Selling a Rental Property: When is best?

Deciding how and when selling a rental property makes sense can be a complicated business. Our latest guide aims to put as much important information at your fingertips so you can understand why more landlords are choosing to do this right now.

New Government legislation and the rapidly changing property environment has led to many owners deciding to sell their investment properties.

Research by the property website Zoopla shows the number of landlords is dropping, with 8% of homes that were previously up for rent now up for sale.

In addition, the number of private renters in England dropped for the third year in a row, according to data from the English Housing Survey.

01 | So why are landlords selling up?

There are a lot of reasons.

With Liz Truss and Kwasi Kwarteng looking to raise the minimum threshold for stamp duty, and the market failing to slow down, thing are certainly changing.

Others fear that the UK housing market could be close to its peak, and that the recent economic instability might lead to a collapse in prices or significant changes in the mortgage market. For many, now could be seen as the best time to sell.

On top of this, a number of policies brought in by the UK Government have made owning a rental property less attractive.

02 | Why the UK lost 50,000 rental homes in 2022

As a result of the Government’s war on landlords, Britain will lose almost 50,000 rental properties this year.

That’s according to a survey by Hamptons estate agents that found more landlords are selling up rather than buying. The market is set to lose, on average, roughly 3,800 landlord properties every month in 2022, that’s more than double the number from two years earlier.

This is bad news for renters, as the already tight supply of rental properties is set to get even tighter. Landlords are selling up at twice the rate they are buying, so the pool of available rentals is shrinking rapidly. And they can also now find ways of selling properties with tenants in place too.

If you’re one of the many looking for a place to rent, it’s going to be increasingly difficult to find one. And if you do, chances are it will be more expensive than it would have been just a year ago.

The government’s policies are clearly having an impact on the buy-to-let market.

If you’re a landlord, now might just be the time to sell up quickly while there is still good demand for your property.

03 | Rule changes hit profits

The Government has implemented a series of rule changes that have made it harder for landlords to make a profit or assert their rights.

A total of 1.25 million housing transactions are expected to take place this year, based on data from HMRC. Of these, it is estimated that 16%, or 204,440, will be sales of buy-to-let properties. It’s also expected that purchases by landlords will account for 13% of transactions, or just 157,954 properties.

This means that the market could lose 46,486 rental properties over the next year alone, or an average of 3,874 a month.

04 | Landlords want to leave

A survey from the National Residential Landlords’ Association (NRLA) has found that 23% of landlords are planning to sell at least some of their buy-to-let properties during the next 12 months. This is up 20% from last year and is a direct result of punitive tax increases since 2015 and government policy which have made it harder for landlords to operate profitably.

Ben Beadle, the NRLA’s chief executive, warned that this exodus of landlords from the market will drive up rents and leave tenants with less cash to save for a deposit on a house of their own.

This is yet another example of how badly thought-out government policy is making it harder for people to access affordable housing.

He said: “The last six years prove it was a nonsense to think that cutting the supply of rental housing when demand is so strong would make it easier for those saving for a home of their own. We need a strong and vibrant private rental market that meets the needs of those who rely on the flexibility it provides. Those who need somewhere to live before becoming homeowners and those for whom the promise of social housing tomorrow provides cold comfort today.”

05 | Reasons landlords might decide to sell a rental property include:

06 | Abolition of Section 21

The much-anticipated Government White Paper, ‘A Fairer Private Rented Sector’, has laid the future for the private rental sector – and it confirms the abolition of Section 21. That’s when a landlord can give their tenant a ‘no fault’ eviction notice.

Once in place, landlords will need to have a reason for ending a tenancy, such as wanting to sell the property or needing to move back in themselves.
Unless something replaces section 21, landlords may find it more difficult to evict someone with serious rent arrears or who is causing disturbance for neighbours. No doubt lenders will also be watching this space very carefully as they face the prospect of greater difficulties in obtaining possession too.

The new White Paper also unveiled plans for a property portal that will make it easier for landlords, tenants and local councils to comply with the law and access other important information. The portal should allow tenants to perform checks on landlords before renting from them and make it easier for local councils to identify and penalise criminal landlords.

The portal will also include a database of rogue landlords, so that the public can easily see which landlords have been breaking the law.

It will also soon be illegal for landlords or their agents to refuse to rent to families with children or those receiving state benefits.

In future, this may be extended to include other groups, such as ex-offenders.

And landlords will need to have a good reason for refusing a tenant’s request to keep a pet in their property. Instead, they will be able to insist the tenant has insurance to cover any potential damage that the pet might cause.

07 | Rising mortgage costs

With recent inflation and instability in the Money Markets, the Bank of England has repeatedly increased its interest base rate as many as 15 times from historic lows of 0.25% all the way up to 5.25% currently (September 2023). In addition, the bank’s chief economist Huw Pill says it is likely to rise again soon.

This means interest rates on mortgages are almost certain to go up, with trackers and standard variable rate mortgages all increasing in cost in line with the base rate. Experts are currently trying to forceast where interest rates will go next.

If rates rise any further this would cut into landlords’ already thin margins, making their buy to lets even less profitable, and leading some to decide it is time to finally sell up.

08 | Changes in the way mortgage interest relief is accounted for

In the past, mortgage interest, and other finance costs were deductible from landlords’ property income which reduced the taxes paid on this income.

However, as of 2021, this is no longer the case, as all financing costs incurred by a buy to let property owner are now treated as a basic rate tax reduction only. This fell under the Government’s Section 24 of the Finance Act.

