Streamlining your property portfolio with precision

In this recent article – – we discussed how a large property portfolio could result in less profitability than one that is strategically streamlined. If you decide to sell property assets, you’re likely to be considering which properties to retain and which to offload.

Champion Accountants offers a specialist accountancy and advisory service tailored to property investors, with this being an area of common concern for our clients.

Calculate the gain on each property

Clarity about your gain on each property is key to this decision. We would always begin here. First, you must establish a property’s true sale price: the amount your buyer pays. From this figure, deduct the purchase price, including legal fees and any Stamp Duty Land Tax paid. The figure you are left with is your gain.

Establish the loan to value on each property

Usually, the gain won’t tell the full story. You must then ascertain the loan to value amount for each asset in your portfolio. By comparing what remains of each mortgage, alongside the gain amount, you’ll have a clear picture of the value – and potential value – of your asset.

Understand the interest cover ratio

The interest cover ratio on your property is the interest you pay on it, compared to its rental income. Getting to grips with this figure will facilitate an informed decision about its worth, and how it positively – or negatively – impacts your portfolio.

Consider geography

From here, we move on to somewhat less tangible factors, which help you understand the long-term value of your asset as an investment. The location, for example, of any property will impact its potential future income. Is it located in a highly sought after area? A location where property values are rising above the national average, or where rental costs are on the rise – perhaps due to investment into the area – will add long-term value.

Tenant quality and longevity

Any landlord knows that a quality tenant saves time, money and headaches. With a reliable, trustworthy, committed tenant in place, you’ll reap the benefits of regular rental payments, low risk of avoidable property damage, and either time saved or agent fees reduced through a lack of issues requiring attention.

Early repayment charges

While not all mortgages carry an early repayment charge, this must be factored into any decision. Typically, an early repayment charge is one to five per cent of the outstanding mortgage, so the charge will vary by property and could be significant.

Rank your properties

With a clear understanding of the true value of each property, we would then rank each asset in your portfolio. Your income, costs and ambitions will influence how many properties you should sell.

Following the above steps will help you fully understand your property assets and expedite hard decisions about selling or holding on to each. With long-term financial gain in mind, some landlords are willing to accept the short-term cash flow hit on rental income. For others, the price is too much to bear.

For expert advice about your property portfolio, including when to sell, call Champion on 0161 703 2500 or email David Herd at