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Sell or Rent: The best bet for homeowners

Friday, 9th May 2014

Categories: Lettings

Author: Kris White

If you’re moving abroad, taking a sabbatical for work, or buying a second home to live in, you need to think carefully about what to do with your current property. Although your initial thoughts might be to sell your home in order to release much needed equity and cut ties, you could discover that it makes more financial sense to let your home and continue with a second house purchase.

Capital returns

If property prices in London continue to rise – even at a less aggressive rate – your property really will be a nest egg, earning far more than the equivalent amount of money in a savings account. You also have the security of still owning your own home, should your plans change in the future, and you will keep that precious rung on the property ladder.

Counting the costs

Of course, there are a number of recurring and one-off costs involved with retaining your property, and you might think it easier and less stressful to sell up and move on. You will need to pay letting management fees, as well as upkeep and repairs to the property, and also take into account any void periods in rental when current tenants move out and you wait for new tenants to move in. It might also be necessary to travel back to check on the property, complete paperwork etc. A good agent should be able to take care of most of the admin for you, so you won’t be constantly bombarded with calls and requests, but the property is still held in your name and, as such, you are ultimately responsible for it.

Size matters

Your decision to keep or sell will also be based on the size, age and condition of your property. If it’s a fairly new flat in a well-kept block, there should be minimal maintenance; however, a large period property may well require ongoing and regular maintenance in order to keep it in good repair.

Before you make a decision, it’s important to have all the information to hand and have a detailed breakdown of the relevant fees, projected income and contingency requirements. Breaking even might not necessarily be a deal breaker for a rental property in a good location in a rising market, but if you can turn a profit after you’ve factored in all your costs, so much the better.