential investments hasn’t dropped away as many pundits suggested,’ Lake observed. ‘Indeed, we have seen a strong start to 2016, with most of our sales rooms showing growth over last year’s excellent performance. There was some seller hesitancy immediately following the introduction of the Stamp Duty surcharge but this is now behind us and entries are strengthening. Most believe that the outcome of the Brexit vote will have little short term effect on the auctions market. Normality is returning to the supply side in our sector and buyer demand is still healthy. I expect activity to increase further during the summer and autumn.’
‘As far as buy-to-let is concerned, there are still numerous cash-rich buyers who see rental property as a highly valued part of their investment programme. It’s one that has consistently delivered in the past and should continue to do so in the future,’ Lake concluded.