Should I sell my house or rent it out?

There may be times when you are faced with the decision to sell your house or rent it out. Sometimes your house isn’t selling as quickly as you want; or the rental yield you might achieve is not enough. You need to weigh up the pros and cons of each approach, study the house sales and rentals market and decide which makes more financial sense to you.

Here we look at the merits of selling or renting.

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Should I sell my house now?

Deciding on the right time for a house sale isn’t easy. If the house market is booming, you might want to wait and see if prices climb further. Spring is the best time to put a house up for sale, followed by early autumn. Christmas time and the summer holidays are less good times to try to sell. 

UK house prices and property market

Look at what estate agents are saying about the property market in your area. National trends might not always be replicated where you live. Check out local council plans in the coming months, to see if there is any building work going on that may disrupt viewings or make your area less desirable. Compare house sale values over the last six or 12 months. Search for houses like yours on websites like Rightmove and see if prices are rising or falling.

Use our online calculator to check on demand for specific house types in your local area. We can tell you how long homes like yours take to sell and market hotspots in your area.

Pros of selling your house

You could release equity

If the value of your property has increased significantly since you bought it, selling will release equity. These are funds that you can use towards the cost of buying a new property, or, if you are buying a property costing less than your existing property, becomes disposable income that you can use for anything you like. 

You could get a good price

Judging the market, taking advice and being in the right place at the right time can all contribute to getting a good price for your house sale.

Money spent adding value to your home won’t be lost in capital gains tax

You only pay capital gains tax on the profit of selling a property that is not your main home. So if the property being sold is not your main home, any money you have spent adding value to it will count as an expense and will reduce the amount of capital gains tax you may have to pay.

Cons of selling your house

You could sell your house for less than you bought it for

Negative equity occurs when the value of your house when it is sold is lower than it was when it was purchased. This means that if you have a mortgage, the debt to your lender will not be covered by the proceeds of the property sale. This is a very important consideration and must be avoided if at all possible.

House sales can be long-winded

If you need a quick sale to realise the assets from a property, bear in mind that some houses can take a long time to sell. The longer the ‘chain’ is, the more vulnerable a sale is to falling through. Character properties, or those with unique features, also might not find a buyer as quickly as a more conventional house.

You could be selling an asset that will increase in value

Everyone wants to make money on the sale of a property, but if you are in no rush to sell and house prices are rising, playing the waiting game may work for you. You could make a tidy gain if you sell a few months later.

Pros of renting out your house

If you have no immediate need to sell your property, the demand for rental properties is high, and you are comfortable with the responsibilities being a landlord bring, then letting your house could be a good move.

Additional, regular income

Depending on your circumstances, renting may be a better option. For example, if you are working abroad or in a different part of the country and plan on returning home at some point, letting a property could give you an additional source of income.

You could move quicker

If speed is of the essence and you can’t wait for a property sale to go through, renting your property out may be the solution. Tenancies can be arranged quickly if you find a tenant who is available to rent immediately. 

Good tenants will look after the property

If you are lucky enough to find good tenants who take care of your property, then many of the problems associated with being a landlord may not arise. When choosing tenants, make sure that you are comfortable with any screening process involved – or better still, try to get to know any prospective tenants first.

Cons for renting out your house

Many people fall into becoming an ‘accidental landlord’. The rental income may be beneficial, but the responsibilities involved in letting a property, maintaining it or dealing with difficult tenants can be significant. It is not for everyone.

You will need to be compliant with lettings legislation

A landlord has responsibility for 29 different issues for tenants in the Homes (Fitness for Human Habitation) Act, including the safety of gas and electrical appliances, security and hygiene. You will also need to be aware of your legal responsibilities with regards to deposit protection, energy performance and the Right to Rent.

You will take on additional debt if you get a second mortgage

If you own more than one property, having a ‘buy to let’ mortgage in addition to your standard mortgage will mean taking on more debt. The payments on a buy to let mortgage are likely to be higher than a standard residential mortgage, so you need to be sure you can afford these.

You could find you are paying more home repair and maintenance bills

Tenants living in your property increases the risk from damages to the property. The cost of repairing appliances, utilities, fixtures and fittings could mount and eat into the rental income you receive. Insurance costs will also be higher.

haart can help whether you’re looking to sell or rent out your house

To sell or not to sell? To rent or not to rent? Answering this question will depend very much on your personal circumstances, and sometimes it is a fortunate choice to have. Whichever is right for you, haart can kickstart your property sale with a free, no obligation valuation, or take the stress out of being a landlord with our range of property management services.