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Should You Rent Out or Sell Your House in 2023

Should You Rent Out or Sell Your House in 2023?

Looking at whether or not you should sell or rent out your property, the pros and cons of selling your current property or renting it, and how you can sell to us.

Alexandra Ventress

Alexandra Ventress ★ Digital Content Writer

Table of Contents

Deciding whether to sell or rent out your current home is a decision that thousands of homeowners face every day. Whilst the majority of homeowners are reliant on the sale of their current property in order to purchase their next, some find that it can make financial sense to hold onto their current property and rent it out to tenants. 

 

In this blog post, we will look at the pros and cons of renting out your home vs selling it, why people choose to rent out their properties rather than selling on the open market and answer the all-important question “Should I sell or rent my house?”

 

Looking for a quick answer? Check out our interactive menu at the side! 

When does renting your home make sense?

Whilst renting out your home rather than selling it is a situation that is not suitable for everyone, you may find it is suitable for you if: 

 

  • You have enough money in savings to be able to buy another property without selling your current home 
  • You feel confident that house prices are going to rise 
  • You are having to temporarily relocate and you want to keep your current home 
  • It is an attractive rental property that has the potential to generate a healthy rental income 

Will your mortgage lender let you rent out your home?

One of the biggest deciding factors on whether or not you should rent your house you will need to check your mortgage to make sure you would not be in violation of it should you let out your home. Unfortunately, the majority of mortgages contain clauses that do not allow you to rent out your home. However, others will let you rent it out for a year and some will even allow you to rent it out if you are moving for work for a limited period and are intending to move back. 

 

If your mortgage will not allow you to rent your property, then chances are you will have to switch to a higher interest buy to let mortgage. This will usually involve you having to pay early repayment charges, valuation survey fees, and new mortgage arrangement fees. 

 

Another option that you could explore would be to look at Let to Buy mortgages. Whereas Buy to Let mortgages are taken out by homeowners who are looking to let out their property, Let to Buy mortgages are taken out by homeowners who use it to buy a property. If you have enough equity, you remortgage and use some of the cash to put down a deposit on a new property. You then let out your current property and use the rental income to pay the mortgage on your existing home. 

Pros and cons of renting out your house

As with any house-selling decision, there are pros and cons to renting out your property. Below we have broken down some of the biggest advantages and disadvantages of renting out your home:

Pros 

  • If you are only moving away temporarily or you cannot sell your property on the open market, then renting out it short term may be a viable option 
  • You can generate income and secure capital growth by retaining an existing property and letting it out to tenants. 
  • If you do not want to undertake the hassle of renting, then you can always use a letting agent
  • Your tenant will pay rent on time and take care of your property

Cons

  • Becoming a landlord is a minefield of red tape. With 400+ rules and regulations that getting added to by the day, you have a lot to find yourself getting to grips with. 
  • When you rent out your home, taxes on second homes can be hefty, and the rates on buy to let can be much higher than when investing in other ways. 
  • You will potentially have to invest money into your current property to ensure that it is up to code e.g new boilers or wiring 
  • The rental income you receive from your tenants can often be outweighed by the costs of running and maintaining your property
  • In the event that you default on your mortgages on house prices fall you could risk losing both houses 
  • If you have unruly tenants, they may end up damaging your property which may not be covered by your landlord insurance, leaving you out of pocket
  • You will need to be wary of ‘void’ periods. This is when you are unable to let the property for one reason or another and have no rental income. 
  • You will need to prepare in case your tenants decide to stop paying rent. Will you be able to cope without the rental income until you can find new people to let your property to? 

Pros and cons of selling your home 

When you are deciding whether to rent or sell, it is important to explore the pros and cons for both sides. Now that we have looked at the advantages and disadvantages of letting your property out, we can now take a deep dive into the pros and cons of selling your home: 

Pros 

  • You are able to move on with your life without worrying about tenants or the property
  • You can release equity and invest it in other investments 
  • Any extra cash that you spend on your next home will be free of Capital Gains Tax when you sell the asset
  • You will be able to spend more on your new home than if you rented it out 
  • You won’t have to deal with any extra unexpected repair bills or letting voids
  • You won’t be putting all of your eggs in one basket and expecting one property to deliver a return 

Cons

  • It can be difficult to part with the family home, especially if you have lived there for many years 
  • If you have found yourself in the position of being in negative equity, then you may have to use the cash from your house sale to redeem your mortgage 
  • Selling on the open market can take months and can bring a lot of stress with it 
  • You run the risk of selling off a lucrative asset 

Do you need to pay Capital Gains Tax when selling your house?

Capital Gains Tax (CGT) is a tax that you pay on any profit or gain you make when you sell an asset that has increased in value. 

