
According to research by the NRLA, published in February 2023, 30% of landlords are planning to sell at least one of their rental properties in 2023.
This exodus of landlords may seem difficult to understand when rents and rental demand have never been higher. The reasons range from George Osborne’s restriction on mortgage tax relief in Section 24, to concerns about the impending abolition of Section 21 and more energy efficient EPC ratings.
Many long-standing landlords have decided it’s time to sell up. The remaining landlords will need to be comfortable they’ll make an acceptable return if they’re to add to their portfolio.
It’s also a particularly challenging time for renters, who may struggle to find alternative housing if their landlord sells with vacant possession.
In this blog post, I discuss the different ways landlords can approach selling their buy to let portfolios, and the perspectives of renters. It’s a detailed post, but you can see the overview of topics below.
At a glance
Selling up in 2023

The most important thing for landlords to appreciate when looking into selling in 2023 is that the market has turned. It’s a challenging market for anyone looking to sell property at a decent price.
First-time buyers are holding back, waiting for prices to drop, and interest rates to ease. Depending on the location and type of property, it might attract a provider of serviced accommodation.
However, short-term lets are facing increased scrutiny and regulation. You can read more about the pros and cons of serviced accommodation here. Also, the cost of living crisis means people have been cutting back on discretionary spend.
What about selling to another landlord? It can be a win-win, as the property stays in the PRS.
However, even putting Section 24, EPCs and renters’ reforms to one side, the expectations of landlords have changed. These are the four inter-related developments that have changed the priorities of those landlords that are continuing to invest:
1. Asking rents
The average asking rents for new tenancies have increased significantly over the last few years, according to Rightmove. For instance, average rent outside of London has increased from £972 in Q4 2020, to £1,190 by Q1 2023.
If the seller hasn’t increased the rent since before the pandemic, there may be a big gap with the market rent. Depending on the situation with the tenant, this may impact the valuation.
2. Average yields
Yields have also gone up, the average across Great Britain increasing from 5% in Q1 2022 to 5.8% by Q1 2023. Landlords now expect higher yields. Click here for a table showing both average yields and rents in the various regions and countries in the UK.
3. Rising interest rates
Following the increases in the base rate, BTL mortgages cost considerably more than investors have been used to.
Mandy Waby, an independent mortgage adviser with Veracity Financial Planning who specialises in property investors, says that rates have settled after the Kwazi Kwartang budget. Let’s take the example of a 5 year fix 75% loan to value single let BTL mortgage. Mandy advises that rates in February 2023 start at over 4.69% for a sole trader, increasing to 4.79% for a limited company. For the stress rate, the lender adds an extra 0.5% for basic rate tax payers and companies, and an additional 1.5% for higher rate tax payers.
In order to provide more attractive headline rates, some lenders have now increased arrangement fees to 3% of the loan amount or £5,000.
Consequently, it’s now harder for landlords to secure a BTL mortgage, without a high rent or opting for a lower loan to value.
4. Competition from banks
Rising interest rates also mean that would-be property investors might be better off putting the money in fixed rate bank accounts of over 4%. This means the yield from high interest bank accounts can rival the net cash flow from property.
Sure, there’s no capital growth in the bank, but we may well be entering a period of stagnant house prices. For instance, the 2023 Joseph Rowntree Foundation report published February 2023 says “market stagnation is the most likely path for the next few years”.
Being realistic on price

If you’re determined to sell your rental property, the most important thing is to be realistic on price. This isn’t the market to test the waters with a high price, even if estate agents try to woo you with unrealistically high valuations.
If you price reasonably, you may get several offers. On the other hand, if the price is too high, it’s likely to hang around on the market and have to be reduced in price.
For instance, I recently viewed a house for sale in Maidstone with an EPC D, with renters paying a rent that would return a yield of 3.8% at the asking price. Even if I were to value the property on the basis of a yield of 6% on a market rent, which would mean a rent increase of 47%, the property would still be 20% over-valued. In any event, the current renters could not afford a 47% rent increase. It was a no from me, as the asking price bears no relation to the rental return.
If you do want to sell your rental property, do not be like this Maidstone landlord. It is 2023 and not 2021, and sellers need to price accordingly.
Tenanted or vacant possession?

