Should I sell or rent out my house?
Inheriting a property or having responsibility for a second house can raise the question of whether it should be sold and the proceeds deposited, or whether it should be used as an investment opportunity and rented out.
While selling your property provides you with a substantial lump amount, it can be a time-consuming and expensive procedure with tax ramifications. On the other hand, renting out the house may provide the benefits of a monthly passive income but may also pose some risks if there are tenancy voids.
It’s a significant financial decision, and the answer will differ based on the individual’s specific situation.
To help you think through this crucial decision, we’ve detailed some of the significant advantages and disadvantages of both selling and renting.
The Pros and Cons of Selling Your House
Pros
- You will receive a significant lump sum of cash that can be utilised for other purposes or invested in other ways.
- The UK market is strong, and housing prices have been rising for many years.
- If the property is vacant, you don’t have to worry about maintaining it or keeping it secure.
- There is no need to be concerned about covering any existing mortgage payments.
- Some properties may not be suited for renting or their location may not be appealing to renters, in which case they should be sold.
Cons
- You will not benefit from any future increases in the property’s value if you sell it.
- Selling is a time-consuming process that might take months or even a year to form and complete.
- There are other charges associated with selling, including conveyancing, removal trucks, and clearance costs.
- There may be capital gains or inheritance tax issues.
- While selling provides a big sum, once it is spent, it is gone.
- The buyer’s survey may reveal concerns you were unaware of, and you may need to invest in renovations or upgrades to finalise the sale or achieve the best possible price.
Pros and Cons of Renting Out Your House
Pros
- If you subcontract property maintenance to a company, you earn a dependable monthly income that is passive. This income could take the place of a wage or pension.
- You can leave a property to your children as an inheritance while continuing to rent it out.
- Demand for rental houses remains high as individuals struggle to raise a sufficient deposit or afford a mortgage.
- Over time, the rent could exceed the value of the property.
- If you have a mortgage on your property and are unable to sell it while living elsewhere, renting might relieve the stress of making the monthly payments.
- You still own the property, and you can sell it at any time in the future while benefiting from any growth in its value.
- Good tenants will take care of the property and provide security that it is occupied, making it less vulnerable to break-ins or squatters if it is otherwise left vacant for long periods of time.
- Rather than selling, continuing to own the property may help decrease the tax impact.
- If the property was inherited and the mortgage was paid off with life insurance, the net rental income would increase.
Cons
- If the property requires a mortgage, it must be converted into a buy-to-let property. These have different restrictions than a conventional homeowner’s mortgage and may have a higher interest rate.
- You may need to make an investment in the property to guarantee it meets the necessary criteria.
- Damage to furniture, flooring, or the building structure by bad renters can have a significant impact on your income.
- Tenancy vacancies can also have a substantial impact on your income. (times between tenancies when no one lives in the property.) Keeping the time between tenants to a minimal might be difficult, so promoting your home quickly and at the right price becomes critical.
The Importance of Conducting Research Before Making a Decision
In either case, whether a person sells or rents out their property, there are huge implications for their finances, and any decision should be made with caution and expert guidance.
If You Decide to Rent Out Your Home
If you decide that renting out a property and becoming a landlord is the appropriate path for you, the next option is whether to hire a property management firm or go it alone. Using a management firm, on the other hand, might significantly lessen the amount of disadvantages associated with renting out the home that were previously listed.
The Advantages of Hiring a Property Management Company
In fact, by hiring a property management company, a landlord receives numerous extra benefits, including:
Advice and valuation to ensure your home is appraised correctly.
To avoid tenancy vacancies, assistance in finding suitable tenants is required, as is the ability to promote to a large and interested audience.
Appropriate financial checks should be performed on tenants to assess their eligibility and ability to pay.
Advice on how you can protect your tenant’s deposit.
Assist in understanding your legal obligations and ensuring that your rental property complies with the ever-changing complicated laws and regulations for rental properties.
More time to pursue other interests or jobs while the management team organises background checks and manages tenancy agreements.
Conclusion
The decision of whether to sell or rent out your house is a multifaceted one that hinges on a multitude of factors. Evaluating the pros and cons of each option is crucial, as it involves substantial financial, personal, and long-term considerations.
Selling your home might result in fast income, perhaps giving you capital gains to reinvest in a new property or achieve other financial goals. However, this strategy incurs capital gains tax and you may miss out on future property price appreciation.
Renting out your house, on the other hand, can provide a steady source of rental income, which can assist in covering mortgage payments or even make a profit over time. Being a landlord, on the other hand, comes with obligations and possible challenges such as property management and dealing with tenants.
The decision you make should be influenced by the market worth of your current property, your financial ambitions, and your willingness and aptitude to be a landlord. Ultimately, whether you sell or rent your property is determined by your individual circumstances and long-term real estate aspirations. Weighing all of these factors carefully and considering the right to rent in your area will help you make an informed decision, finding a balance between current financial benefits and the possibility for future returns on your real estate investment.
Western Lettings Glasgow is a full-service company that manages Rental Properties
If you’re still unsure whether to sell or rent your home, Western Lettings Glasgow is here to help. Our team of experts is ready to offer you expert advice geared to your specific situation. Please do not hesitate to contact us for a personalised consultation.
Our professional team at Western Lettings Glasgow is here to assist you through every stage of the renting process. We provide a range of services, from an initial free rental valuation to complete management, so you can choose the management plan that best meets your needs.
Contact us immediately at 0141 357 0436 and let us help you make the best selection for your property.
