Most homeowners sell their current home at the same time as buying a new one. Selling and buying homes this way can be extremely stressful, which is why some homeowners consider selling their house and renting before buying again.
But are you better selling your house and renting before buying again? You are much better selling your house and renting before buying again as this reduces stress and puts you in a stronger buying position for your new home. Whilst renting before buying again means you have to move twice, the double move is worth it in the end.
The great thing about selling your home before buying is that it cuts out on the conveyancing chain and you become a premium buyer. I can say I’ve sold a few housing using this way of doing things.
I have to say it’s a great feeling to know that as soon as you see a house you want, you don’t have your current house sale holding you back. You can make an offer on the basis you can proceed straight away. As a result I wouldn’t buy and sell a house for myself in any other way.
But what are the advantages and disadvantages of doing this?
What are the advantages of selling your house and renting before buying again?
- You become a stronger buyer.
- Less chance of being gazundered.
- Less chance of being gazumped.
- You’re under less pressure to sell your current home.
- Less likely to be disappointed.
- In a falling housing market houses become more affordable.
- As a cash buyer you’re more likely buy your next house at a discount.
- Less stressful.
- You’ll be more in control of the whole process.
- It’s better if you’re moving significant distance from where you currently live.
- Works well if you buy a house that needs renovating.
- It can force you into de-cluttering.
- You can move at your leisure.
- Selling first and renting before buying works well if you live in a large house.
- You reduce the risks associated with what can go wrong between exchange and completion.
Let’s take a look at these advantages in more detail.
1. You become a stronger buyer if you don’t have a house to sell
Sellers will always prefer a buyer who’s ready to proceed rather than someone who is in a conveyancing chain. There are less chances the sale can go wrong with less buyers and sellers in the sales-chain.
So if you sell your house and rent before buying again you are in a much stronger position.
2. Less chance of being gazundered if as a seller you not also buying a property
Gazundering is when a buyer drops their offer price after agreeing to buy at a higher price. This usually happens just before exchange and is more likely to happen to a seller who’s in a weaker position.
If you are under less pressure to sell because you intend to move into rented accommodation, you are less likely to be gazundered.
3. Less chance of being gazumped if you are in a stronger buying position
Gazumping is when a buyer accepts an offer from one buyer, only to then accept a higher offer from another buyer. This can be extremely frustrating, especially if you’ve already spent money on legal costs and valuations. But also if you had your heart set on this property.
However, you are much less likely to be gazumped if you are in a stronger buying position. Unless of course another buyer in a similar strong position as you comes along and offers more for the property.
4. You’re under less pressure to sell your current home if you’re not buying at the same time
If the purchase of your new home is dependent on the sale of your current home, this puts you under quite a lot of pressure. Often times this is where a lot of the stress comes from when moving house.
Therefore the more you can do to reduce this stress the better. Which is why selling your house and renting before buying again is such a great idea. The pressure of selling your current home disappears, as you are no longer worried about losing the purchase of your new house.
5. Less likely to be disappointed if you’re not in a chain-sale
If you have moved before, you may have been disappointed in the past when a house sale falls through. If you are in a chain, it’s possible your buyer may pull out before contracts are exchanged, which can happen for many reasons. Whilst this is extremely annoying, it can also lead to disappointment too.
The sellers of you new home may not be willing to wait for you to find another buyer. Which means they put their house back on the market again. If another buyer comes along and buys your potential new home this can be extremely disappointing.
However, if you sell first before you buy again, you are less likely to be disappointed in this way.
6. In a falling housing market houses become more affordable
If you are selling your house in a falling housing market you benefit in two ways. As a chain-free seller this can be more attractive to potential buyers and may make it easier to sell your house faster.
But the main advantage is that whilst you are renting and property prices are falling, the houses you want to buy become more affordable in the process.
But then when you finally find somewhere to buy again, you are in a much stronger position. As a more proceedable buyer your offer will be more attractive to the seller. Which means you can be more cheeky with your offer.
7. As a cash buyer you’re more likely buy your next house at a discount
As already touched upon in the previous advantage, as a buyer in a much stronger position you are more likely to get a better price for a house as a result.
