Sell then rent in this climate?

Mr.Generous

No flats just houses. being a LL is a business. I can afford to spend the money, but the return on the investment - say I put the rent up £100 a month - is still a long payback. You can speculate all you like, I am in this position and the EPC states underfloor insulation and cavity wall being required to save the tenant maybe £400 a year but cost me £15k. At that point I'll sell up and spend a load of cash on fast cars, loose women and fancy holidays. The rest I'll waste.

Sarah1Mitty2

Mr.Generous said:

No flats just houses. being a LL is a business. I can afford to spend the money, but the return on the investment - say I put the rent up £100 a month - is still a long payback. You can speculate all you like, I am in this position and the EPC states underfloor insulation and cavity wall being required to save the tenant maybe £400 a year but cost me £15k. At that point I'll sell up and spend a load of cash on fast cars, loose women and fancy holidays. The rest I'll waste.

I wish you well but I really think the sweet spot for unloading property is gone, I believe a lot of the "smart money" got out during the stamp duty holiday, some cynical types would say that that event was designed to create an exit point for certain market participants.

gazfocus

It’s definitely a difficult question to answer but here’s my experience…

My wife and I decided nearly 2 years ago to sell our house and move into rented. The idea of a fast selling market and higher sale prices was so very tempting (our house was listed at £72k more than we paid in 2014, accepted an offer £20k over asking). 

We found it extremely difficult to find a rental to the point that we got desperate and went for the first house we were offered (which was a very expensive dump). Two weeks after signing the tenancy, our buyers pulled out so we ended up renting our house out while we were stuck in a dump. 

We decided to try selling our house again this year and we are nearly at the finish line thankfully (and are getting £10k more than the offer we accepted in 2021…not the greatest increase but hey). We are in a much nicer rental but man it was hard work getting a house. 

I’ve always read/been told “don’t leave the property ladder for too long”, “you’ll never get back on the property ladder”, etc, so my wife and I have decided to use some of the equity from our house sale to buy a doer upper which will become a holiday let. At worst, it will retain its value or hopefully it will increase in value. It’s not where we ever intend to live, and it’s nowhere near what we want for our ‘forever home’ but it’s a house we can keep hold of as a method of keeping a foot on the ladder while enjoying our current rental so that when the time comes to buy our forever home, we will be in a better position. 

My one concern has always been that money in the bank will always go down in value as inflation makes everything more expensive, so what you can get for £200k today might cost you £250k in 5 years and so on. 

[Deleted User]

I don't think you should sell. You said yourself you have a low mortgage and debts, pay the debts off, pay the house down faster. If you buy again even in a year, the rate will be higher. Doesn't make financial sense. Stick it out for another few years. i.e five and ride out the coming storm. What if you have kids? future proof! You may get off the chair and find the dancing has stopped, and your chair is gone. Look at ways to improve the current situation. Seems sudden.

Sarah1Mitty2

gazfocus said:

It’s definitely a difficult question to answer but here’s my experience…

My wife and I decided nearly 2 years ago to sell our house and move into rented. The idea of a fast selling market and higher sale prices was so very tempting (our house was listed at £72k more than we paid in 2014, accepted an offer £20k over asking). 

We found it extremely difficult to find a rental to the point that we got desperate and went for the first house we were offered (which was a very expensive dump). Two weeks after signing the tenancy, our buyers pulled out so we ended up renting our house out while we were stuck in a dump. 

We decided to try selling our house again this year and we are nearly at the finish line thankfully (and are getting £10k more than the offer we accepted in 2021…not the greatest increase but hey). We are in a much nicer rental but man it was hard work getting a house. 

I’ve always read/been told “don’t leave the property ladder for too long”, “you’ll never get back on the property ladder”, etc, so my wife and I have decided to use some of the equity from our house sale to buy a doer upper which will become a holiday let. At worst, it will retain its value or hopefully it will increase in value. It’s not where we ever intend to live, and it’s nowhere near what we want for our ‘forever home’ but it’s a house we can keep hold of as a method of keeping a foot on the ladder while enjoying our current rental so that when the time comes to buy our forever home, we will be in a better position. 

My one concern has always been that money in the bank will always go down in value as inflation makes everything more expensive, so what you can get for £200k today might cost you £250k in 5 years and so on. 

If inflation is making everything more expensive interest rates will be high or rising, that will make your property worth less and may make it very difficult to sell, using an illiquid asset like property as an inflation hedge in a rising interest rate environment is a massive gamble, the best way to hedge against inflation is money market accounts, or money market funds, cheap ETF`s or Index funds tracking one or more of the major stock markets, or investing in well chosen companies with growth or future dividend potential.

jonnydeppiwish!