If the ‘asset’ that you are selling is your main residence then you will not need to pay CGT on it. But if you own a second residence then you may have to pay. The rules and regulations surrounding CGT are frequently updated, so it is important to check with either a tax advisor or HMRC if you suspect you may have to pay CGT. 

Should I sell my house and rent to get out of debt?

Selling off your property in order to get out of debt will only really work if the property is worth more than you owe. You can figure out how much your property is worth by taking away your remaining mortgage balance from your house’s market value. 

 

If your market value has fallen below your outstanding mortgage amount, then you are now in negative equity. If you sell whilst still in negative equity you risk owing money to the bank, so if you can help it, wait until house prices improve. 

 

You should also consider the following when deciding whether to sell to get out of debt: 

Selling your home in order to clear your debt is a big decision to make and it can have major repercussions later down the line. It is worth exploring other avenues before putting your home on the market for good. An example of this would be talking to your lender about implementing lower interest rates. 

When it comes to debt, you ideally want to release equity as quickly as you can. Selling on the open market is not often ideal when it comes to a fast sale, as it is a lengthy and time-consuming process with no sale guaranteed at the end of it. You will need to research what the local market is like and consider whether your home is in a sellable condition or not. 

Another element you will need to consider when it comes to selling your house in order to clear debt is how much the process will cost. Selling a house can be an expensive business, with solicitor fees, conveyancing costs, estate agent commission, repairs and maintenance fees all eating away at your equity. Will you be able to afford all of the fees, especially if the sale falls through? 

Once the majority of homeowners have bought a property, this is often their biggest asset. If you decide to sell your property in order to clear your debt, you may struggle to purchase another property in the future. You should decide whether you are dependent on this home in order to fund retirement or if this sale will affect your finances in the long run. 

Are your money troubles short-term or long-term? Are they a result of a change of circumstance or is it due to difficulty managing money? Selling your house to clear debt is not a decision that should be taken lightly. You should only sell your property if you are certain it will clear your debt for good. 

What are the extra costs involved with renting out your property? 

When you are deciding to sell your house or rent it out, you will need to consider the costs involved with letting a property. Not only will you be paying your own monthly mortgage, but you will also be paying the costs of maintaining a rental property. Your lender will often want to be sure that the rental income is enough to cover the mortgage interest payments, and you will need to take the following points into consideration: 

 

  • In the event that you are unable to rent out your property, will you be able to afford the mortgage? You need to be sure that you will be able to avoid repossession or a forced sale should you run into difficulty. 
  • Will you manage your property yourself or are you going to enlist the help of a letting agent? Whilst letting agents do a great job it is worth bearing in mind that it is not done for free, and you will need to pay them on top of the mortgage and running costs. 
  • How many months will you rent out your property for? You should plan to have at least one month of the year where the property is empty, so you have time to find a tenant. 
  • Are you going to be able to afford the property maintenance? Should the property need a new roof or boiler can you afford it alongside property and mortgage payments?
  • Have you thought about how much insurance will cost? 

Will I have to pay income tax if I become a landlord?

As of April 2017, landlords will have to pay tax on their entire rental income, rather than just on the profit they make. You will only be able to claim relief on mortgage interest at a rate of 20%, regardless of income tax band. If you are a landlord who is in a higher tax band, then you will pay tax rental income at 40%-45% but you will only be able to claim 20% tax relief. 

Should I sell or rent?

Whether or not you should rent or sell your home is down to your own personal circumstances. What works for one homeowner may not for another. But before you make the decision to become a landlord, you should carefully weigh up the pros and cons. Becoming a landlord involves navigating a lot of legal red tape and undertaking a lot of extra work to ensure your tenants are well provided for and are in a safe and legal property. 

 

If you are unsure about becoming a landlord, but don’t want to navigate the stress of a house sale, then we may have the solution for you…

The Property Selling Company 

Wanting to avoid the red tape that being a landlord brings with it? Or maybe you want a life free from unruly tenants and unexpected repair bills? Whatever you reasons for deciding to sell instead of rent, we are here to help. 

 

Here at The Property Selling Company, we believe a house sale should be three things: fast, effortless, and most importantly free. That’s why we can sell your property in as little as 28 days, without having to pay estate agent fees! 

 

It’s our mission to change the way you sell houses, so we are proud to offer a full online estate agents service. Long gone are the days of hefty estate agent fees eating away at your final profit. 

 

We work alongside you every step of the way, covering all aspects of the house-selling journey so that you won’t have to. The days of expensive solicitor fees and legal work are over, and our team of property experts will continue to be there, even after the process is complete. 

 

We will market your property on popular property portals such as Rightmove and Zoopla, organise viewings, cover legal fees, and negotiate better deals all for free!  

 

If you are ready to sell your home in as little as 28 days, then get in touch today and fill out one of our fast, free, no-obligation forms for your house valuation today!

or you…

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Selling and Buying a House: Should I Sell First?