If you stand side-by-side against another buyer who is in a sales-chain, you stand a better chance of having your offer accepted before there’s is. Which is even the case if your offer is less than there offer.
8. It’s less stressful to sell first and rent before buying again
Selling and moving house is one of the most stressful things that anyone can do, apart from going through a divorce that is. Which means it makes sense to try and reduce the stress of the moving process.
If you cut out buying your next house at the same time as selling your current house, you can at least halve the stress.
9. You’ll be more in control of the whole process if you sell first and rent before buying again
The whole process of selling your house becomes a more relaxing process from start to finish.
But because you end up moving into rented accommodation after selling, you can take your time to find your next home. This puts you in the driving seat and in control of the whole process.
10. It’s better to sell and rent first before buying again if you’re moving significant distance from where you currently live
If you are moving some distance from where you currently live, you don’t know the area that well. So it’s far better to move into a rented house in any case, as this will allow you to explore the area before you buy again.
Also, it’s normally far easier to find rented accommodation than it is to find a house you want to buy. This is because you don’t have to be quite so choosy over a temporary place to live.
If you are looking for somewhere to buy, you will need to go back and forth much more until you find the perfect place. Whereas if you’re renting, this process is far easier.
11. Selling and renting before buying again works well if you buy a house that needs renovating
If you end up buying a house that needs to be renovated, you can remain in your rented house until the works are completed.
This avoids having to move into a house that ends up full of dust and having to live from boxes. Or worst still having to live outside in a caravan…no offence if you like caravanning.
12. Moving twice can force you into de-cluttering
Moving twice and to avoid spending too much on storage, may force you to declutter.
Many of us know we collect way to much stuff and have way too many clothes and shoes. But moving into a rented house first and then again when you buy your home, may force you to have a good clear out.
13. You can move at your leisure at each stage of the sale and buying process
One of the other big stresses of selling your current house and buying a new house at the same time is having to move everything out on the day of completion.
However, if you move into rented, you can get your rental property a few days before you complete on your current house and take your time to move out. This gives you plenty of time to clean everything in your current house before completion day.
Also, when you buy your new house, you can move at your leisure by keeping your tenancy slightly beyond the day of completion. This allows plenty of time to move, but also to clean the rental property before you move out.
14. Selling first and renting before buying works well if you live in a large house
If you live in a very large house, moving everything out on the day of completion can be a stretch and quite stressful.
This is where moving into rented first helps, because it gives you more time to pack everything away. You can move your furniture and belongings you don’t need while you’re renting into storage. Then move what you do need into the rented house.
15. You reduce the risks associated with what can go wrong between exchange and completion
Whilst it’s not common, there are a number of things that can go wrong between exchange and completion. If something happens to your buyer after you’ve exchanged, and for whatever reason they can’t complete, you also have a massive problem.
On the assumption you were buying a house at the same time as selling, when you exchange contracts with your buyer, you will also have simultaneously exchange with the house you are buying. Which means your 10% deposit will have been paid.
As a result of your buyers not being able to complete, you may not be able to complete either. Which is another good reason why you should sell your current house first and rent, before you buy again.
It would be worth you having a quick read of my article on what can go wrong between exchange and completion before you leave. This will help you to decide whether in fact it is a good idea for you to sell and rent before buying again. You can read this article here; what can go wrong between exchange and completion.
Video of the main advantages of selling your house and renting before buying again?
What are the disadvantages of selling your house and renting before buying again?
- You must move twice.
- It will cost two lots of removal costs.
- You may incur storage fees.
- In a rising housing market you may lose out and it could cost more to buy again.
- If you can’t find your next home quickly renting can be expensive.
- Renting can be competitive.
- Having pets makes it harder to find rented accommodation.
- When you rent, it’s not your house.
- The landlord could serve notice before you find a place to buy.
- You may not be able to port your mortgage.
- If you have children, this adds a further challenge with school catchments.
Let’s take a look at each of these disadvantages in more detail.