The long and the short of this is that landlords with mortgages and a higher taxable income often now fall into the 40% tax bracket and so their taxable become can be substantially higher. This is often because their rental income is now counted as part of their annual taxable income. For ease, we have published a guide on how Section 24 applies to landlords.

It is therefore no surprise some property owners in this situation are choosing to sell their buy to let properties with or without tenants.

09 | Selective Licensing

Selective Licensing was introduced by the UK Government in 2006 in an effort to ensure that private rented accommodation is kept at a decent standard.

It gave local authorities powers to introduce Selective Licensing of privately rented homes in order to tackle problems in their areas caused by poor maintenance of properties or anti-social behaviour in areas with a large concentration of rental properties.

As a result, certain landlords in these areas now pay an average of £890 (per property) in licensing fees and complete onerous paperwork to get a license or face substantial fines.

Such schemes have been introduced by local authorities up and down the country, including but not limited to Nottingham, Liverpool, Durham and parts of London.

Many landlords have decided this legislation is more trouble than it is worth.

10 | Fire and Gas Safety Legislation

In the wake of the Grenfell Tower disaster, the UK Government has been taking fire safety more seriously, bringing in legislation to ensure improvements are made.

However, the cost of this is falling on landlords, with many being forced to pay for hugely expensive improvements, or being left with an unsellable property.
If the government is willing to leave these individuals in the mud, the security of buy to let property as a hassle-free investment is compromised. Mortgage lenders are also likely to be worried by this, as it increases the potential chance of a landlord losing interest in their property and ultimately defaulting on their payments.

Landlords have also been caught out by what they thought were simple regulations about gas safety certificates.

A single missing piece of paperwork left one property owner unable to evict a tenant who had refused to pay rent for four months. This was due to a potentially misunderstood regulation requiring the gas engineer to take a selfie with the tenant and the gas safety certificate.

Finally, new legislation in October 2022 required all private rental properties to have a carbon monoxide alarm fitted in any room which contains a fixed combustion appliance. These include oil or gas boilers, wood burners and gas powered fireplaces although an exception is in place for gas cookers.

11 | New electrical safety standards

Updated electrical safety standards came into force for new tenancies on 1 June, 2020 and were applied to pre-existing rental agreements on 10 April 2021.

Landlords today must employ qualified and competent electricians to conduct full wiring checks on their properties every five years.

In addition, rental property owners are also required to have Portable Appliance Tests (PAT) conducted once a year. The PAT test must be completed on all appliances provided by the landlord.

These services are not free and add yet another additional expense and hassle to owning and managing a rental property.

12 | New energy efficiency standards

Houses in the UK have their energy efficiencies measured on a scale that runs from A to G. A house in the A category must be more than 92% efficient, while a house in the G category is less than 20% efficient.

In 2018, new laws came into place stating that all private rented property must have an EPC rating of E or above, and that landlords renting out properties in the F and G category must improve them to E.

While it is possible to get an exemption to this, in order to do so a landlord must show that they have spent £3,500 on the recommended energy efficiency improvements for their property.

However, the government is considering introducing tough new EPC rules in 2026 that require all rented properties to have an EPC rating of or above or have £10,000 spent on improvements.

Given making properties achieve a class C rating is often completely unachievable due to Britain’s aging housing stock, many landlords will be put substantially out of pocket by these changes, with potentially as many as 1 in 5 considering selling their buy to let property.

13 | To realise assets or invest in something more profitable

A landlord might need to sell their property quickly in order to invest more elsewhere.

There could be many reasons an individual property owner might require this additional liquidity: They could be starting or supporting a business, buying another property, or consolidating their finances.

It could even be that they are investing in something they perceive as more profitable— if you saw the potential of Amazon in 2001, or Bitcoin in 2014, it would have been wise to buy in big.

14 | Nightmare tenants, or even just difficult ones

Stories of nightmare tenants appear almost weekly in the newspapers, with some landlords being left with rat infested, rubbish filled homes, with no appliances or furniture after a lengthy and costly eviction proceeding.

It is no wonder some property owners decide that it is not worth the risk of renting.

Other tenants are simply difficult, through no fault of their own. Some seem to have terrible luck with appliances, while others struggle with their finances and don’t always pay rent on time.

In addition, with the rapidly increasing cost of energy, many tenants may be forced to choose between paying for heating and electricity or paying the rent.

Many landlords have decided to sell up to avoid being exposed to this risk.

15 | Upcoming maintenance

One of the biggest advantages to renting your home is that you do not have to pay for its maintenance— however, this also cuts the other way, and as a landlord, maintenance can be one of your biggest costs and bugbears.

A big upcoming job, be it repairing a roof, or replacing a boiler can be a substantial cause of dread in a busy landlords’ life.

Many look to sell their properties before these problems become urgent, but selling rental properties can be far from easy.

However, a problem property is also far from unsellable, and there are many ways to do so quickly.

16 | In Summary

While landlords who remain in the market will be hoping for significant rental increases as rental property supplies fall, they may be in for a rude shock.

With rapidly rising mortgage rates, energy bills and inflation, they may soon find that the coming increase in rent income is purely theoretical, while ever-growing legislation leads to their workload and costs only increasing.

If you have been thinking of selling a rental property contact one of our experts at National Property Buyers.

Our experienced team will be on hand to answer any questions you may have.

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17 | FAQs

Clear, honest answers to help you move forward with confidence.

2026 Legal Shifts: The Renters’ Rights Act

Tax & Financial Impacts for Landlords

Selling with Tenants: The Quick Sale Strategy