Just about any house price index you look at will tell you that the market is slowing and prices are falling.
And according to online change-of-address service iammoving.com, 18 per cent of those packing up and moving out have no intention of getting back on the property ladder until they can re-enter the market with a bargain buy.
With the market on the turn, the time is ripe for this trend of selling to rent – but does living as a tenant and then re-buying really make sense? Do the numbers stack up?
FindaProperty.com own research suggests that house prices would have to fall significantly to make this pay – and even then the hassle involved, not to mention the uncertainties, might make it more trouble than it’s worth.
Estate agents fees, solicitors fees, removal and storage costs, stamp duty, rental costs and additional taxes will ultimately take a hefty chunk of any capital gained from the initial property sale.
Should the market rise by five per cent while you're busy renting, you would lose out to the tune of £35,000.
But, perhaps more importantly, even if prices dropped by -5 per cent during the year, you would still end up £9,100 out of pocket thanks, in large part, to the not inconsiderable rental costs and the costs of repurchasing.
Practical Complications
Mike O’Flynn, FindaProperty.com's Content Editor notes: "Aside from financial considerations, there are all kinds of practicalities here to keep in mind. Property takes time to buy and sell and this increases the complications.
"In a slow market, for example, it could take months to complete, and as the market drops buyers may try to negotiate discounts before exchange. This, combined with any price rises on rental properties, could lead to lost savings, particularly if there is an extended rental period.
"If you plan to rent for more than a year there is no guarantee the landlord will renew your lease. The landlord may need the property back after a year or in a strong rental market demand a higher rent to renew. You may have to move three times, making it an emotionally and financially stressing time.
"And of course the market may have picked up by the time you decide to buy again, which could mean you will find it difficult to find an appropriate property to buy."
The following two models illustrate selling-to-rent costs given a five per cent upturn and downturn in the market:
Sell To Rent Costs
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