Moving house to trade up - worth renting before buying the next place?

FreddieVanHalen

So I'm moving house and hoping to trade up. Sadly this will involve an increase in the amount of mortgage debt, perhaps quite a bit.

Given the various threats to the economy right now, trade wars, no-deal Brexit, etc. I'm wondering if I'd be better off selling and then renting for a while to give myself a bit more time for all this to play out before deciding whether to bite the bullet on a bigger debt pile or whether to scale back my ambitions and go for something just incrementally better.

Would appreciate your thoughts and experiences :-)

EDIT: plan will be to stay in the next place for 10 to 15 years.

Axe_meister

My personal opinion is sell now pay of any debts you may have (car, credit cards) to get your credit score to max.
Then wait till after brexit with a nice large deposit as I believe we will see a house price collapse as people are made redundant post brexit and will be forced to sell.
Once stabilised then buy. You may find your money will go a lot further.
Wish I could sell now.

Iamnobody

While you are renting you’re losing money - there’s uncertainty about house prices/Brexit at the moment but in 15 years I’m sure you’ll be ok.

There’s no guarantees at any time...

FreddieVanHalen

Axe_meister said:

Wish I could sell now.

Well, I've still got to get my sale to go through...looking having to take a 5% to 7% discount to peak values to shift the place but it's probably the current market rate for mine as there are comparables that are priced higher but getting no attention. I had to cut to get any serious interest, and put up with a lot of tyre kicking from BMV bandits hoping that I was a distressed seller.

Bit like selling guitars at the moment!

FreddieVanHalen

Iamnobody said:

While you are renting you’re losing money - there’s uncertainty about house prices/Brexit at the moment but in 15 years I’m sure you’ll be ok.

There’s no guarantees at any time...

I know what you mean, i suppose it’s the size of mortgage increase I’m also trying to balance. If I thought I could keep my job I’d bite off something a bit bigger but like you say there are no guarantees.

Too little ambition means I may end up moving again and spending transaction costs twice.

Too much and I might struggle to service the increased debt during a nasty recession.

WiresDreamDisasters

Move to Japan. Houses are made of paper, so are cheap. But the women are hot. The food is better. Your kids will be bilingual. They'll move back to Blighty in 20 years and just completely dominate after benefiting from superior society and superior education.

Britain is lost. It'll need to go through 10 years of eating rats before it'll be worth anything again.

WiresDreamDisasters

(that's my backup plan anyway)

FreddieVanHalen

WiresDreamDisasters said:

Move to Japan. Houses are made of paper, so are cheap. But the women are hot. The food is better. Your kids will be bi-lingual. They'll move back to Blighty in 20 years and just completely dominate after benefiting from superior society and superior education.

Britain is lost. It'll need to go through 10 years of eating rats before it'll be worth anything again.

Ha! No kids to worry about but I had been thinking about doing some more education myself...my wife spends a lot of time working in Germany so if the UK keels over moving there might be an option...I'd probably look to start a PhD if things looked like full on melt down in London.

Eating rat might turn out to be quite nice tho'  

exocet

I sold then rented before buying again. It worked out well for me.

1) Easier to sell my house

2)  Stronger position to negotiate when buying again.

That said, I only rented for 10 months. Personally I can't see house prices rocketing anywhere in the U K over next 2 years so I'd be comfortable renting for that period.

VimFuego

this was something I was giving some thought to if/when we decide to move (as Exocet said, it does put you in a stronger buying position) but I'm really out of the loop on renting, do you rent furnished properties? And if so, what do you do with all your stuff, put it in storage? And how much does that cost?

octatonic

VimFuego said:

this was something I was giving some thought to if/when we decide to move (as Exocet said, it does put you in a stronger buying position) but I'm really out of the loop on renting, do you rent furnished properties? And if so, what do you do with all your stuff, put it in storage? And how much does that cost?

Depends on how much stuff.
We put 1/4 of our possessions into storage when we moved to Singapore.
Monthly cost is about £100 a month- if it was everything we'd be looking at £300 odd plus insurance for the studio gear separately.

You can get cheaper if you shop around and are prepared to lug it to a storage unit but we weren't because we weren't paying the bill.

FreddieVanHalen

Octa is on the money regarding storage. I shopped around, lugged it all into storage myself and got my house insurance to extend cover to the unit.

Having to pay 250 per month for a unit big enough to swallow the entire contents of a three bed. The only thing left in my place now is a mattress and the bare basics to live.

Sounds like renting for a short period is the way forward, I can get a small cheap place for 6 months so hopefully not too much rent money wasted.

FreddieVanHalen

exocet said:

I sold the rented before buying again. It worked out well for me.

1) Easier to sell my house

2)  Stronger position to negotiate when buying again.

That said, I only rented for 10 months. Personally I can't see house prices rocketing anywhere in the U K over next 2 years so I'd be comfortable renting for that period.

