Should Landlords be thinking about selling up?

With the sudden rise in interest rates, fears of a long recession and more pressure coming down the line for landlords (digital tax reporting, EPC requirements to name but two!) it’s easy to feel doom and gloom, and wonder if it’s worth staying in the sector.

And that sentiment can become contagious, create a panic and a selling frenzy. And there are always buyers happy to wait and buy in a downturn. “Be greedy where other are fearful” according to Warren Buffet!

So, what should you do?

Firstly, do not panic. Unless you are losing money hand over fist (which suggests that something was fundamentally wrong with your strategy in the first place), taking some time to make sure you choose what’s right for you is better than rushing in to a fear-based decision. Here is my 3-point plan to guide you:

Know your numbers:

Stress test your cashflow. How much more could interest rates rise before you cannot break-even or hit your target yield. How long could you ride it out for?

Can you pass on some of the interest rate rises to tenants? Get a view from a local Letting Agent. Tenant demand is still strong, so you may have headroom for increase, especially if you source a new tenant.

Revisit your investment strategy. If you have been in the sector for several years and made good money, and your wealth strategy was to be in property for another 10 years, perhaps viewing this is as a 1 or 2-year blip in the grander scheme of things will strengthen your resolve (even if you take a short-term profit hit) to keep the faith.

Get tax advice from multiple sources:

Speak to your accountant, but consider alternative sources from Estate Planning and Chartered Tax Advisers. You may be able to either defer or mitigate Capital Gains Tax but most solutions need to be in place BEFORE you exchange contracts, so allow sufficient time to consider all your options.If you’ve got properties in a limited company, are you better off selling the company shares as opposed to the individual properties?

With Capital Gains Personal Allowances reducing by 50% in April, make sure that you are claiming all the capital costs allowed (Purchasing Costs including Stamp Duty, Structural Improvement Works, Selling Costs etc). HMRC are very hot on this area, so make sure you’ve got the paperwork to evidence these costs. A good property tax accountant should be able to help you here.

Have a positive alternative use for proceeds of sale:

If you’re selling part of your portfolio, should you reduce your debt in your remaining properties?

Get advice from an Independent financial adviser as to what else you could invest in (based on your risk profile)

If you’d like to discuss this further, please get in touch with us at

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