Landlords are being encouraged to strategically evaluate their property portfolios to determine which assets to sell first. This approach aims to help create a property business that generates a better income, demands less time, and offers a clearer financial future, according to Property118.
The decision of which properties to sell is a common question for landlords considering retirement, reducing their workload, or changing their investment focus. Common strategies include selling properties as they become vacant or using sale proceeds to pay off other mortgages, both of which can yield positive results.
However, there is an opportunity to make these decisions work harder, potentially releasing capital for better-performing properties, simpler investment types, or ownership structures tailored to income and family needs. Property118 suggests that landlords should assess each property as if building a portfolio anew, considering the capital invested, income generated, and the work required.
Cashflow return on equity (RoE) is highlighted as a useful metric, calculated by comparing the annual surplus (rent minus operating costs and mortgage interest) to the property's current value less its outstanding mortgage. Properties with substantial equity, modest income, and disproportionate demands are identified as potential candidates for closer examination and sale.
The article also notes that qualifying non-residential and mixed-use property purchases in England and Northern Ireland can benefit from lower Stamp Duty Land Tax (SDLT) costs compared to additional dwelling rates. For example, a £300,000 purchase could see a £15,500 difference in SDLT.