Thanks, interesting to hear that. It’s a funny old world at the moment and there is some risk that prices boom whilst renting, like if the pound  is cheap and everyone from Hong Kong decides London flats are better than having cash in China, or some other weirdness.

Think I’d rather live with that than the alternative of being under the gun for a big mortgage during GFC mark 2.

LuttiS

FreddieVanHalen said:

...

I can get a small cheap place 

...

No such thing in the UK anymore...

FreddieVanHalen

LuttiS said:

FreddieVanHalen said:

...

I can get a small cheap place 

...

No such thing in the UK anymore...

Well, yeah, it’s all relative :-) 

spark240

House prices are definitely on the rise around Midlands where I am, renting is stable.

Ive just sold a place that we thought would be about £110k, it went for £118k.

Personally I don’t believe there will be any long term effect on house prices, I’d be more concerned about the interest rate you will be paying,

I would go rental for short term, puts you in a much stronger position and gives you some space to find the right house for you.

Good luck !

Jalapeno

We did exactly what you're planning before we maxxed ourselves for our current place.

However, having just sold my late Dad's place I'd wait and see about Brexit along with everyone else - hard to say if it will be a housing boom or slump (a lot are predicting a slump). It is pretty dead at the moment.

Musicman20

I was given lots of advice when I thought about buying my first place. This was very very recently.

Personally, I would never rent again unless I had NO choice. I was spending SO much in South Manchester and the mortgage I am now about to start is £350 less for my own damn house which is built to a much higher spec and brand new.

If you can rent short term it might give you chance to decide....

FreddieVanHalen

Jalapeno said:

We did exactly what you're planning before we maxxed ourselves for our current place.

However, having just sold my late Dad's place I'd wait and see about Brexit along with everyone else - hard to say if it will be a housing boom or slump (a lot are predicting a slump). It is pretty dead at the moment.

It feels like a very strange market at the moment. Lots of decent stuff hanging around but sellers on the whole not willing to drop prices...gut feel for me right now is that I'm nervous about pulling the trigger on a big number...things feel a bit 2001, though not 2008...yet.

Musicman20 said:

I was given lots of advice when I thought about buying my first place. This was very very recently.

Personally, I would never rent again unless I had NO choice. I was spending SO much in South Manchester and the mortgage I am now about to start is £350 less for my own damn house which is built to a much higher spec and brand new.

If you can rent short term it might give you chance to decide....

Yeah I've been out of the rental market for 20 years so not looking forward to going back to it, but for a short let whilst I get my head together and see where things are going I'm sure I can live with it. I certainly won't be renting anything massive given that all my stuff is in storage. 

GuyR

If you buy and sell simultaneously, you remove 100% of the risk of selling, then watching prices move out of your reach.
Your course of action depends entirely on what you think is going to happen to prices over the next period.
If you strongly believe prices will decrease, go into rented and , if you were right, you will buy a much better house for the same money.
If you are wrong, you will end up with a less good house, a bigger mortgage or both.
It is true there is a benefit in being chain free to simplify your purchase, but weigh it against the risk of prices increasing, which tends to happen quite suddenly.
In most areas, say a small town or suburb, there are normally only about a half dozen properties of each type, 1 bed flat, 3 bed semi etc, which are really for sale - seller ready to accept an offer of what the market will realistically pay and asking price accordingly set. The rest of what's on offer is generally overpriced, where agents have competitively overvalued to flatter the seller into instructing them, or the seller vainly thinking it's the best thing since sliced bread, or both. So the number of homes genuinely fr sale, exprssed as a percentage of the existing housing stock is minute. A perfect recipe for price volatility.
Generally, as prices drop, buyers wait, then, when a couple of those cheaper properties are marked sold, the other reasonable ones go as watching buyers sense the fear of missing out. Suddenly, that next tranche of previously-overpriced stock is now the best value available, in a market where buyers can see property suddenly moving quickly.
If you sell then wait to see what the market will do, it is the equivalent of going into William hill with a five figure sum of money.
Often, well-meaning friends and acquaintances have strong opinions about what will happen to property prices. They are not subject to the consequences of an expensive error. Where I am they are 15% down on 2016, but 5% up since January.
I am glad I do not share The confidence many people have in their ability to predict the future.

FreddieVanHalen

GuyR said:

If you buy and sell simultaneously, you remove 100% of the risk of selling, then watching prices move out of your reach.
...
I am glad I do not share The confidence many people have in their ability to predict the future.

On this analysis, probably better to delay my sale rather than move into rented, either by outright delay or by taking the time to make some cheeky offers of my own whilst mine is under offer/STC.

I get some clarity of where things are going, still get some benefit from overall price level falls but am not exposed to quite the same level of gambling.

I don't reap the full benefit of a price level fall, but that's ok. It is true I have no special power to determine where prices are going to go, not having special access to EU negotiation information nor other global events crystal balls.