Should you bide your time and rent between selling and buying?

Do you have to bide your time and rent between selling and buying? It’s a brave tactic that relies on house prices falling at the right time to be worth it.

But it may be a wise move to sell now, before prices fall further, then rent for six months before buying – and hopefully you’ll get more for your money.

There are no certainties to this strategy, but many experts say it could work, and here’s why: Yesterday, Chris Rhodes, chief finance officer at Nationwide, warned that house prices could fall as much as 30 percent in the worst case scenario.

In this case, a house worth £500,000 could drop in price today by as much as £150,000.

Credit Suisse bank is slightly more optimistic and warns that if interest rates continue to rise, house prices could fall by 15 percent.

Selling your property first puts you in a stronger position as a buyer – you are not in a chain and thus more attractive to the seller of your next home – and it means you are not harassed to sell in panic for a lower price than you want because you have an offer on a new home.

Plus, if you’re moving, you’ll want to know about the best streets in the new area, and renting will give you time to do your homework. But it is no longer a cheap option and costs will vary depending on the size and location of the property.

The latest data from Rightmove shows that the average rent outside London has risen to a record £1,162 per month, while in the capital it is typically £2,343 per month. In six months that would cost £7,000, or £14,000 in London.

The numbers may favor a savvy buyer, but the process is not for the faint of heart.

If you have children in school or pets, renting can be complicated with a limited number of properties available. And remember, you’ll need to be prepared to move twice, possibly putting furniture in storage if your rental home is smaller than the home you’re planning to buy.

Comparison service reallymoving.com says the average house move now costs £649 – and you’ll need to double that to cover the move to the rental and then to your new home.

When it comes to storage, according to the Self Storage Association UK, a three- or four-bedroom home typically needs 120 sq. ft. of space at an estimated cost of £12 per sq. total £1,440.

Hamptons real estate agent Grant Bates suggests that the strategy probably works best if you’re buying cash or only need a small mortgage.

“If you’re planning to take out a larger mortgage, it’s likely that higher rates and rental expenses will eat up the margin,” he says.

And anyone who decides to take the plunge must accept that it’s impossible to guarantee what housing prices will do.

In 2020, when the country was gripped by Covid, few expected a 20 percent increase in average home prices over the next two years. Likewise, despite double-digit inflation and a crisis in the cost of living, there is no guarantee that house prices will fall, even after the turmoil of recent weeks.

James Greenwood, of Stacks Property Search, a buying firm, says: ‘It’s a big gamble to play the market with your largest financial asset and where you live.

“Our advice would be to protect your capital rather than gamble.

‘The best way to hedge against movements in the market is to sell and buy within the same political and economic cycle.’

There is also the effect of inflation, which is currently around 10 percent. That means £500,000 held in the bank after the sale of a property could only be worth the equivalent of £475,000 after six months, if inflation remained unchanged.

On the market…ready to rent

West Suffolk, £3,000 pcm : This four bedroom property in Newmarket is fully furnished and recently refurbished. There is also ample space for cars in the driveway; Whatley-lane.co.uk, 01638 597255.

Wiltshire, £2,817 pcm: Lye House has three bedrooms and is located near Pewsey in the North Wessex Downs where there are great walking and horse riding routes. Marriotts.co.uk, 01285 647333.

North Yorkshire, £3,000 pcm : With five bedrooms, this unfurnished house in charming Harrogate is opposite Ashville College, so ideal for a family. Carterjonas.co.uk, 01423 205574.