Should you bide your time and rent between selling and buying?


Should you bide your time and rent between selling and buying? It’s a brave tactic that depends on house prices falling at the right time to be worthwhile.

But it could be a wise move to sell now, before a further dip in prices, then rent for six months before buying — and hopefully getting more house for your money.

There are no certainties in this strategy, but many experts say it could work, and this is why: yesterday, Chris Rhodes, chief finance officer at Nationwide, warned that house prices could fall by up to 30 per cent in a worst case scenario. 

In this case, a house worth £500,000 today could drop in price by a whopping £150,000.

Selling your property first puts you in a stronger position as a buyer — you are not in a chain so are more attractive to the seller of your next home

Credit Suisse bank is slightly more optimistic, warning that if interest rates continue to rise, house prices could tumble by 15 per cent.

Selling your property first puts you in a stronger position as a buyer — you are not in a chain so are more attractive to the seller of your next home — and it means you won’t be hassled into selling in a panic for a lower price than you want because you have an offer pending on a new home.

In addition, if you’re relocating, you’ll want to find out which are the best streets in the new area, and renting gives you time to do your homework. But it is no longer a cheap option and its cost will vary depending on property size and location.

The latest data from Rightmove shows the average rent outside London has risen to a record £1,162 per month, while in the capital it is typically £2,343 a month. Over six months that would cost you £7,000, or £14,000 in London. 

The figures could work in the favour of a canny buyer — but the process is not for the faint-hearted.

If you have children at school or pets, renting can be complicated with a reduced number of properties available. And remember you have to be willing to move house twice, possibly putting furniture in storage if your rental home is smaller than the house you intend to buy. 

Comparison service reallymoving.com says the average house removal now costs £649 — and you’ll have to double that to cover the move into the rental and then into your new home.

When it comes to storage, a house with three or four bedrooms typically requires 120 sq ft of space at an estimated cost of £12 per square foot for six months, according to the Self Storage Association UK — so that’s £1,440 in total.

Estate agent Grant Bates, from Hamptons, suggests the strategy is likely to work best if you are buying in cash or need only a small mortgage.

‘If you’re planning on getting a larger mortgage, it’s likely that increased rates and rental outlay will swallow up any margin,’ he says.

And anyone who decides to take the plunge must accept that it’s impossible to guarantee what house prices will do. 

In 2020, when the country was gripped by Covid, few would have anticipated a 20 per cent rise in average house prices over the following two years. And, likewise, despite double-digit inflation and a cost of living crisis, there’s no guarantee that there will be a house price drop, even after the turmoil of recent weeks.

James Greenwood, of Stacks Property Search, a buying agency, says: ‘It’s a big gamble to play the market with your largest financial asset and the place that you live. 

‘Our advice would be to protect your capital rather than gamble it. 

‘The best way to hedge against movements in the market is to sell and buy within the same political and economic cycle.’

There is also the impact of inflation, currently running at around 10 per cent. That means £500,000 kept in the bank after the sale of a property could be worth only the equivalent of £475,000 after six months, if inflation remained unchanged.

On the market… ready to rent 

West Suffolk, £3,000 pcm : This four-bedroom home in Newmarket is fully furnished and recently renovated. There is also ample space for cars in the driveway; Whatley-lane.co.uk, 01638 597255.

West Suffolk, £3,000 pcm : This four-bedroom home in Newmarket is fully furnished and recently renovated. There is also ample space for cars in the driveway; Whatley-lane.co.uk, 01638 597255.

Wiltshire, £2,817 pcm: Lye House has three bedrooms and is situated near Pewsey in the North Wessex Downs, where there are great walks and horse riding routes. Marriotts.co.uk, 01285 647333 .

Wiltshire, £2,817 pcm: Lye House has three bedrooms and is situated near Pewsey in the North Wessex Downs, where there are great walks and horse riding routes. Marriotts.co.uk, 01285 647333 .

North Yorkshire, £3,000 pcm : With five bedrooms, this unfurnished house in charming Harrogate is opposite Ashville College, so would be ideal for a family. Carterjonas.co.uk, 01423 205574.

North Yorkshire, £3,000 pcm : With five bedrooms, this unfurnished house in charming Harrogate is opposite Ashville College, so would be ideal for a family. Carterjonas.co.uk, 01423 205574.

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