Sell House and Rent for a while

I have a decision to make i'd be interested in other forum users comments on.

Basically we own our house, but we wish to move in the next 6 months to be closer to our childrens school.
If we sold we would be possibly have 50-60k profit from the sale.
My question is whether to sell and buy another house OR sell and invest this money and rent short term and use some of the interest to pay the rent. The reason for doing this is with house prices being unpredictable, we thought maybe renting for 12-24months may give the market time to settle down.

I guess there are risks whichever way.
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Replies

  • your right the market is unsettled at the moment and the risk could be high either way. Remember that if its a good school, prices in the catchment area will be higher than elsewhere in the same town.rental prices could also be higher.
    many people indeed rent to get their children into the best school/ some even renting a small flat, using parents or grandparents addresses to make sure the catchment area is correct.
    my bark is worse than my bite!!!!!!!!
  • SpendlessSpendless Forumite
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    So if you've got £50-£60 grand to put down on new house. Even if house prices dropped your new house would have to go down in value by £50-60 grand b4 you were in neg equity.

    So is it you are hoping by renting that you will get more for your money in a few years should houses drop. .

    It just isn't possible to predict the market & also depends where you are as to what might happen ???
    My town is STILL seeing rising prices but from what others say that's not true everywhere.

    You are right it is not without risk,so you've got to ask yourself are you prepared to take risk either way if market does not go in your favour?
  • Thanks Both for the reply.

    We want to move nearer the school in question as we were able to get our first child there even though we were not in the catchment area. They cannot guarentee a place for our second child.

    My feeling on this was we didnt really want to increase the mortgage we have a present (2 young children), so hoped that selling now and renting, then re-evaluating the market in 12-18 months and hope prices have dropped to a more 'sensible' level

    Looking at rental prices we wouldn't be worse off renting and still have money each month to add to this potential deposit on a new house later on
    micheal5kr.gif
  • ReaperReaper Forumite
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    My feeling is that leaving the market and hoping to buy back later at a lower price is gambling with huge sums of money at stake.

    My view is that is is better to stay in the market. House price changes are somewhat illusionary if you are a home owner. If prices fall you may feel bad, but when you next want to move it simply means the next place you want to buy has dropped a corresponsing amount. You are not really any worse off.

    However if you are out of the market and prices continue going up you will make a real loss when you try to back in.

    So I'd say the safest option is to stay a home owner. The alternative is gambling - you may win or lose. I can't predict which.
  • SpendlessSpendless Forumite
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    Talos
    Have you asked the school concerned about where sibling criteria is in there list of intake?
    I know of a school where sibling there already comes first and also ones where it is way down on list.
    What about renting your own house out and renting somewhere in catchment area also?
  • Poppy9Poppy9 Forumite
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    I wouldn't sell and rent. Our friends did this 2 years ago when they were predicting a price drop in the area. Unfortunately prices rose by almost 100%. They sold their house for £95k. It is now worth £170. The house they were trying to buy at the time for £128k but fell through is now worth £200k. Even though they had £50k equity from their house buying now means a huge mortgage. They have been pouring more money down the drain by renting for 2 years (£13k). If you are just moving for school catchment area I would rent our current house and rent house in catchment area.

    A point to note though when temporarily moving into a catchment area for a school and then moving out again is that you will incur travel costs not only for to and from school but for out of school visits to friends etc. This get worse as they get older. I went to a church school 3 miles from home and did not qualify for free transport. Also all my friends lived over 3 miles from the school. My best friend was about 12 miles away and my nearest friend 6 miles away. As a teenager it was expensive for us all getting together, difficult for us to see one another frequently during the evenings. Hard to make friends locally when they all go to the same local school - you are an outsider even though I joined Brownies, Guides etc.

