Section 21 and selling property

lilyloo17

I’m really in a quandary about selling our property or not.

We live overseas and rented out our U.K. property , tenant have always paid on time etc we have little contact as it’s handled by a management company.
Our overseas stay looks likely to be more permanent and we’ll need to buy a house here so would need equity from our rental. 

We are not in a rush to buy but would need the funds here and be ready to go should the right property come up.
with the market looking likes it’s about the take a downturn it’s looking like we need to sell soon. Our mortgage interest has over doubled and we have absorbed the extra cost not increased rent but it’s just now becoming more urgent. 

We are looking to issue a section 21 soon and I’m feeling awful about it , espec with Christmas coming … but I feel we need to be in a position ready to sell for spring and also we don’t know how tenants will react about leaving so although I’d like to give them longer I also need to think about what I’d they don’t leave after 2 months and issue it now ? 

I’m feeling very torn 

MEM62

lilyloo17 said:

I also need to think about what I’d they don’t leave after 2 months and issue it now? 

Then you would go down the eviction route - as I did this year.  The notice period for my tenant expired mid-May, they refused to move so I went to court and obtained a possession order.  That took about six weeks by the time all the paperwork had been gathered, submitted and the case heard.  They still refused to move even in the face of a court order, so the next stage was to involve bailiffs.  That process has taken much longer, and the eviction has been 'booked' for November 29th.       

GDB2222

Is the rent below market levels at the moment? That would mean that tenants want to stay, as they will find that anywhere else will cost them more money.

I suggest that you ask the managing agents what they advise. They'll want to get the tenants out, so they can get commission on the sale.  

pramsay13

Can you remortgage to take some equity out of the property but still own it? You will probably need 25% remaining to make it work.
Alternatively you could sell with the tenant in place. Your options will be a bit more limited but it will move everything quicker and you don't need to evict. A spring time sale date is out of the question if they dig their heels in and refuse to leave.

lilyloo17

GDB2222 said:

Is the rent below market levels at the moment? That would mean that tenants want to stay, as they will find that anywhere else will cost them more money.

I suggest that you ask the managing agents what they advise. They'll want to get the tenants out, so they can get commission on the sale.  

Yes it’s about 300 per month below market value ! Our agents don’t want us to sell , but with our mortgage increasing interest from 2% to 5.5% and needing the equity we really need to. We were going to wait till summer bit with the prospect of a market crash I think we need to move asap which means an eviction notice before Xmas which feels cruel ,

lilyloo17

MEM62 said:

lilyloo17 said:

I also need to think about what I’d they don’t leave after 2 months and issue it now? 

The you would go down the eviction route - as I did this year.  The notice period for my tenant expired mid-May, thew refused to move so I went to court and obtained a possession order.  That took about six weeks by the time all the paperwork had been gathered, submitted and the case heard.  They still refused to move even in the face of a court order, so the next stage was to involve bailiffs.  That process has taken much longer, and the eviction has been 'booked' for November 29th.       

That’s what I’m worried about I would prefer not to serve notice before Xmas , however if they drag their feet I would need to do asap which my conscience it feels wrong but maybe I need to view this as a business rather than being emotional about it , I’m both a tenant and a landlord so I see both perspectives (and have just sucked up a 35% increase in my own rent I pay)

tacpot12

Well done for feeling torn by the decision.

In your situation, I would give them notice now, apologise and explain your reason. I would also suggest you help them find somewhere to move to, e.g. by offering a good reference.

It might be as well to tell them about the situation a few days before they will receive the Section 21 notice so that it does not come out of the blue. I would mention that you have not increased the rent even when your own mortgage has increased, as this reinforces the message that you have been a reasonable landlord. Under the circumstances, I would expect the tenants to be unhappy, but accept that if you need to sell, you need to sell.

They will move out if they can, and won't if they really can't find somewhere they want to move to. Sometimes it takes an eviction to remind tenants that they might have to be less picky about where they are moving to. 

You might also offer them the option to buy the property from you. If you do, you need to set a deadline for them to make an offer, and indicate when they need to complete by. 

lilyloo17

pramsay13 said:

Can you remortgage to take some equity out of the property but still own it? You will probably need 25% remaining to make it work.
Alternatively you could sell with the tenant in place. Your options will be a bit more limited but it will move everything quicker and you don't need to evict. A spring time sale date is out of the question if they dig their heels in and refuse to leave.

We really can’t we literally need all of the equity , we’re buying in canada and average houses are about 900,000 dollars ! Also I think it’s very complex trying to get an expat mortgage and rates would be high. Plus we have to declare the income from rental in canada in taxes and it’s just not viable anymore we make nothing on it ! 

lilyloo17

tacpot12 said:

Well done for feeling torn by the decision.

In your situation, I would give them notice now, apologise and explain your reason. I would also suggest you help them find somewhere to move to, e.g. by offering a good reference.

It might be as well to tell them about the situation a few days before they will receive the Section 21 notice so that it does not come out of the blue. I would mention that you have not increased the rent even when your own mortgage has increased, as this reinforces the message that you have been a reasonable landlord. Under the circumstances, I would expect the tenants to be unhappy, but accept that if you need to sell, you need to sell.

They will move out if they can, and won't if they really can't find somewhere they want to move to. Sometimes it takes an eviction to remind tenants that they might have to be less picky about where they are moving to. 

You might also offer them the option to buy the property from you. If you do, you need to set a deadline for them to make an offer, and indicate when they need to complete by. 

Thanks for your response, I take onboard we should explain the situation. It doesn’t make me feel less guilty as I definitely feel the human aspect of this , but ultimately I know we have to make the decision which is best for us - I know people have this view of greedy landlords but that is just not the case for us , we’re accidental landlords after moving abroad. Always paid for repairs as soon as required. Not increased rent in 3.5 years , even with rate increases etc and in turn they’ve always paid on time I just hate knowing we have to evict them bit we can’t risk a massive drop in house value. 

GDB2222

lilyloo17 said:

GDB2222 said:

Is the rent below market levels at the moment? That would mean that tenants want to stay, as they will find that anywhere else will cost them more money.

I suggest that you ask the managing agents what they advise. They'll want to get the tenants out, so they can get commission on the sale.  

Yes it’s about 300 per month below market value ! Our agents don’t want us to sell , but with our mortgage increasing interest from 2% to 5.5% and needing the equity we really need to. We were going to wait till summer bit with the prospect of a market crash I think we need to move asap which means an eviction notice before Xmas which feels cruel ,

I would serve a S21 and, at the same time, a notice to increase the rent by £300.

Before doing either, I would talk to the tenants and explain your position, whilst saying how sorry you are. You can also offer them say £300 towards their moving costs, providing they move out on time. 

propertyrental

Communication and the personal touch goes a long way to pre-empting problems. Why not speak to your tenants? Yes, long distance phone calls cost but the benefits could be huge. Maybe email first to set up a time to talk.
Explain your plans and needs. Say you are flexible. Listen to their response, their concerns. Yes serve a S21 but explain you are happy to allow them time to find somewhere. Maybe even offer to help with, say, the deposit on a new place.
Maybe it won't help and you'll still need to use the formal routes of S21, court and bailiffs, but who knows? They might even say they want to buy your house....?