You need somewhere to live your entire life but you don’t need to own a home at all. You certainly don’t need to own any specific home either as your private residence or as an investment. With that in mind, here are some tips on how you can tell when it’s time to sell. They apply to both homeowners and landlords
Life moves on for everyone. Sometimes the result of this is that a home that was great value when you bought it just doesn’t work for you financially anymore. For example, if you’re a landlord, the change to remote-/hybrid working may have made some of your properties less appealing to renters.
If you’re a homeowner, then a change to a new life stage may mean that a property ceases to make financial sense for you. Probably the most obvious example of this is empty-nesters who still have the family home. Downsizing is a major decision and as such deserves major thought. It can, however, make a lot of financial sense.
As with all other markets, the housing market has its ups, plateaux and downs. It can be tempting to try to time the market so that you sell high and buy low. In reality, however, this is often a case of “easier said than done”.
A more practical approach is to look at what you could reasonably expect to get if you sold your property and then see what you could get if you used that money elsewhere. For example, in the case of a homeowner, you might look at your options for downsizing and what you could do with any money this releases.
Property investors would not only need to look at their other investment options but also the tax implications of selling an investment property.
If a house isn’t working for you practically, then your first step should usually be to see if the underlying issues can be addressed. This holds true for property investors as much as for homeowners.
The key question is whether or not the location is still working for you. If it isn’t then ask yourself if the issue is the location itself or something related to it such as transport. If it’s the former then you may just want to go ahead and sell the property without asking any further questions.
If, however, the issue is something related to the location, then you might want to see if it can be addressed. If the issue is related to the property itself, then it’s certainly worth seeing if it can be addressed. This can be a lot more cost-effective than selling it and starting again. It can also be less hassle (even for landlords) and potentially increase the value of the home.
On the other hand, there is usually a limit to how much properties can be adapted at all, let alone in a cost-effective way. Sometimes, it is both financially and practically better just to sell up and move on.
If you are a landlord, you may decide to exit, or at least reduce your exposure to, the property market. If you’re a homeowner, you may find that downsizing, or even renting, can enable you to reduce your estate’s future Inheritance Tax liability. In either case, it can make a lot of sense to dispose of your property in an orderly manner.
If this is your main reason for selling then it’s advisable to take professional advice before making any final decisions. This is particularly important for any homeowner thinking about using an equity release scheme.
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