    I have made sure I live in the catchment area for my child school so friends are close by. What you pay in extra mortgage is saved by having to run 2 cars and travel costs.
    :) ~Laugh and the world laughs with you, weep and you weep alone.~:)
  • Hi Talos

    If there was an easy answer, we'd all be millionaires, ( ;) ) so I'm always very cautious with questions like yours. I train letting agents across the South East and you could say I'm in the thick of it. Most of my clients are pretty cautious with their market view at the mo, and I always find the so-called bullish 'experts' tend to ultimately make mistakes.

    Regarding your specific question... obviously it greatly depends on the location and the market conditions there. However, always remember that your home is firstly your home and secondly an investment. If you were to sell to rent elsewhere temporarily and the market went against you, it may be a while before you could climb onto the ladder again.

    That may sound negative, but I've personal experience of selling to rent - I split with my partner three years ago, and gave her the option to buy me out - I'm still renting.

    How's this for an option? What about considering keeping your present home to rent out, and renting another place in your new location? That way, you will always have your old place to fall back on. You may not have any equity in the bank, but you'll get to stay on the ladder.

    Also, you can sign up tenants for a six month fixed term, so if you wanted your home back quickly, you could serve notice on them and move back in fairly swiftly in six months. It may be that prices go up in the mean time, but it may not. It's just a thought....

    Now, anyone got a crystal ball....? :)
    Desperate Gav

    :confused: Newbie Oldie (been a member since 2005 but have never logged on!). Facing a major, head-on financial challenge with optimism!
  • Talos,

    I would be very careful. Very careful! We bought at what we thought was bottom price after the boom of the eighties but within one year we were looking at £12,000 negagive equity on a one bedroom flat! We had a baby, and then 4 years later another one, and yes we had to stay where we were. Eventually we overpaid the mortgage and moved with only £3000 left to pay. We had to take out another 100% mortgage as all our money had gone into paying off the NE on the flat. My husband was transferred to France. We rented our house out but it didnt cover the mortgage. Eventually we had to sell as we couldn't pay rent in France AND make up the shortfall on the house in England. When we moved back to England in 2000 the house prices had soared in comparison to when we left in 1996. Having been burned we decided not to buy but to rent until the house prices returned to a "sensible" level. Of course, four years later and we have been completely priced out of the market. We have three children with a combined income of over £35,000 but cannot get on the ladder and all our savings have gone on rent. We are so worried and I know it's awful, but we are praying for a crash. Hindsight is great but it doesn't solve anyone's dilemma now. No one can predict exactly what will happen as experience of the last disaster in the housing market WILL affect the decisions people make now.

    Again, be careful. Don't be greedy. Be thankful that you have a family home.
  • I agree with you advice for being very careful, EP. The economic factors are totally different to the crash of the late eighties/early nineties, and the market is currently being propogated by different issues, however we are what looks to be at the top of a curve.

    If we continue upwards, I can see a slight downward trend, and if that occurs, who knows what may happen? It may adjust and continue upwards, or may drop. Nobody knows, hence the cautious play with interest rates by the B of E.

    As mentioned previously, if it's a family home, it should have absolute priority over the fact that it's an investment.

    Also, if it's an investment, or if somebody wants to play with the family home as an investment, ultimately they should be acting with a business attitude, and therefore treating it with the respect a business would command.

    Unfortunately I come across a lot of people who have a 'hit and hope' attitude, in other words, who dive in feet first with no real understanding of the market. Those that act in such a way tend to be highly geared, and those are the big risk-takers. It's fine to be a risk taker, if you can afford it.

    So, without being a doom-merchant or sooth-sayer, 'caution' is definately the word of the day.
    Desperate Gav

    :confused: Newbie Oldie (been a member since 2005 but have never logged on!). Facing a major, head-on financial challenge with optimism!
  • My brother thought about doing this a year or so ago when everyone thought house prices had increased at such a rate, a crash was iminent. He bought his house for approx. £100k, it shot up to £150k and he was going to sell and live in rented accommodation. In the end he didn't, but it was just as well, as house prices didn't crash, they continued to rise and his house is now worth over £180k.

    He also has the added responsibility of a wife and child now, so I think he's glad he didn't sell to rent.
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