What Happens If You Sell Your House and Don’t Buy Another?

You maybe thinking about getting out of the property market for a number of reasons, and you might be asking yourself “what happens if I sell my house and don’t buy another?” This could be to avoid the uncertainty and stress that buying and selling at the same time brings (i.e. you may buy again at another time), or you may not want to own a property any more. Whatever the reason, what happens next?

If you sell your house and don’t buy another home in the UK, you must pay the balance of your mortgage on the property and then bank the remaining equity. The good thing about selling and not buying again in the UK is you don’t pay Capital Gains Tax as long as the house was your your main residence.

There are a few consequences of selling your home and not buying another.

Consequences of selling your house and no buying another

1. You are no longer in the property market. If the property market increases significantly, you will lose out on these gains. It’s never a good idea to try and time the market. For example, many property experts thought property prices would decrease as a result of Covid-19 (including myself), but the opposite happened, which was as a result of a shortage of property.
2. You will no longer suffer price decreases. If you sell your house and don’t buy again, and you happen to time the market right, you won’t lose-out if the market dips. This could mean that when and if you decide to get back into the market, you may be able to buy a house at a much better price in the future. Also, you will now be a chain-free buyer too, which means you will be in a very strong buying position, as sellers love chain-free buyers.
3. As a tenant you have to follow a landlord’s rules. If you rent, you will be a tenant and will have to live within the rules of a landlord. Not everyone likes the idea of being a tenant, as you are left vulnerable if the landlord decides to sell. But this is rare and the benefits of becoming a tenant may outweigh the negatives of not selling for the reasons you don’t want to buy again. For other thoughts on buying and selling property at the same time, you may like to consider investing in my 5-Step House Sale & Move Course.
4. Tenants are not responsible for property repairs. As a tenant, you are no longer responsible for repairs to the property. There is something quite refreshing being a tenant, which is something I did for a few years. But I kept my property portfolio of investment properties so I stayed in the market. You may decide to keep your property and change this into a buy-to-let investment yourself, and become a landlord.
5. Moving into a family of friends house saves the hassle of property ownership. If you move in with a family member, a friend or a partner, you will save the hassle of owning another property, and save on monthly rent costs too.
6. Your credit rating is affected by property ownership. This means it will be better if you’re a property owner vs a tenant. If you sell your house and don’t buy another, you may not have access to the best loans, credit cards and rates generally, but it won’t stop you from being able to borrow.

Do you pay tax if you sell your house and don’t buy another

If you sell your house and don’t buy another in the UK you do not pay tax, so long as the house you sell has always been your private residence, which has been used as your main home. Which means you might pay tax if the property has been a rental property at some point during your ownership.

Do I have to inform HMRC when I sell my house?

If you sell the house you live in that’s been your private residence, you don’t need to inform HMRC when you sell it, but if the house is not your main home and it has been an investment property, you must inform HMRC within 60 days from when it is sold.

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