When/how best to sell previous rented property when looking for a new one?

craigs822

Hi, I am looking at purchasing a new property but need some advice in relation to my existing property.
I stay in a rented property currently, with a small property owned from a previous marriage currently being rented out to tenants.
I'd like to buy a new property where I live now, but realistically cannot get enough of a deposit without selling my other place.

The place I currently own that is rented out, is in the opposite end of the UK. So It would probably have to be done all via an agent, with tenants included in the sale (not sure what the proper term is but essentially not kicking them out).

Not knowing much about the process, it seems unlikely that I could go through the process of buying a new place AND sell the old place in time enough to get the money I need for the deposit.

So, advice needed: should I sell the old property now, so that i have the funds ready if/when i find a new place that i want to bid on? (it currently pays for itself more or less)
Or is it better to hold on to the old property and hope and try to do both the buying and selling in parallel?

housebuyer143

craigs822 said:

Hi, I am looking at purchasing a new property but need some advice in relation to my existing property.
I stay in a rented property currently, with a small property owned from a previous marriage currently being rented out to tenants.
I'd like to buy a new property where I live now, but realistically cannot get enough of a deposit without selling my other place.

The place I currently own that is rented out, is in the opposite end of the UK. So It would probably have to be done all via an agent, with tenants included in the sale (not sure what the proper term is but essentially not kicking them out).

Not knowing much about the process, it seems unlikely that I could go through the process of buying a new place AND sell the old place in time enough to get the money I need for the deposit.

So, advice needed: should I sell the old property now, so that i have the funds ready if/when i find a new place that i want to bid on? (it currently pays for itself more or less)
Or is it better to hold on to the old property and hope and try to do both the buying and selling in parallel?

I would sell it first and then buy next one chain free.

TripleH

I'd sell up as you don't know how long it will take to sell.

You could find and loose what is your 'dream home' because the other place is taking time to sell. You then become able to act quicker when the right property comes along.

donutandbeer

Unless your dream house literally just comes up, I would sell first then buy. Not sure how straightforward your sale will be with tenants in it (you would know the market of that area better) but nevertheless I can’t see the downside of selling first.

matthew91822

I'd sell the other property then go chain free.

I'm doing the exact same thing. I am in the process of selling a buy to let.

Beware though, we had it on the market for 2 months advertising with tenant in situ and gathered almost zero interest from potential landlords. I think the % yield for that area was too low. Ended up selling to someone who wants vacant possession so we served notice to the tenant, they stayed beyond the notice, got aggressive, stopped paying rent and now we have to go through the courts to get them formally evicted.

The eviction process is so sporadic with timing I'm waiting for the tenant to vacate before I continue looking for a property for myself as it could take 6 weeks or 6 months.

K_S

craigs822 said:

Hi, I am looking at purchasing a new property but need some advice in relation to my existing property.
I stay in a rented property currently, with a small property owned from a previous marriage currently being rented out to tenants.
I'd like to buy a new property where I live now, but realistically cannot get enough of a deposit without selling my other place.

The place I currently own that is rented out, is in the opposite end of the UK. So It would probably have to be done all via an agent, with tenants included in the sale (not sure what the proper term is but essentially not kicking them out).

Not knowing much about the process, it seems unlikely that I could go through the process of buying a new place AND sell the old place in time enough to get the money I need for the deposit.

So, advice needed: should I sell the old property now, so that i have the funds ready if/when i find a new place that i want to bid on? (it currently pays for itself more or less)
Or is it better to hold on to the old property and hope and try to do both the buying and selling in parallel?

@craigs822 Hopefully I'm not stating the obvious, but are you sure about the numbers though and how much minimum deposit you need to be able to afford the residential purchase?

You could consider re-mortgaging (it's still called re-mortgaging even if it is currently mortgage free) your rental property to an interest-only BTL mortgage, release up to 75% (or even 80% if the numbers add up) and then use any cash released towards the onward residential purchase. As long as the monthly BTL interest-only payment is covered by the incoming rent, the rental property will have no adverse impact on your borrowing.

If you have had the rental property for a couple of years, you may even be able to use the rental income to boost your borrowing power.

Once you're in your new home, you can then consider selling the rental property at an appropriate time without being rushed into it.

Of course there are cons to the above approach - you'll have to pay a 3% stamp-duty surcharge on the residential purchase which may not be recoverable (depending on how long ago you lived in the rental property), you may have to pay an ERC on the BTL mortgage, etc.

canaldumidi

Don't forget potential Capital Gains Tax when you sell. Has to be paid within 30 days (or is it 60?).

But yes, sell first. If with tenants, it may take time to find a willing/interested landlord to buy, and they won't pay full market value, so eviction, marketing, then selling with vacant possession might be better.Might even be faster (depending on the tenants/eviction) and better price.

theoretica

If you own the rental property when you buy then you will need to pay the higher rate of stamp duty.

canaldumidi

theoretica said:

If you own the rental property when you buy then you will need to pay the higher rate of stamp duty.

unless simultaneously selling...

GDB2222

canaldumidi said:

Don't forget potential Capital Gains Tax when you sell. Has to be paid within 30 days (or is it 60?).

But yes, sell first. If with tenants, it may take time to find a willing/interested landlord to buy, and they won't pay full market value, so eviction, marketing, then selling with vacant possession might be better.Might even be faster (depending on the tenants/eviction) and better price.

60 days.