Option 1: Selling Your Old House

1. Instant Capital: Selling provides a lump sum that can be used as a deposit for your new home or invested elsewhere.
2. No Landlord Responsibilities: Once sold, you’re free from the hassle of property maintenance and dealing with tenants.
3. Market Timing: If the property market is strong, selling could secure a substantial return on your investment.
4. Tax Simplicity: Selling eliminates future capital gains tax (CGT) concerns, as principal residences are exempt from CGT in the UK.

1. Loss of Long-Term Appreciation: By selling, you miss out on potential property value increases over time.
2. Costs of Selling: Estate agent fees, conveyancing costs, and potential repairs can add up to a significant expense.
3. Short Market Windows: If the market isn’t favourable, you might not get the price you desire.

Option 2: Renting Out Your Old House

1. Steady Income: Rental income can cover mortgage payments and provide additional cash flow.
2. Property Appreciation: Keeping the property allows you to benefit from long-term value increases.
3. Portfolio Diversification: Renting out adds a layer of financial stability by diversifying your income streams.
4. Flexibility: You retain the option to move back into the property in the future.

1. Landlord Responsibilities: Managing tenants, repairs, and maintenance can be time-consuming and stressful.
2. Regulatory Requirements: In the UK, landlords must comply with strict regulations, such as obtaining an Energy Performance Certificate (EPC), conducting gas safety checks, and adhering to tenancy laws.
3. Market Risks: If demand in the rental market falls or tenants default, your rental income could be disrupted.

Key Considerations in the UK

1. Local Property Market Trends: Check whether house prices in your area are rising or stable. Selling in a high-demand market could be advantageous, while renting might make sense in slower markets.
2. Mortgage Status: If your current property has a significant mortgage balance, selling might free you from debt. Conversely, you may need consent from your lender to let the property.
3. Tax Planning: Understand the tax implications of both options. For rental properties, income tax on rent and CGT on eventual sale are key considerations.
4. Rental Demand: Investigate rental demand in your area. If it’s high, you may easily find tenants, but in low-demand areas, renting could be more of a challenge.

Making the Decision

• If you value liquidity, simplicity, and have no interest in being a landlord, selling might be your best option.
• If you’re aiming for long-term wealth, have a high-demand property, and are prepared to hire a letting agent, renting could be the way to go.

Final Thoughts