With house prices teetering at record levels, many homeowners are planning to rent and sell “for a year or two” before buying again.
With house prices teetering at record levels – at the edge of a precipice, in many people's eyes – the number of homeowners in the UK looking to rent and sell for a year or more is growing fast.
The rent-and-sell argument is bolstered by a number of factors: high interest rates, unbelievably high property valuations compared with ten years ago, rising repair and maintenance costs and an uncertain future for the housing market over the next year or two.
Because of this, many people have either already sold properties and are now renting or are planning to rent and sell up in the near future.
"Acetip", a contributer to finance website thisismoney.co.uk's property messaging board, is typical of many. He wrote, "I will continue to rent for the next year and let the interest from my sold house pay the rent, living for free, but once the [interest] rate falls below 5.5% then I buy. Simple rule I think. Of course NO COSTS JUST RENT". The capitals are his.
High interest rates support "rent-and-sell"
High interest rates favour the rent-and-sell argument in two ways. They make mortgages more expensive, as anyone coming off a fixed-rate deal recently will have found out. At the same time, though, they push savings rates up, making it more attractive to have thousands of pounds in a building society account rather than tied up in bricks and mortar.
House prices have more than doubled in the UK over the last ten years – although growth was static for the half-decade before then. People who remember the house price crash of the early 1990s know that prices are not guaranteed to rise at 10% a year forever – and could even fall in 2008 and 2009. To them, the argument for a rent-and-sell strategy now more than at any other time seems strong.
Rent-and-sell arguments become overwhelming
And with inflation forcing up the costs of repairing and maintaining property that you own – costs which are the responsibility of a landlord if you are a tenant – the rent-and-sell argument becomes overwhelming for many people.
Not that these people are intending to rent forever – but, like Acetip, they plan to rent and sell for a year or so and buy again when house prices reach more affordable levels and the economic future seems more certain.
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