Buying a 2nd home before selling current home

Homeland16

Just looking for a bit of clarity. We are looking to buy a new home (main residence) before selling our current main residence. We are aware of the extra stamp duty we need to pay and are factoring that cost in (will receive rebate on this when house sells as long as within 3 years). Mortgage is sorted and approved (on a previous property that fell through). Are there any other hidden costs that could be incurred? If I’m reading correctly capital gains tax won’t affect us as it’s both main residence and we are not letting out the property?

Thanks in advance

Flugelhorn

Just that it expensive paying two lots of council tax / utilities etc
just about to this ourselves and having done before, I seriously hope we get house one sold quickly!

Homeland16

Thanks for your reply! Yes factoring in all bills too.

davidmcn

CGT - in theory will apply for any period during which one or other house isn't being used as your principal residence, but given the (hopefully) short period involved any gain should be negligible and not actually lead to a charge.
Council tax - check local policy for "second" properties as sometimes a surcharge (and conversely, reliefs for limited periods for unoccupied/unfurnished properties)
Insurance - check policy for conditions about leaving the place unoccupied, if a significant period then may need to switch to a more expensive/restrictive policy. 
And obviously you're duplicating other costs for utilities, maintenance etc during the overlap.

eddddy

Homeland16 said:

Mortgage is sorted and approved (on a previous property that fell through). 

Do you have a mortgage on your current property?

If so, have you checked that your new lender is OK with you having two mortgages at the same time?  Typically, a mortgage offer on a new house will be dependent on you paying off the mortgage on your old house.

Then there's the normal risks associated with selling your old property:

• Property prices tumble, so your old house sells for less than you expect (having paid a 'pre-tumble' price for your new house)
• A sale or two falls through on your old house, so it takes much longer to release the equity in the old house than you expect
• The conveyancing / surveys on your old house shows up problems which take months (or years) to resolve - and/or may mean you have to drop the price.

(And insuring your old property whilst it's empty might be a bit costly and a bit of a hassle.)

I guess it depends on your attitude to risk and your assessment of the risks.

GDB2222

davidmcn said:

CGT - in theory will apply for any period during which one or other house isn't being used as your principal residence, but given the (hopefully) short period involved any gain should be negligible and not actually lead to a charge.
Council tax - check local policy for "second" properties as sometimes a surcharge (and conversely, reliefs for limited periods for unoccupied/unfurnished properties)
Insurance - check policy for conditions about leaving the place unoccupied, if a significant period then may need to switch to a more expensive/restrictive policy. 
And obviously you're duplicating other costs for utilities, maintenance etc during the overlap.

Insurance may well require that the water is drained down. That means no heating, and that’s rather off putting to buyers. That may translate into a lower selling price. 

Homeland16

Mortgage on current property is in my name. Mortgage on new property is in husbands name solely.

Homeland16

We haven’t actually put in an offer on a house. The house we were buying broke down. Mortgage advisor with Halifax direct has told us how mich we can borrow, repayments etc and said all we need to do is tell him the new address and survey etc can go ahead. 

Homeland16

As we are married we are treated as one entity so only eligible for 1 dwelling so subject to the higher stamp duty.

oldbikebloke

davidmcn said:

CGT - in theory will apply for any period during which one or other house isn't being used as your principal residence, but given the (hopefully) short period involved any gain should be negligible and not actually lead to a charge.

The final 9 months of the ownership period will be exempt from CGT because it was previously used as the main home. 
That is to allow precisely this sort of overlap period between buying the new and selling the old.
CGT would only apply if it takes > 9 months to sell and as you rightly say, the chances of a gain before finally selling would be small, particularly when you also take into account the CGT tax free allowance.