Jumping out of the property market: Are you prepared to take the rental gamble?
If you have put your property on the market, you probably know what kind of home you want to purchase in its place. You may have even already seen something you have fallen in love with and set the wheels in motion to make it your own.
However, ever since the government pressed the pause button on the housing industry at the start of the coronavirus lockdown, estate agents and conveyancing solicitors have been scrambling to catch up with their clients’ transactions. Because of huge industry-wide delays, chains are rarely falling straight into line anymore. In fact, these days you are much more likely to experience a lengthier time between selling your existing home and completing on your new one.
Up until now, only a small number of buyers and sellers have been brave enough to jump out of the property market and wait for their purchase to go through in rented accommodation or with family. But in today’s highly disrupted industry, could it be worth the gamble?
Well, in my opinion, it really depends on three things: your individual circumstances, your financial position, and your attitude to risk.
If you’re travelling solo, you can probably afford to be a bit more flexible. Living out of storage boxes for a while won’t be such a big deal. On the flip side, if you’re moving with a young family in tow, you will want to keep upheaval to a minimum for the sake of the kids. You will need to think about how comfortable everybody would feel in temporary accommodation, and what kind of pressure this might put on you and the people around you.
Money is a big factor. Moving home is an expensive business, so when stamp duty tax has been considered and all the conveyancing fees have been settled, there might not be enough cash left in the pot to cover an initial deposit and ongoing rental payments. Remember, too, that every penny you spend on a rented flat or house is a penny that will not go towards renovations in your new house or flat. If you’re planning big works at your new property, like a new kitchen, bathroom, extension or conversion, having to splash out on rental accommodation could set back your plans quite significantly.
Plus, there is always the possibility that your purchase will fall through, leaving you without a home to go to – not to mention external threats like redundancies, family emergencies and future lockdowns that could bring the entire move to a halt.
It all sounds a bit dicey, doesn’t it? But despite all the negatives, there is sometimes a strong case for spending the weeks or months in between your sale and your purchase in temporary digs.
Jumping ship before settling in might be a better strategy if you are comfortable with the prospect of renting somewhere for a while. If you haven’t yet got your heart set on a particular property or location, temporarily exiting the property market could put you in a stronger position when you’re shopping around for your ideal home.
With cash in the bank, a pre-approved mortgage and no chain to speak of, you’ll be an estate agent’s dream – and you’ll be less likely to be gazumped by another potential buyer who might be in a less desirable situation, and unable to move as quickly as the vendor might like.
And if the market drops for whatever reason, you could find yourself able to negotiate an even better price on your perfect property. Imagine that!
My advice is this: before you commit to selling up and renting for a while, weigh up the pros and cons of your decision, and have a think about what plan B might look like if things don’t go your way.