Selling a house after a year

Jake_1013

Hello

I have found a house I really like in a great area. I've saved up a 20% deposit (£28000). I am a first time buyer. However the slight issue is my work might be relocated across the country and I'd move with my work as it's a great job. So would selling this house after a year lose a lot of money? I suppose I could rent it out if this did happen with work but not sure if I'd want to. I just want a few peoples opinions please as I am a first time buyer so a bit clueless.

Thanks

Jake

SoulUK

With the current market it may start cooling or dropping within a year, so the house firstly might not be worth what you bought it for today.

ontop of that, you'll have legal fees (stamp duty) which you would most likely not recoup in one year. You'd also need to be considering if your mortgage lender would be happy with this, as most people turning a property around in a year or so are developers and i believe have certain mortgages

egoode

Property should be a long term investment and unless you choose a place that needs work doing to it and you might be able to add some value then you should rethink your plans. Also it might not be easy to just rent out if you do get moved as you will need to get permission from the lender and there are a lot of responsibilities you will have to take on as a landlord. You may find the rent does not cover the mortgage and other expenses involved in renting it out.

pinkteapot

The fees and expenses you'll incur in doing the purchase will add up to the best part of a year's rent. Personally I'd wait to buy until you've got certainty about what your job is doing...

[Deleted User]

You will lose money and flexibility. Don't forget opportunity cost, that £28,000 could be distributed across a number of high interest current accounts and turn into £29,000 within a year, so not only would you lose the selling fees (~£3000) you'll miss out on deposit growth. Also don't forget you're going to have to pay Stamp Duty on the purchase (£1400) which is money you won't get back.

At the start of a mortgage you're primarily paying off interest, the equity gains you'll make in the first year are far below what you'd need to be able to justify purchasing for a short period vs. renting.

Purchasing a property in your situation would be a bad idea, unless you live in an area where you can expect 10% growth in property value in 1 year with high demand for property (from offer to completion in 2 months).

BlaEm

I don't think anyone will have a definitive answer for you, but here's my two pennies worth

I wouldn't be put off from buying a property which had only been owned for a year, but the valuation in one years time will obviously be influenced by your purchase price - no one can say what the market will do, but some buyers may not want to buy it off you for much more than you paid for it unless you've improved it in some way.

Think of the actual cost to you of your purchase - solicitors fees, searches, stamp duty, which don't 'add' to the value, plus the cost of selling (estate agent fees, solicitors fees, potentially the cost of a management information/freehold pack for your buyer) which could all contribute to a 'loss'. Also, if you buy on a fixed term mortgage you will have to pay an early redemption fee if you sell before the term is up (£'000s) and don't port it to a new property.

These will vary, of course, but as an idea it's recently cost me £3,200 to sell my leasehold flat (spent about £3,000 buying it) - I would deduct that from any 'profit' I imagine I have made.

This will be offset by the benefit of a year of ownership - the savings you've made paying mortgage interest rather than renting? Any rent-a-room income if you let out a room? Appreciation in value (not guaranteed)?

If you rent out rather than sell: depending on the lender, it's not always easy to get a consent to let (£100), particularly if you can't demonstrate that your relocation is temporary; you may have to convert to a Buy-to-Let mortgage which are several % higher, often require at least 25% equity, and have high arrangement fees (c.£2,000).

If you do then let it out you need to pay for gas safety certificates, and agency fees (a monthly %, plus either a check in/check out fee), ensure you have a buffer for e.g. gaps in tenancy, minor (or major!) repairs.

NB these are just my own opinions having recently sold a property I had to relocate from, weighing up the cost/benefit of selling it v renting.

Good luck!

Jake_1013

OK thanks everyone, it has been helpful reading your views. I think I knew what the answers would be! I really want to own my own property but I'll wait until I know what's happening. I'm sure there will be other houses I like just as much if not more! I live in the Northwest as well and I don't think property prices are going anywhere quick up here!