October 23, 2019
Should I sell my home or rent it out?
Unless you’re a first-time buyer, it’s highly likely you will need to consider selling your current home before moving into your new one. By doing so, you can have more money to put towards your new abode.
However, there are occasions when it makes practical sense to hold onto your existing home and rent it out instead.
If you’re faced with this situation and are unsure of what to do, here at Atkinson McLeod we outline the pros and cons of selling and renting out to help you make an informed decision.
Selling your home
Selling your home before purchasing a new one is the typical route for movers. This is mainly due to the money that you could gain once the sale goes through. Plus, any additional money you spend means that when you come to sell again, the gain is free of Capital Gains Tax.
Another benefit of selling before you move is that it allows you to release equity to spend or invest in alternative asset classes. You will also avoid the hassle of unexpected repair bills, tenant damage and void periods.
Most importantly, though, selling could put you in a stronger position when buying. This is because the seller you want to buy from is more likely to prefer a purchaser who has the cash (or a pre-approved mortgage) rather than enter a chain.
Of course, it’s important to keep in mind that you may be selling off a lucrative asset that has the potential to grow substantially in value. For instance, the property could earn you a good rental income and contribute to your pension fund in the future.
If you do decide to sell before you move, however, ensure that your home is well-maintained and marketed well with the help of your chosen estate agent. This can help you to attract more potential buyers and, in turn, achieve a higher asking price.
Renting out your home
With the rise of ‘accidental landlords’ in the UK, it’s worth understanding what it means to be a landlord and if it’s the right option for you.
Renting out is a method that may be useful if you’re only looking to live elsewhere temporarily. It also allows you to secure capital growth from retaining the existing property and letting it to tenants.
If you’re hesitant of letting due to the potential hassle, you need to identify the best possible tenants to look after your property. You also need to outsource the management process to a quality agent. At Atkinson McLeod, we are trusted letting agents and members of all the main bodies, including ARLA Propertymark. This helps us to provide our clients with great customer service and extra peace of mind.
However, be mindful that you may need to invest money to ensure your property meets legal requirements. This could entail upgrading the boiler or improving energy efficiency.
Tenants can also cause damage to your home. And it may not be covered by your landlord insurance. What’s more, taxation on ‘second homes’, including buy-to-let, can be much higher than investing money in other ways.
Of course, renting out your home can be a lucrative investment. Plus, it can be much easier to find someone to rent than to buy.
If you choose to go down this route, ensure that you check the small print of your mortgage. Some mortgages include a clause that prohibits you from renting out your house. Some allow you to do it for up to a year.
Whatever you decide, appointing a hands-on agent with experience in both the sales and lettings sectors could help you immensely.
To find out how much your home could be worth in the current market, you can also request a free and instant online valuation.