We often find investors who are looking for bulk purchases of flats and apartments that can be bought at a discounted price.
These properties can be rare on the open market and can be difficult to buy outright.
However, we come across properties for sale that are marketed for a quick sale, especially when developers face financial problems or when banks repossess them to find new owners to take on the renovation or management.
If you are interested in selling apartment blocks or flats, please read on.
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Which properties meet the definition of being a block of flats?
Owning a block of flats can be a great investment for anyone, whether as a single purchase or as part of a property portfolio. As the building’s owner, you can rent out each flat to tenants, and gain steady income from their rent payments.
But what exactly qualifies as a block of flats? It is any building of which you are the head leaseholder or freeholder and which contains two or more flats rented out to tenants on a monthly, annual, or other basis.
These tenants don’t own any of the freeholds and will sign a contract with you, which outlines their rent and how long they’ll stay, usually via an Assured Shorthold Tenancy Agreement.
These properties are often found in urban areas but can also exist in suburban regions.
Tenancy and Tenant Rights
If your block of flats has existing tenants, you need to consider their rights. In the UK, tenants may have the right of first refusal, meaning they could collectively make an offer to purchase the freehold before it is offered to other buyers. You will maintain good tenant relations as unhappy tenants can hinder the sale process by refusing viewings or not maintaining the property.
Legal and Financial Obligations
- Capital Gains Tax: You may need to pay Capital Gains Tax on the profit made from selling the block of flats. This tax applies to the gain, not the overall sale price.
- Service Charges and Lease Terms: Ensure all service charges and lease terms are clear and up-to-date, as potential buyers will scrutinise these details
Can you sell a block of flats if you currently have tenants?
Selling your block of flats with existing tenants is possible, but it comes with some extra complications that you should be aware of.
To ensure tenants are happy and content with their living situation, you should do all you can to make sure they are treated well. People who find the building comfortable are more likely to keep it in good condition and are open to viewings from buyers.
However, if tenants are unhappy, they may reject viewings and leave common areas untidy, which can affect the value of the property.
Alternatively, you could sell the block of flats as empty. To do this, you will need to activate the notice clause in your rental contracts with your tenants. Usually, this clause requires 60 days’ notice, although this can vary in some circumstances.
Potential problems trying to sell a block of flats with cladding
Unfortunately, some types of cladding have been proven to be highly flammable, leading to a major public concern after the tragic Grenfell Tower fire in North Kensington, West London in June 2017.
The fire spread quickly due to the non-compliant cladding on the building, making it more prone to ignition.
This event highlighted the fact that many blocks of flats in the UK have this type of cladding, and it sparked calls for stricter safety regulations.
In response, the government banned this type of cladding in the summer of 2022, preventing its use in any new construction to reduce the risk of further fires.
If you’re selling a block of flats with cladding and don’t want to wait for a surveyor’s report, there are other options.
You could contact a fast property-buying company, like Property Saviour, who might have the financial means to buy the block of flats immediately without needing to wait for a cladding assessment.
This guide will explain how these companies operate and the advantages they can offer.
Taxes you might have to pay when selling a block of flats
When you sell a block of flats, there are certain taxes you may need to pay. These could include:
- Income Tax If you’re receiving rent payments from your tenants, it’s likely that you will need to pay tax on at least some of the income. Speak to an accountant or other tax specialist to get an accurate assessment of your total tax liability.
- Capital Gains Tax might apply to the profit you make from the sale of the flats, but only to the amount of profit and not the full selling price. It’s best to consult a financial professional before selling any type of property, as there may be exceptions and limitations that reduce the amount of tax you need to pay.
Selecting the right method for selling your block of flats
When you have decided to sell the freehold on your block of flats, the next important choice to make is which of four common methods to find a buyer.
These include selling to a quick property buyer, selling on your own, selling through an estate agent, and selling through an auction.
- Selling to cash property buyers is a fast option, with offers and purchases usually completed within a few weeks.
- Selling on your own can be slow and stressful, with some properties taking over a year to find a buyer.
- An estate agent will take on the responsibility of listing the property, advertising it, organising viewings, and seeing the offers through to exchanging contracts.
- Auction involves bids of ever-increasing value, with the highest bid when the auction ends being the buyer of the block of flats.
Can I sell a block of flats with tenants?
Yes, you can sell a block of flats with tenants, but you must consider their rights and the potential impact on the sale process. Tenants may have the right of first refusal, and maintaining good relations can facilitate smoother viewings and negotiations.
What is the fastest way to sell a block of flats?
The fastest method is typically selling to cash buyers such as Property Saviour, who can complete the purchase in a few weeks. However, this may result in a lower sale price compared to other methods.
Do I need to pay Capital Gains Tax when selling a block of flats?
Yes, you may need to pay Capital Gains Tax on the profit from the sale. It is advisable to seek professional tax advice to understand your obligations.
What are the biggest problems when selling a block of flats with tenants?
Selling a block of flats with tenants can be a bit of a headache.
Missing freeholders can cause significant headaches for leaseholders, particularly when it comes to lease extensions, property sale, or addressing maintenance issues.
Without a contactable freeholder, leaseholders may struggle to obtain necessary permissions, negotiate lease terms, or ensure proper management of the building. This situation can lead to difficulties in securing mortgages, decreased property values, and potential legal complications, often requiring leaseholders to pursue costly and time-consuming legal remedies such as applying for a vesting order through the courts.
Here’s a quick rundown of the other issues you might face:
- Tenants making it tricky to show the place
- Flats not looking their best for viewings
- Legal stuff like tenancy agreements and rights
- Money matters – rent, taxes, and all that jazz
- Fewer buyers interested in occupied flats
- Figuring out the right asking price
- Dealing with any ongoing management problems
- The whole cladding kerfuffle
It’s not all doom and gloom, though. With a bit of planning and maybe some expert help, you can tackle these challenges head-on.People also ask: “What are the biggest problems when selling a block of flats with tenants?”The biggest problems when selling a block of flats with tenants are:
- Getting tenants to play ball with viewings
- Making sure the flats look tip-top for potential buyers
- Navigating the legal maze of tenancy rights
- Dealing with the financial ins and outs
- Finding buyers who are keen on tenanted properties
Remember, it’s not impossible to sell a block of flats with tenants – it just takes a bit more work. Keep your tenants in the loop, get your paperwork sorted, and don’t be afraid to ask for help if you need it. With the right approach, you’ll be well on your way to sealing the deal.
What is a vesting order in the UK?
Vesting orders help leaseholders with missing freeholders in the UK by providing a legal mechanism to transfer ownership or control of the property when the freeholder can’t be located.
This court-issued order allows leaseholders to proceed with important actions like extending leases, collectively purchasing freeholds, or establishing right to manage, even when the freeholder is absent.
By applying to the County Court or High Court with evidence of efforts to find the missing freeholder, leaseholders can use vesting orders to overcome the obstacles posed by an untraceable property owner and protect their interests.
Tips for a Successful Sale
- If freeholders or management companies are uncooperative, it can complicate the sale. Ensure all necessary documentation, such as the LPE1 form, is completed to avoid delays.
- Prepare Documentation: Gather all necessary documents, including lease agreements, service charge receipts, and any maintenance records, to streamline the sale process.
- Enhance Property Appeal: Consider minor renovations or improvements to increase the property’s attractiveness to potential buyers.
- Consult Professionals: Engage with solicitors and property professionals early to address any legal or financial issues that may arise.
Sell to us!
Contact Property Saviour today if you’re looking to sell blocks of flats!
We can help you get a quick sale for your property and make the process as easy as possible.
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
