For about twenty years, most landlords found out what a property was worth in the same way. Serve notice, get the property back empty, put it on the market and see who bites. If the offers were disappointing, re-let it and wait for a better year.

That route has changed, and a lot of landlords who are thinking about selling a portfolio have not been told what it now costs.

The change in one sentence

You can no longer find out what your portfolio is worth by putting it on the market and seeing what happens.

Ground 1A is the possession ground a landlord uses to sell. It carries four months’ notice. And if you use it and then change your mind, there is a twelve-month restriction on re-letting the property, or marketing it to let.

Under the old approach, the option to change your mind cost nothing. You tested the market, and if the market said no, you put a tenant back in. Now the same change of mind can cost you a year of empty property. Not a void you chose. A void you are not allowed to fill.

Across a portfolio, that is not a paperwork point. It is a year of lost rent on every unit you tested, with the mortgage, insurance and running costs still going out.

So “serve notice, list it, see what happens” has gone from the default plan to one of the most expensive things a landlord can do.

Selling with the tenants in

The obvious response is to sell with the tenants in place. That is a real option, and for a lot of portfolios it is the right one. But it is worth being clear about what it does.

Selling tenanted shrinks your buyer pool to other landlords. Everybody who wanted to live in the property, and everybody who wanted a blank canvas, has gone. What is left is a buyer who is doing arithmetic.

A buyer doing arithmetic does not pay what you would like. He pays what the income supports, and what his lender will lend against that income. That is the whole conversation.

It is not necessarily a worse price. On a properly performing portfolio it can be a better one. But it is a different price, arrived at a different way, and you cannot get to it by hoping.

The basis you are valued on

The thing that decides that arithmetic is the valuation, and almost nobody asks the right question about it.

When a surveyor values a portfolio for a lender, they are not answering the question you think they are answering. You want to know what it is worth. They are answering what it would fetch if it had to be sold within a defined marketing period.

Give the same portfolio a longer marketing period, a 180-day basis for example, and you get one answer. Compress that period and you get a lower one, because you have asked what the portfolio fetches under pressure.

Same bricks. Same tenants. Same income. A different question, and therefore a different number.

This matters more when you sell with the tenants in, because the valuation is the number the buyer’s lender lends against. If the basis is compressed, the buyer’s borrowing shrinks with it, and so does what he can afford to pay you. You can have a willing buyer and a portfolio that performs, and still watch the deal re-price because nobody agreed the question before the surveyor was instructed.

The evidence you hold changes the answer too. A documented rent roll, tenancy agreements that are in order, a clean arrears history and up-to-date compliance all give a surveyor grounds to support the better basis. Gaps in any of them give him grounds to be cautious, and caution is always priced against the seller.

So when a seller tells me a valuation came in light, my first question is not about the surveyor. It is: what basis were you valued on, and did anybody tell you before you instructed?

Notice is the last step

Everything above comes back to one thing: keeping the ability to change your mind.

Under the old rules you kept that ability by default. Now you only keep it if you sequence things deliberately. The sequence is not complicated:

First, establish what the portfolio supports before you serve notice on anybody.

Second, find out what a buyer, and a buyer’s lender, would actually do with it.

Third, understand which basis you are likely to be valued on, and get together the evidence that supports the better one.

Only when you know all of that, and only when there is a buyer in view, does anybody serve anything.

Notice has been treated as the first step for twenty years. It is now the last one. The habit of serving first and thinking second is the expensive part.

And the sequence has a benefit that is easy to miss. Once you have priced the sale properly, you are in a position to compare it honestly with the alternatives: restructuring, refinancing and stepping back from the day-to-day, or handing the portfolio on. Deciding not to sell after you have priced it is not a failure of the process. It is the process working. You cannot choose between routes you never priced.

Next step

If you own a £1m+ portfolio and you are thinking about the way out, the next step is a free 15-minute Portfolio Exit Certainty Call. We map what your portfolio would support in a buyer’s hands, which route keeps your options open, and what has to happen before you serve anything on anybody.

Book your Portfolio Exit Certainty Call: https://calendly.com/spvmortgages/portfolio-exit-certainty-call?utm_source=site&utm_medium=organic&utm_campaign=exit_certainty&utm_content=site-article-v46

I am a mortgage broker, not a solicitor. Ground 1A applies to tenancies in England. Any client situations referenced are anonymised and details changed to protect confidentiality. This article is education only – not tax, legal or investment advice. Always speak to your own tax adviser, solicitor and mortgage professional before acting on anything discussed.

SPV Mortgages is a trading style of Venoa Financial Services Ltd. Regulated mortgage advice is provided via Connect IFA Ltd, authorised and regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on your mortgage. The FCA does not regulate some aspects of buy-to-let and commercial mortgages.