One of the first questions that landlords need to answer when selling up is whether to sell the property with tenants, or with vacant possession.
If the priority is to sell for the highest price, then sadly for the renter, it’s more likely to be achieved with vacant possession.
Why is this? Selling with vacant possession means the property will appeal to the widest amount of sellers. Not just other landlords.
Often buy to lets are the types of properties that attract first time buyers, who also benefit from lower stamp duty. They might fall in love with a project and aren’t fixated on generating rental income. However, few first-time buyers would contemplate having to evict a tenant on their first property purchase. Therefore, to attract those first-time buyers who can afford higher rates, landlords need to sell with vacant possession.
When I sold my low-yielding rental flat last year, the buyer bought it to turn into serviced accommodation, for listing on platforms like Airbnb. This sadly meant that another property left the private rented sector. Click here for an overview of serviced accommodation.
What about selling a tenanted property to another landlord? This could work well if the renters are paying near market rent. However, if they’re not, the value to the investor will reflect this, as the Maidstone example above shows. Valuations are invariably higher if the property is sold untenanted, instead of with tenants in situ on a low rent. This in turn is fuelling the increase in Section 21 evictions.
Please do bear in mind, however, that if the landlord didn’t comply with their legal obligations at the start of the tenancy, they might not be able to use Section 21. For instance, if the deposit protection rules were not followed, the property is unlicensed (depending on the location) or if no EPC or Gas Safety certificate was issued. If you’re in this position, you should get specialist legal advice as to your options before putting the property on the market.
The practicalities of selling a buy to let with tenants

There are some benefits when a landlord sells a buy to let property with tenants. In fact, it may well become the norm after the abolition of Section 21. (Click here for my blog post explaining the likely implications of abolishing Section 21).
First and foremost, the renters keep their home, and the sale is not adding to the rental housing crisis. The seller won’t need to evict the tenants from their home, which is particularly difficult with good long-term renters. The seller also receives rent until the sale completes, and won’t have the worry of an empty property. The buyer knows exactly what the income will be, and that they’ll be responsible for future rent increases if it’s fallen behind the going rate.
Also, unless the buyer is a first time landlord, they’re likely to have a good understanding of conveyancing and the legal responsibilities of landlords. This is more likely to result in a smooth conveyancing process.
However, as I’ve seen myself when looking to add buy to lets to my portfolio, it’s not easy for landlords to sell with tenants. Access to the property for viewings can be difficult to arrange and the seller won’t be able to stage the property for sale.
The images above from my last project prove this point. The top photo of the sitting room was in the estate agent’s listing for the sale of a property I bought last year. The tenants’ oversized furniture meant it was very difficult to see the potential of the room, not least because the fireplace was behind the sofa. I took the bottom photo after the refurb from a different angle, when I listed it for letting on OpenRent. The refurbished room is clean and airy, and the lovely fireplace is the focal point, instead of the wrap-around sofa.
The seller did agree to sell the house with vacant possession, but it delayed the sale, as he needed to serve a Section 21 notice. I wan’t prepared to take the risk of buying a tenanted property, without a substantial reduction in the sale price, as it was only yielding 3.8%. To achieve a yield of 6%, I needed to be able to refurbish the property to a high standard, which couldn’t be done with anyone living in the property.
The seller wasn’t prepared to drop the sale price to an amount that would enable me to keep the existing tenants, so he agreed to a sale with vacant possession. We exchanged and completed three days after the tenants moved out.
Although it’s hard for renters, it’s a question of economics for sellers. Selling with vacant possession reduces the buyer’s risk and helps the seller achieve the best price in a difficult market.
Tips for selling a buy to let with tenants

The best possible outcome from a wider societal perspective is to sell the property with tenants in situ.
Here are some practical tips for landlords who are considering selling a tenanted property:
Rents
I’ll be easier to achieve a fair price with tenants in situ, if the rent isn’t far behind the market. This doesn’t mean increasing the rent all in one go, just before listing it for sale, as that may put your renters in financial difficulty. It means increasing your rent at least in line with wage inflation each year. Something to bear in mind if you’re thinking of selling in 2024, for instance.
For more information, read this guide to increasing rents.
Advanced notice
It’s not compulsory to advise the tenants in advance of the sale. However, it’s best practice and it’s respectful to the renters. They’re also more likely to be cooperative if they feel they’re being treated fairly in the circumstances.
Viewings
It can feel very invasive to renters when potential buyers come to view the property. Estate agents should be considerate when arranging viewings.
Legally, the renters’ right to quiet enjoyment continues, even when a property is on the market. The estate agent should give at least 24 hours’ notice of a viewing, and be at a reasonable time.
The tenancy agreement
Unless the tenant leaves the property before completion, any sale of the property will be subject to the existing tenancy.
However, it’s common for a new landlord to enter into a new tenancy agreement with the renters. They’ll need to ensure the renters have an up to date documentation. (This means the How to Rent checklist, EPC, EICR and Gas Safety Certificate).
The rent will also be apportioned if the sale completes on a date that is not a rent day.
What happens to the deposit?
The contract of sale of the property should explicitly state that the deposit will be transferred to the buyer. The new landlord will responsible for ensuring the deposit is protected, and serving the prescribed information within 30 days.
Notification to renters
Although it’s not compulsory to give advance notice of the sale to the tenants, the new landlord must provide notice of the sale within two months. The notice must include their name, address, and contact details. See Section 3 Landlord and Tenant Act 1985 for full details.
From a practical perspective, the new landlord will also need to do this to start receiving the rent, and advise the renters who is managing the property.
Landlord obligations
The new landlord is responsible for complying with landlord obligations, including any licensing requirements, from completion. The buyer should check the smoke and carbon monoxide alarms, and do a fire risk assessment.
Click here for a summary of the fire safety rules.
How to get vacant possession

