The question of whether to buy or rent is a dilemma that has faced many people who could afford both options. What if I buy now? Will I will buying at the top of the market and so will lose money. Or if I wait and buy later, what if properties go up so my procrastination will just got me more down the line?
So here at Quick Property Buyer, we thought we would summarise some key points to consider. If you want to sell your home, rent for a while, wait for prices to fall and then return to the market to buy, this can be a great move, but also one that shoots yourself in the foot.
Lets look at the advantages and disadvantages:
- Advantage 1: Market drops so houses are cheaper next year
This strategy can be very beneficial that if the property market does fall. It would be silly to purchase a house at the top of the market when the same or similar properties may be cheaper in the future.
Indeed property prices in the UK are predicted to fall in 2021 following the end of both the furlough schemein November 2020 and stamp duty holiday on 31 March 2021. So the argument of renting now to buy later may have some credibility.
Many people buy at the top of the market then spend years regretting it. As prices fall, more bargains come onto the market, asking prices are slashed and more and more motivated (some say desperate) sellers start to appear.
Therefore you may pick up a heavily reduced bargain by waiting.
- Advantage 3: Buyers can try out a new area before buying there
Renting before buying also gives buyers the opportunity to try out a new area before they buy there.
You may want to live in a new area, but after 6 months of renting there, you may decide its not an area for you. We have all gone to a new area and thought that it must be great living there. But thepracticalities may take over once there. The harsh reality of a long commute on a rainy January morning may give you a different impression of an area compared to the sunny flowery new location you saw in the summer.
Therefore renting allows you to jump ship and move back to a different area, without the financial commitment of having bought there.
- Advantage 2: No more long and stressful property chains (at least on one side)
Selling, renting for a while, then buying also takes you out of a chain or reduces it. When you do come to buy, you will be a cash buyer which will make you more attractive to sellers. The complication and stress to both you and them will be muchless. This is very important if you find your dream home and its purchase is no longer dependent on your sale.
Sure you may still be entering a chain if your sellers are in one, but at least you will be at the end of it.
- Disadvantage 1: House Prices may actually rise while you are renting
The reverse scenario is that property prices may not actually not start falling. The Bank of England estimated a 16% drop in prices after lockdown. Instead it has just gone up. Indeed if the market goes up, you will be in the unenviable position of having to pay more in the future than you would have done had you bought when you sold.
Also the UK is presently in a stamp duty holiday. If you buy after 31 March 2021, the amount of stamp duty to pay will be far higher.
- Disadvantage 2: Costs and Practicalities of Renting
Another disadvantage is actually the costs of renting. It would be more than likely you would pay more in rent each month than your mortgage payments would have been, especially in these times of super low interest rates.
Another negative is the practicalities of renting. You are living inside someone else’s property under their rules. If you want to paint the walls, you have to ask their permission first. If you want to get a pet, they may say no. If you need something to get fixed, they may be slow in doing it. This can be all difficult to take if you are used to owning your own property.
One other negative is that you will be entering a lease. Usually leases have a minimum term of say 6 months or a year. Therefore this may restrict your freedom of when you can buy, unless you are willing to pay rent and a mortgage together.
- Disadvantage 3: Flushed with Cash, you may spend it
Another disadvantage is, and one that you may think is quite counterintuitive, that you suddenly come into a lot of cash. This is not a problem in itself, but it is if you suddenly feel a false sense of wealth and start spending it.
It can be very tempting to buy that car, go on that holiday or purchase that dream present for another or for yourself. This can be quite common if people have never had such money before. They think why not, enjoy life a bit. But if that happens and the amounts start dwindling, it can leave buyers in a position where they can no longer afford to buy a place.
If you do want to sell quickly to then rent, feel free to contact our friendly team at Quick Property Buyer for a no obligation instant cash offer.