1. You have to move twice if you sell and rent first before buying again
If you don’t like moving house and find it a chore, selling your house and renting before buying again may not be right for you. You will have to move out of your current home and into a rented house first. Then once you find your next home, you will up-sticks and move again.
This may mean packing and moving twice within six months.
You may not want to spend too much on rent, so you may end up renting a smaller house than you intend to buy. Which means you may need to put some of your belongings into storage.
This can become a bit of a challenge to work out what goes into storage and what goes with you to your rented house.
2. It will cost two lots of removal costs if you move twice
As you have to move twice, you will have to pay two lots of removal costs. However, the benefits you gain by selling your house and renting before buying again outweigh this cost.
And if you manage to secure a good deal on your next house because of your strong buying position, this may outweigh the cost of moving twice in any case. Especially when you read this article…on how you could save £71,475 on your next mortgage.
But it also depends on what value you place on living an easy stress-free life. You could argue the cost of moving twice is a small price to pay for piece of mind and a less stressful move.
3. You may incur storage fees if the house you rent is small than the house you eventually buy
As already mentioned, selling your house and renting before buying again involves two moves. But also if you are able to do so, you are better to rent a smaller house than you intend to live in to save on rent.
However, this will mean you have to put some of your furniture and belongings into storage. Which means you will also have to pay storage costs too.
But so long as the combined cost of rent and storage costs are less than renting a house the size that fits all your belongings, you are ahead on what it will cost on a monthly basis.
4. In a rising housing market you may lose out and it could cost more when you buy again
If house prices are rising fast you may find that by the time you come to buy your next house, property prices have moved up.
However, house prices don’t usually move that quickly, but if they do you are still in a stronger buying position than someone else who has a house to sell first. Which means you may still be able to buy your next house at a good price, despite house prices moving up.
But if house prices are increasing quite quickly, let’s say by 10%, and if it takes a few months to sell your current home. If you then rent for a few months whilst you look for your next house, by this time house prices may have jumped significantly.
5. If you can’t find your next home quickly whilst renting it can become expensive
Renting isn’t cheap, and if you cannot find your next house quickly, this could end up being a costly process. However, if you weight up some of the above advantages, these may well outweigh the cost of monthly rents.
Normally you’ll need to sign up for a minimum of a six month tenancy. Which means you initially have six months to find and buy your next house.
However, if you are not successful in finding and buying your next house in this time, you may have to sign for another six month term. This may even be the case if you are nearing completion at the point your first six month tenancy runs out.
An alternative is to move in with a friends of relatives. For example my parents moved in with me as I had a very large house as it made it much easier for them to sell and buy another house later.
6. Renting can be competitive and the right house may not be easy to find
It’s not always easy to find the right rental property. This is especially true when rental properties are in high demand.
Which means that this process can end up being a bit stressful in itself. For example, you may not want to sign a tenancy agreement until you’ve exchanged contracts. Otherwise the house sale may fall through, but you are still committed to the rental agreement.
But on the other hand, if you wait until you have exchanged contracts, and depending on the time you have between exchange and completion, you may not find a house to let in that time. But also in a high demand area where rental properties get snapped up quickly, you may lose a property if you wait for contracts to be exchanged.
7. Having pets makes it harder to find rented accommodation
Not many landlords accept pets in their rented accommodation. Which means if you have pets this may make things more difficult to sell first and rent before buying again.
However, you can always ask a friend or a relative to look after your pets until you find you next house.
8. When you rent, it’s not your house you’re living in
You have to get used to the fact that when you’re renting the house isn’t yours. You can’t simply put a picture on the wall without permission and you will have the agent coming over to spot check the property.
But if you can put up with these minor inconveniences, they are a small price to pay when you look at the advantages of renting before you buy again.
9. The landlord could serve notice before you find a place to buy
As the rented house isn’t your property it’s quite possible the landlord could serve notice on you to move out.
There is a chance this could happen before you are ready to move out. If this happens before you’ve found a place to buy, you could end up moving three times instead!
10. You may not be able to port your mortgage if you rent before buying again
If you currently have a very good mortgage rate, or if you are tied in with a penalty clause if you repay your mortgage early, you may want to port your mortgage to your new house.