Often the best option for the seller is a sale with vacant possession. Unless the sale coincides with the renters themselves deciding to leave, selling with vacant possession involves evicting renters.
What can a landlord do to help renters in this difficult situation? In a word, transparency.
Landlords should let the renters know informally that they’re thinking of selling well before serving the Section 21 notice. This is being fair to them, and will help them plan ahead, especially in taking on financial commitments.
It’s best to explain the reasons why, and reassure them that you’ll provide a good reference (if they merit it!) They might want to buy the property themselves.
Little things like being flexible on when the renters move out can make a real difference. For instance, if they find something earlier when they’re still in a fixed term period, be generous, and release them. If they want to stay a few weeks after the notice expires to time coincide with their move to another property, be flexible.
In terms of legalities, landlords should serve a Form 6A notice under Section 21, with at least two months’ notice. However, this notice must not expire during a fixed term tenancy, unless there is a break clause. For more tips on serving the Section 21 notice, click on my advice here. The Form 6A notice itself is available on the government website.
However, remember that landlords can’t use always use Section 21. For instance, they must have followed the tenancy deposit protection rules, provided the renters with a valid EPC and How to Rent checklist. The property must also have had the correct licenses, where relevant. If the landlord did not follow these rules, they’d need to rely on Section 8.
Getting ready for conveyancing

One of the most frustrating things about buying or selling property is the speed of the conveyancing.
However, there’s a lot you can do to get ready for the inevitable questions and requests for documents.
Here are some practical tips so you can get organised and hit the road running on your sale:
- Ask your solicitor to send you the property information form, so you can have it ready to go.
- For leasehold property, ask your managing agent for the management pack. This should include the lease, any amendments and the last three years of service charge accounts. If it’s on a development, dig out the Certificate of Completion from Building Control.
- If you’re selling the property with tenants in situ, be sure to have everything up to date. This includes the Gas Safety Certificate, EPC, EICR, and the deposit registration information. Do also provide a copy of the latest tenancy agreement with any letters changing the rent. (If your paperwork is not in order, this may limit your options, and you should get advice from a specialist solicitor.)
- If you’ve done any work on the property over the years, eg installing a new boiler or windows, retrieve the Building Control documentation.
- Find any guarantees for the property or the appliances.
Take a look at this blog post here for tips on speeding up conveyancing from the buyer’s side.
Marketing the property for sale
Sellers usually turn to high street estate agents to sell their property, who in turn market the property on Rightmove and Zoopla.
Another option available to landlords, especially if they would like to sell tenanted properties or even a portfolio, is Movewise. They specialise in sales of properties with tenants in situ, and act as a broker for the seller. Movewise tailor the strategy for each sale, and unlike typical estate agents, have access to large databases of active property investors. They can also engage estate agents or auction houses, depending on the property. Click here to find out more and how to register with Movewise.
Movewise’s service is particularly useful for sellers with larger tenanted portfolios, as they offer a user-friendly single point of contact. Their rates compare favourably with the higher quality estate agents, but provide a more bespoke service for landlord sellers.
Whatever agent you use, insist that they take professional photos and make a floor plan with measurements. Agents often skip them, but they are crucial in presenting your property to potential buyers.
Final thoughts
Buying and selling property is stressful at the best of times, even in a booming market. However, it’s even worse in a stagnant or declining market.
With an increasing glut of buy to lets coming onto the market, landlords who are selling up in 2023 need to have realistic expectations. Particularly as first-time buyers have become increasingly priced out of the market.
Of course it’s even more stressful for renters, when a rental property is sold. Landlords should be sensitive to this, and be open, transparent and flexible with them, before and during the sale process. They should also try to sell the property with the existing tenants if at all possible.
Selling to another landlord with vacant possession at least means the property won’t be leaving the private rented sector. Otherwise, it’s one more Section 21 notice, one more set of renters looking for somewhere to live, and one less property available for renters.

Related content
How to terminate a tenancy under Section 8
A guide to buying a tenanted property