Selling and Buying a House: Should I Sell First?

Finding the best avenue to selling and buying a house can be confusing, join us as we delve into all the ways to sell and buy a house.

Tom Condon
Tom Condon ★ Digital Content Writer

Table of Contents

Selling and Buying a House: Should I Sell First?

Selling and buying a house could take anywhere from four to twelve months, and is completely reliant on the demand and supply of the housing market as well as any property chains you may be in. 

 

There is no set way to sell and buy a house, in fact there are so many different avenues, it can be very confusing! The right avenue to follow will simply come down to what suits your needs. 

 

When you buy a house, you will need to pay Capital Gains Tax, and when you sell a house, you will need to pay Stamp duty, on top of the actual house sale and any arrangement fees or estate agent fees so it’s vital you have your finances in order. 

 

There are disadvantages and advantages to selling first, buying first or doing it simultaneously. 

If you’re looking for something specific, please check our interactive menu below:

Should You Buy And Sell A House At The Same Time?

Selling and buying a house simultaneously is the route that most homeowners in the UK choose. This is due to the ease and convenience of not having to rent in between houses. 

 

But, buying and selling a home at the same time can be a complex process as it requires careful planning and coordination to ensure a smooth transition between homes.

What Is The Process Of Selling And Buying Simultaneously?

Selling and buying simultaneously, is the most generic way to sell and buy a house. 

 

Before considering simultaneously buying and selling a house, you should assess your financial situation and determine if you have enough funds for a deposit on the new house and if you can qualify for a mortgage while carrying the existing mortgage. 

 

You should always look to evaluate current housing market conditions, as if your local area is a sellers market then you will be able to easily sell your house. 

 

But, if it’s a buyers market then it may take longer to sell your house, but easier to buy your next one — which could end up in you spending more money on utility bills or selling at below market value to a cash buyer or auction. 

 

Due to the risk involved in the selling and buying a house process, you should attempt to coordinate the timing of your transactions to minimise the gap between selling your house and purchasing a new one. This could involve aligning your completion dates and arranging temporary housing if needed.

Advantages Of Selling And Buying A House Simultaneously

When selling and buying a house simultaneously, you will benefit from convenience, where you can avoid the need to find rented accommodation or move twice, which can save time, effort and avoid emotional distress. 

Selling and buying simultaneously can help you align your financial transactions by using the proceeds from your current home and apply them directly toward the deposit or completion costs of buying your new home.

 

Simultaneous purchase and sale allows you time to transition between homes more efficiently. 

 

You should be able to coordinate completion dates which can be beneficial to have specific time constraints or need to synchronise with other life events, such as employment changes or accommodating the start of the new school year. 

 

Selling and buying a house at the same time will also allow you to work with the same conveyancing solicitors at the same time, and minimise the conveyancing costs. If you were to sell your house and buy separately, then there would be a gap between the two processes. 

Disadvantages Of Selling And Buying A House Simultaneously

Although coordinating the sale and purchase of two properties can allow you to have a seamless move, if it goes wrong, it could produce time uncertainties. 

 

Which can be challenging to ensure that the completion dates align perfectly and any unexpected delays in one transaction can have a ripple effect especially if there are any property chains. 

 

The simultaneous transaction could create financial strain if you need to cover two mortgages or carry the costs of both properties for an extended period. It’s essential to carefully assess your financial situation.

Should You Sell First And Then Buy?

If you have the time, or accommodation to stay in during the selling and buying a house process, then selling first and buying second may be the best option.

 

By selling first, you will have the funds readily available to buy your next property and be a more attractive buyer but you will need to rent or stay elsewhere in between houses.

What Is The Process Of Selling First And Buying Second?

When selling first and then buying a house, you should ensure that you have all your finances in order before you start the process of selling your house.

 

By staying organised, you will be able to organise and port your mortgage quickly, and ultimately make you far more attractive to the property seller. This will help avoid delays and the risk of you being gazundered. 

 

Before you sell your house, you should have already completed your research to find your next property and contacted local estate agents about houses you are interested in.

 

Once you have sold your house, you can actively view the properties and decide on a property that suits you.

 

You may need to move to a friend or relative’s property, or rent, while you find your next home, which may come at an additional cost.

Advantages Of Selling First

When selling first and then buying a house, you should ensure that you have all your finances in order before you start the process of selling your house.

 

By staying organised, you will be able to organise and port your mortgage quickly, and ultimately make you far more attractive to the property seller. This will help avoid delays and the risk of you being gazundered. 

 

Before you sell your house, you should have already completed your research to find your next property and contacted local estate agents about houses you are interested in.

 

Once you have sold your house, you can actively view the properties and decide on a property that suits you.

