It is difficult to choose between renting out or selling your home. Sometimes you may find that your home isn’t selling as quickly as you would want or that the rental return you receive is insufficient. When you are making such a huge financial decision, experts, including estate agents in Edgware, suggest that you must assess the advantages and disadvantages of each strategy, research the housing sales and rental markets, and choose the one that makes the most sense from a financial standpoint.
Should I list my home right away?
It’s difficult to choose the ideal period for a house sale. You may want to wait to buy if the housing market is hot before doing so. The optimum time to list a house for sale is in the spring, followed by early autumn. The summer and Christmas holidays are less advantageous times to try to sell.
UK housing costs and the real estate market
Examine what real estate brokers have to say about the housing market in your neighbourhood. It’s possible that local patterns don’t always reflect national ones. In the following months, look over the local council’s plans to determine if there are any construction projects underway that might interfere with viewings or devalue your neighbourhood. Analyse the prices of recent home sales over the past six or 12 months. Find similar homes on websites like Rightmove and check to see if the price is rising or declining.
Advantages of selling your home
You could take equity releases.
Selling will release equity if the value of your home has improved significantly since you purchased it. These are funds that you can put toward the price of purchasing a new home or, if you are purchasing a home that costs less than your current home, these funds become disposable income that you can use in anyway you like.
A decent price is achievable.
Using market judgement, seeking guidance, and being in the right place at the right time can all help you sell your home for a decent price. You won’t pay capital gains tax on the money you spend increasing the value of your house. Only the profit from the sale of a property that is not your primary residence is subject to capital gains tax. The money you spend enhancing the worth of the property, if it’s not your primary residence, would thus be considered an expense and therefore lower the potential capital gains tax you may have to pay.
Cons of house selling
Your home may sell for less than what you paid for it.
When the value of your home s less than it was when you bought it, you have negative equity. This implies that if you have a mortgage, the profits of the sale of the property will not be sufficient to pay off your debt to your lender. This must be avoided if at all feasible because it is a very essential factor.
Homesales can be drawn-out processes
Remember that certain homes can take a long time to sell if you need a rapid sale to realise the assets from a property. A sale is more susceptible to failing to close the longer the “chain” gets. Character properties, or those with distinctive features, may also take longer to sell than a more typical home.
You can be promoting a product whose worth will rise.
Everyone wants to profit from the sale of a property, but if you’re not in a rush and home values are rising, playing the waiting game might be advantageous to you. If you sell a few months later, you can realise a sizable profit.
Advantages of renting your home
Renting out your home could be a smart decision if you don’t have a pressing need to sell it, there is a high demand for rentals, and you are prepared to handle the obligations that come with being a landlord.
Renting can be a better choice for you, depending on your situation. For instance, renting out a property could provide you with an additional source of income if you are working overseas or in a different region of the country and intend to return home at some point.
You could move more swiftly
If you need cash quickly and can’t wait for a property sale to close, renting out your house can be the answer. If you can find a tenant who is willing to move in right away, tenancies can be set up swiftly.
Good tenants will take care of the property
Many of the issues that come with being a landlord may not emerge if you are fortunate enough to locate dependable tenants who take good care of your property. Make sure you are happy with any screening procedures used when selecting tenants, or even better, try to get to know any potential tenants in advance.
Drawbacks of renting your home
Many people make the “accidental landlord” mistake. Although the rental income may be advantageous, there can be a lot of work involved in renting out a home, keeping it up, or dealing with problematic tenants. Not everyone will enjoy it.
You must adhere to all applicable lettings laws.
The Homes (Fitness for Human Habitation) Act places 29 distinct responsibilities on landlords, including security, hygiene, and the safety of electrical and gas appliances. You should also be aware of your legal obligations with relation to the Right to Rent, energy efficiency, and deposit protection.
If you obtain a second mortgage, you will incur more debt.
Having a “buy to let” mortgage in addition to your regular mortgage will result in you taking on extra debt if you own multiple properties. You must be sure you can afford the increased monthly payments on a buy to let mortgage because they are likely to be greater than those on a typical residential mortgage.
You might discover that your home maintenance and repair costs have increased.
The risk of property damage is increased when tenants occupy your property. Repairing appliances, utilities, fixtures, and fittings could become expensive and reduce your rental income. Additionally, insurance costs will increase.
Hence it is ideal that you measure all the pros and cons of selling vs renting before making a decision.