Should I sell my property before buying a new one?

Buying and selling property can be a complex business, not least of all deciding whether it’s best for you to sell before you buy or to be prepared to enter a chain. Whether or not you should sell your property before buying a new one really depends on your individual circumstances.

Selling your property before buying a new one, can be a way to ensure that you have the funds to purchase your new property. However, you may require to obtain alternative accommodation, if there is a gap between the date of entry for your sale and your onward purchase.

Additionally, if the sale of your current property falls through, you may lose out on the opportunity to purchase your new property. It’s important to consider the potential risks and benefits before deciding to sell your property before buying a new one.

Purchasing another property without selling your current one, can be expensive, particularly from the perspective of payment of additional dwelling supplement (ADS).

Here are some things you to consider:

Financing: If you plan on using the proceeds from the sale of your current property as a deposit payment on your new property, it may make sense to sell your property first or simultaneously with your purchase. This will give you the cash you need to make a deposit payment. Often there will be a chain, so you can sell your property on the same day as you purchase and move in to your new property.

Timing: If the market is favourable for sellers, then it may be a good time to sell your property and then purchase a new one later. However, if the market is slow and it could take a long time to sell your property, you may want to hold off on selling until the market improves. It may also take you time to find your ideal home, so you will need to have plans for the interim.

Flexibility: If you’re not in a rush to move and are able to rent out your current property while you look for a new one, it could be beneficial to keep your property and rent it out in the meantime. This way, you’ll have a steady source of income.

Risk tolerance: If you are comfortable with taking on the risk of owning two properties at the same time, it might make sense to buy first, before selling. This will give you more time to find the right buyer for your current property. However not everyone is comfortable with this kind of risk so it’s a good idea to weigh up what you will be happy undertaking.

Additional Dwelling Supplement: If you buy an additional property when you already own one or more residential properties and you are not selling or replacing your main residence on the same day, if the property you are purchasing has a value of more than £40,000, you will require to pay tax being additional dwelling supplement of 6% of the purchase price, in additional to any standard Land and Buildings Transaction Tax (LBTT) payable for the purchase. There are certain circumstances whereby you can claim a repayment of additional dwelling supplement after you sell your previous property.

Taking expert advice

Buying and selling property can be complex and time-consuming, and it is always a good idea to take professional advice before you embark. Consulting a conveyancing solicitor who deals with residential house purchase and sale and a financial adviser to discuss your options and your individual situation can make your course of action a lot clearer and the process easier.

McSherry Halliday has teams of solicitors and financial advisers who are on hand with expert guidance and advice.