With your mortgage payments, don’t forget you are increasing your own equity, rather than your landlords.

Whats the rental situation like where you want to live?

How many EAs did you get to value your home?

Do you really want to go through the upheaval of moving again?

Dohave kids in school and will have to move them or are you thinking of having kids in the short to medium term?

I’d be honest with you and say you need to have a break from DIY and enjoy the work you have done for a year or so. The extra cost of mortgage is £3,000 but what’s the cost of moving house?

£3,000 for the EA, £700 removals, £1,300 for solicitors, £1,000 for deposit on Rental.

Make a list of all the prospective costs and then see which is cheaper. Then look at what you want to achieve and reevaluate. You may still come up with the same decision, but you may not.

Good luck!

gazfocus

Sarah1Mitty2 said:

gazfocus said:

It’s definitely a difficult question to answer but here’s my experience…

My wife and I decided nearly 2 years ago to sell our house and move into rented. The idea of a fast selling market and higher sale prices was so very tempting (our house was listed at £72k more than we paid in 2014, accepted an offer £20k over asking). 

We found it extremely difficult to find a rental to the point that we got desperate and went for the first house we were offered (which was a very expensive dump). Two weeks after signing the tenancy, our buyers pulled out so we ended up renting our house out while we were stuck in a dump. 

We decided to try selling our house again this year and we are nearly at the finish line thankfully (and are getting £10k more than the offer we accepted in 2021…not the greatest increase but hey). We are in a much nicer rental but man it was hard work getting a house. 

I’ve always read/been told “don’t leave the property ladder for too long”, “you’ll never get back on the property ladder”, etc, so my wife and I have decided to use some of the equity from our house sale to buy a doer upper which will become a holiday let. At worst, it will retain its value or hopefully it will increase in value. It’s not where we ever intend to live, and it’s nowhere near what we want for our ‘forever home’ but it’s a house we can keep hold of as a method of keeping a foot on the ladder while enjoying our current rental so that when the time comes to buy our forever home, we will be in a better position. 

My one concern has always been that money in the bank will always go down in value as inflation makes everything more expensive, so what you can get for £200k today might cost you £250k in 5 years and so on. 

If inflation is making everything more expensive interest rates will be high or rising, that will make your property worth less and may make it very difficult to sell, using an illiquid asset like property as an inflation hedge in a rising interest rate environment is a massive gamble, the best way to hedge against inflation is money market accounts, or money market funds, cheap ETF`s or Index funds tracking one or more of the major stock markets, or investing in well chosen companies with growth or future dividend potential.

I disagree. Interest rates have skyrocketed in the last year but house prices are still largely on the up. Obviously nobody knows with any level of certainty what the house prices will do next but as others have said, if prices go down, generally the next house you buy will go down in proportion to the house you're selling, so you're not any worse off in real terms.

If you're buying a house to keep hold of just to sell it at a profit in the future, then I can understand that there are other ways of investing that money that might increase your pot more, but that's not what I was saying.

gazfocus

Personally, I think it boils down to one question... Can you be happy staying in your current house for another few years? 

If the answer to that is 'no', you have two options...sell your house and move (though I think I would much rather buy somewhere smaller where I want to live than not be on the property ladder at all), or rent your current house out and then rent where you want to live...again so you stay on the property ladder (though being landlords isn't for the faint hearted.

If you do decide to rent again, you need to look at the rental market where you live as it's increasingly difficult to get a house at the moment in most places (one house we enquired about had 40 viewings booked within the first 2 days).

GixerKate

As said above, I think it depends on how unhappy you are where you are and if you see it continuing in the same way.  

You've finished finished doing up your house, it sounds amazing, what about sitting back and enjoying the results of your hard work?  You mention feeling isolated where you are now, do you have a car to get about? 

Personally I've made a similar move - from South London to East Sussex so apart from the local shops I have to use the car to go anywhere.  I personally prefer this, its so much safer than having to figure out what time I have to leave places or routes to take to avoid the dodgy areas etc and I now have complete freedom of movement rather than being restricted to the unreliable public transport. I have actually now got more going on than before I left London.

If you are feeling isolated, are there any community groups or activities that are local that you can join so you build your connections in the newer area?

I wouldn't want to take the risk to go back into rented unless I absolutely had to, sitting put means I'm paying off what I owe rather than chucking money away on rent.  The thought of going through the process of selling / finding another home fills me full of dread as well, I've always found the process very very stressful.

It really is down to how happy you think you can be in the current home.