Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property118. Read the original article for full details.
Landlord Sales Agency: Using Equity as a Business Asset in Property Sales
Landlord Sales Agency has outlined an approach for landlords to treat property equity as a business asset, using it to manage costs and improve outcomes during the sales process. The agency describes how deploying equity can help landlords navigate the financial challenges of selling rental properties, especially when considering whether to sell with tenants in situ or with vacant possession.
The report notes that selling a property comes with various costs, regardless of the method chosen. Estate agents typically charge fees or commission after a sale, but landlords selling empty properties may face significant ongoing expenses such as mortgage payments, insurance, utilities, council tax, maintenance, and legal costs while waiting for a buyer. Additional costs can arise from gaining vacant possession, loss of rental income, replacing fixtures and fittings, and redecorating, potentially leading to 6–18 months of extra spending while income is reduced.
Selling with tenants in place can avoid some of these costs and risks, but auction houses may charge entry fees, listing costs, and seller’s fees, and properties sold this way often achieve prices below vacant possession value. Not all property buying companies purchase with tenants in place, and those that do may make low offers or charge high fees.
Landlord Sales Agency states that it uses a portion of the equity tied up in the property to minimise these costs and fund the sale, rather than requiring sellers to pay upfront for fees, legal costs, tenant incentives, refurbishment, and other holding costs. This approach is presented as a more efficient use of capital, allowing landlords to keep more options open and potentially achieve better outcomes.
The agency provides an example of a landlord with a seven-property portfolio in the North East, where different strategies were used for each property. Four properties were sold to a mix of investors, first-time buyers, and an existing tenant. Some sales required vacant possession, and the agency worked with tenants individually, assisting with moving costs to avoid court processes and delays.
Source: Property118