If you have decided to move to another home or have to locate to a different area due to work commitments, this can sometime lead to a dilemma as to whether it would be better to sell your home or rent it out.
You can use someone like www.geeringandcolyer.co.uk to help you with the arrangements whatever you decide to do, but first you will need to consider your options so that you take the right steps with your current property.
Pros and cons
There are definitely pros and cons attached to either decision when it comes to either selling your home or opting to rent it out.
Finances are a primary consideration when it comes to trying to establish which would be the best option for you and one of the main attractions to keeping your old home, is that you manage to retain a potentially valuable asset which is generating a useful income and also hopefully, gaining in value over a period of time.
You have to weigh up the respective pros and cons based on your own personal financial circumstances, any professional advice that you receive and what your personal domestic and work circumstances are allowing or dictating you should do.
When renting makes sense
If you have been offered a career move or have to work away from your area for a period of time, it can often make sense to keep your options open for a while by renting out your property, before seeing if your move is more permanent.
If you live in an area where rental demand is good and your property is suitable for renting out, it may well work out to be sound financial management to rent it out and generate an income that will cover any mortgage payments you need to make, plus maybe a bit more besides.
If you already own what is perceived to be a good rental property and you are reasonably confident that property prices in your area are likely to continue to rise for the foreseeable future, renting can make sense.
It may be of course, that you have to sell your existing home if you want to buy another property, but if you have enough money behind you to consider renting, it is certainly an option that is worth considering.
You should always take professional advice on the tax implication associated with a decision like renting out your existing property.
If you manage to make a profit from renting out your property and the annual rental income you receive exceeds the current allowable thresholds for allowable costs, including mortgage interest payment, then you may well attract an income tax bill from the venture.
The tax authorities in the UK do at present offer allowances for maintenance and wear and tear which can be deducted from your tax bill, but again it makes sound sense to clarify your tax position before you commit to the rental route, so that you know exactly what to expect from a tax point of view.
Another important tax question to raise is the prospect of receiving a capital gains tax bill.
You don’t attract capital gains tax on your primary residence in the UK and under current regulations, if you sell your old home within three years of moving out of it, you shouldn’t have to pay any capital gains tax, but again, clarify your tax position with a professional adviser.
If you have a mortgage
There are conditions that could be imposed by your lender if you have a mortgage and decide to rent your home out.
You should definitely seek to confirm what you are and are not allowed to do with your property when it comes to renting it out.
It is possible that your mortgage contract has a clause that forbids you to rent the property out at all or some lenders might agree to a limited period if you need to move for work reasons. It is also likely that if the lender agrees to let you rent the property out, they might charge a slightly higher interest rate to reflect the fact that you are in effect, changing the terms to a buy-to-let.
The ultimate decision you come to as to whether you should rent your existing home or sell it, will be influenced by a number of factors such as whether your financial situation is strong enough to give you some clear choices.
The main thing to remember is to consider all your options, so that you can hopefully make the right move and either put up the For Sale to To Let sign.
Guest post by: Paige Schofield writes about a range of personal finance topics relating to property, from mortgages to property investment and much more. Look out for her interesting topics on a range of personal finance blogs on the web.