But if you sell you first house and rent before you buy again, the mortgage on your current house will be paid off in full. Which means you may not be able to port your mortgage to your new home.
This means that if you have a large fixed penalty clause and you repay your mortgage early, the cost of this may outweigh the savings of renting first.
However, this isn’t always the case, and some mortgage companies may be willing to port the mortgage when you buy again. You may have to pay the early redemption penalty when you sell. But the mortgage company may refund all or a part of this penalty when you buy again, if you use them for your new mortgage.
The amount repaid will depend on how much your new lending is vs how much your current mortgage is. But you will need to speak with your mortgage provider to find out if they are willing to port your mortgage. But always compare current mortgage rates too.
11. If you have children, this adds a further challenge with school catchments
Moving with children is more of a challenge than it is if you don’t have children, as you have to consider school catchments. Plus you have more stuff to move when you have kids and it can be disruptive for them with their friends.
But it didn’t affect me too badly, as I was moved three times as a kid by my parents. I know some children move even more, especially if their parents are in the Forces. Kids soon make friends at school, and I think it gives them more confidence by doing so.
With regards to school catchment areas, if your children are already in the school within the catchment of your choice when you start renting, this is not a problem. You may need to plan your moves around when your children move from one school to the next.
But you could even use this to your advantage. If you like a particular catchment area, but you cannot afford to buy in that area, you could rent a house instead. This does rely on you finding a property you can afford to rent, which doesn’t eat into your deposit money.
Whilst renting, get your children into your preferred school before you buy your next house in an area you can afford, but also at a better price too.
Moving twice with a large family isn’t as easy as it is for single persons or couples
Selling your house and renting before buying again is easy for someone who is living on their own. It’s also not such a problem for a couple living together. But if you have a number of kids into the mix, this makes this a little more tricky.
Having to move children twice won’t be easy. Plus if you have a large family, it may not be as easy to find larger houses to rent either. So it all depends on family size.
You need to think about what to do with funds whilst you are renting before buying again
When you’ve sold your current house you will end up with the balance of monies in your bank account. But you may not want to simply leave these funds sitting in a current account not earning interest.
When it comes to where you put your funds until you buy again, you need to consider the following:
- The length of time before you need the funds for buying your house.
- The risk of loosing your investment, so play it safe.
- The rate of returns available for depositing funds.
During uncertain times it’s better to try to bring a certain amount of certainty into your world. Whilst house prices have risen in many places during the Covid-19 pandemic, this is unlikely to last.
The surge in house sales was partly caused due to a pent-up demand due to estate agent closures. But is also fuelled by the Stamp Duty holiday.
However, in the medium term it’s likely that house prices will fall. Which is something you could benefit from by selling now to avoiding losing out on value on your current house. But then sitting on the side-lines and wait for prices to fall. This way you may be able to pickup a bargain if you wait.
Selling your house and renting before buying again won’t work if you’ve already found a house you like
If you have already found a house you really want to buy, selling your house and renting before buying again won’t work.
But what you must be disciplined about is not even starting your search for a house to buy until you’ve sold and moved into your rented house. This way you won’t find yourself being disappointed.
Selling house and renting before buying again will work if you’re moving for your job
Selling your current house and renting before buying again actually works well if you are moving to another area for work. Moving to a new job in another part of the country can be quite stressfull, but it’s also exciting too.
It’s better to get settled into your new job and find your feet in the new area before you commit to buying your new house.
Selling house and renting before buying again is an ideal strategy if you’re moving abroad
If you think it’s stressful to sell your current house and buy another in the same country, you should try doing this when you’re moving overseas and the new house you’re buying is in another country.
You are far better to sell your house where you live first. Rent a place in the new country. Get to know where you want to live and then buy. But also, you don’t even know if you’re going to like the new country. So it’s best not to commit to buying until you’ve lived there for a while.
You may even be better not to sell your current house when you first move overseas, just in case you want to move back.
I hope you’ve enjoyed this article about selling house and renting before buying again
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