 

You may need to move to a friend or relative’s property, or rent, while you find your next home, which may come at an additional cost.

Disadvantages Of Selling First

Due to market conditions, you may find it hard to find a property to buy after selling yours, which means you will spend more money on finding further accommodation to rent. 

 

There is also the chance that house prices rise dramatically when searching for your next property, which may result in you ending up out of pocket. 

 

If you sell your house before buying a new one, you will need to find temporary housing arrangements which could involve renting a short-term apartment, staying with family or friends. 

 

You will also need to arrange storage for your belongings as well which can be expensive.

Should You Buy First And Then Sell?

If you are selling and buying a house and want to buy first, then you’ll need to be able to fully fund the purchase of the new property before having the funds released from your house sale. 

 

This is one of the most risk heavy ways to sell a house but could have a massive pay-off.

What Is The Process Of Buying First And Then Selling?

When buying a house first and then selling your house, you will need to create a budget for purchasing the new home and ensure that you have the financial means to carry the mortgage of your old house and a new mortgage for the new house. 

 

When buying first and then selling your house you should begin by searching for a new home based on your preferences, needs and budget. You should engage with an estate agent to assist you in finding the right property, schedule viewings and negotiate offers.

 

Once you’ve identified a property you wish to purchase, work with a mortgage lender to obtain pre-approval or secure financing for your new home. 

 

When you submit an offer to the seller of the new property, you should negotiate the price, and completion dates before the offer has been accepted. Carry out any necessary surveys and work alongside your estate agent and solicitor to complete the necessary paperwork.

 

Once the purchase of your new home is underway, you can focus on preparing your current home for sale, including staging your home, making necessary repairs, and consider hiring an estate agent to list your property. 

 

Working closely with your estate agent, mortgage lenders and solicitors to coordinate the completion dates for both the purchase of your new home and the sale of your current one. Ensure there is alignment and sufficient time to complete necessary surveys.

Advantages Of Buying First

When selling and buying a house, buying first allows you the luxury of time to carefully consider your options and make a well-informed decision. 

 

You can thoroughly research the market, explore different options and find a home that truly meets your needs and preferences without the pressure of a pending sale. 

 

When you buy a house first, you eliminate the need to rent or arrange temporary housing arrangements. You won’t have to incur the costs of renting which can save you money and make the moving home process more convenient. 

 

Being a non-contingent buyer can provide you with a stronger negotiating position when making an offer on a new home. Sellers may view your offer more favourably since its not contingent on the sale of your current home. 

Owning a new home before selling your current property allows you flexibility in the timing of sale. You can choose the optimal time to list and sell your home, potentially allowing you to wait for market conditions to be more favourable.

Disadvantages Of Buying First

Buying a new home before selling your current one means carrying two mortgages simultaneously which can create financial burdens and increase your risk exposure. 

 

You will need to have sufficient financial resources to cover both mortgages, utility bills, insurance and other costs until your current home is sold.

 

If your current home takes longer to sell than anticipated, it can strain your finances and increase your monthly obligations. 

 

The housing market is subject to fluctuations and can be unpredictable; buying a house first exposes you to the risk of potential market downturns or a decline in home prices. If the value of the property decreases before you sell it, you may face challenges in selling it at the desired price. 

 

Buying a house before selling may limit your budget and purchasing power for the new home. If a significant portion of your funds is tied up in your current home, you may have less money available for a deposit and any necessary renovations or improvements on the new property.

Selling And Buying A House? This Is How You Do It

If you are selling and buying a house, we can help!

 

We can offer you a full online estate agent service, without all the estate agent fees because its our mission to change the way you sell houses. We will work alongside you every step of the house selling and house buying process, covering everything so you don’t have to.

 

The days of expensive solicitor fees and legal work are over, and our team of property experts will be there to support you even after the process is complete!

 

We will market your property on popular property portals such as Rightmove and Zoopla, organise viewings, cover legal fees and negotiate better deals all for free.

 

If you are ready to sell your home in 28 days, then get in touch today and fill out one of our fast, free, no-obligation forms for your house valuation today.

Selling And Buying A House FAQs

When selling and buying a house, you will find it easier to get approved for a mortgage if you have a property in your sights that you wish to buy. Which is why selling and buying a house simultaneously or buying and then selling may be the least stressful. 

 

If you decide to sell your house and then buy, you will be under stress to get approved for a mortgage while living in temporary housing.

When you are selling and buying a house, you should assess your financial situation, research and find a home, take your time, wait until the market favours your situation and take the big leap!

Selling a house to a first time buyer can have both advantages and disadvantages as they are eager and motivated to get onto the property ladder, they are often less complicated as there are no chains, but the first-time buyers may fail in securing financing due to a limited credit history or the house sale may fall through due to inexperience.