Selling vacant vs. tenanted properties by auction

When it comes to selling a property by auction, landlords are often faced with an important decision – should they sell their property vacant or tenanted? There are pros and cons for each option, and the right decision will likely depend on a few factors, such as the property type, the reason for selling and market conditions.

At SDL Property Auctions, we sell hundreds of vacant and tenanted properties every year and we work with our sellers to discuss their options so they can choose their sales route with confidence. Here, Andrew Parker, auctioneer and partner at SDL Property Auctions, explores the key considerations when selling both vacant and tenanted properties by auction.

Vacant properties appeal to a wide range of buyers, from owner occupiers and first-time buyers to developers, investors and landlords. Auction bidders are often looking for properties in poor condition that they can renovate, and at previously tenanted properties in popular rental areas where they will get the best return on investment. This works well for landlords with empty properties who don’t have the time or money to refurbish prior to finding a new tenant or indeed disposing of the asset.

This large pool of potential buyers is one of the biggest advantages of selling a vacant property. The marketing process can often be a lot smoother too as there are no restrictions to taking internal photographs for property particulars, no tenants to accommodate for viewings and no tenancy agreement paperwork to navigate. Ultimately a vacant property is a blank canvas for the successful purchaser to refurbish as they wish.

In contrast, a property which remains vacant for a prolonged period of time can result in a loss of rental income for landlords, while still incurring expenses such as council tax and insurance. In addition, an empty house could be the target for vandalism or squatters, or it could simply fall into disrepair with mould problems, broken pipes or general maintenance issues.

You’ll often find a number of tenanted properties filling the pages of an auction catalogue, more so than you will in the window of an estate agent. Landlords looking to dispose or restructure their assets will turn to auctions to tap into the pool of investor buyers, and those property professionals who understand the world of rental portfolios. Properties can be successfully sold by auction as both single lots and as combined portfolios.

The natural attractiveness of selling a tenanted property is that the new purchaser has a ready-made income from day one. They can simply start, or grow, their rental portfolio with minimum effort and disruption to the sitting tenant. Promoting a healthy yield as part of the sales particulars can attract competitive bidding from buy-to-let landlords and give confidence that the purchase will be a profitable one.

It’s important to note that selling a tenanted property does narrow your buyer audience. Not everyone wants to be a landlord and manage tenants, properties and everything that goes with it. They may not know their Assured Shorthold Tenancies from their Regulated Tenancies. Tenants could also refuse access for viewings if they are unhappy about the sale of their home or they simply don’t want strangers walking around their lounge. There could also be disputes or rental arrears with tenants too which have forced the landlord to sell, and which would be inherited with the purchase.

In the end, both tenanted and vacant properties can achieve excellent sale prices, with an immediate exchange of contracts and speedy completion. What’s important is preparing detailed marketing information and legal packs to provide potential bidders with all the information they need in order to make an informed decision.

Whether you’re looking for a fast and faff-free sale of your vacant property or are looking to dispose of your tenanted rental portfolio, the experts at SDL Property Auctions can guide you through the process from start to finish and get you the best price.