Selling our house to buy a bigger one vs renting it out and renting a bigger one.

[SamanthaandSamaris]

We currently live overseas, but we have always intended to return, and we have a small 2 bedroom house in the south of England that we have been letting out for the past 6 years. (It is mortgaged, we don't own it outright.)

We are now making plans to return to the UK, looking for jobs etc. Since leaving we have had 2 children, and the house we own will be too small for us to come back too - and in any case, we might well return to a different area.

Because it will be complicated to co-ordinate selling etc before we come back, we will probably find a rental property to live in at first, while we try to sell our house and find somewhere to buy.

But now I am thinking, is there actually a big advantage to selling our house and buying a bigger one?

What would be the advantages and disadvantages of continuing to rent out our house, and renting a larger one elsewhere (or nearby) indefinitely?

Would we have any problems with school admissions? Our house has tenants and has not been our "main residence" for more than 6 years, but I know some councils have rules about not renting near a house you own.

Aside from that, what would the other advantages and disadvantages be to renting (and being landlords ourselves) to just paying the mortgage on whatever home we live in?

I feel that renting will give us more flexibility if we need to move again (DH is quite likely to get temporary contract work rather than permanent, so we could well need to move around the country) But I am wondering if I am missing some huge disadvantage.

I'm not sure there are any disadvantages. For school admissions some councils do look to see if someone has moved into the catchment area just to get a school place so impose rules on how long you have been there or if the property is just being rented as opposed to actually lived in. i.e a 1 bed for a family of 4.

If your current rented property works well, is limited hassle and give good returns, then I would stay with it, the only challenge you might have is when buying as you might need the equity.

just rent until you know what you are doing. and keep the other house rented.

as the house has not been lived in by you for a long time it should not impact for school admissions.

That's reassuring about the school admissions, that is my big worry.

I think DH in particular is a bit worried about getting "left behind" in the property stakes - lots of friends and siblings are moving into big "forever homes" and we only own this little starter home on the bottom rung of the ladder.

But I keep saying there is no point in moving to a forever home if you don't know if you will be there forever (but then I start worrying that we should be trying to buy something bigger before the prices just spiral permanently out of reach.)

We are considering doing this.

Rent would cover our mortgage and we could then rent somewhere else. My main worry is that as our house is a large country house it may not rent easily - leaving us times when potentially we'd have to pay or mortgage and our rent (plus 'wear and tear' repairs, agents finder fees). We would have to have it rented for 2 years at a time for the sums to work out.

As you've been renting your house for years, you'd know how well it rents and what a risk this would be for you.

It sounds a good idea for you, you havent lived her for a long time and coming back now with children, you may well not like the area you have the house in. Being a family is so different from being young and carefree! I'd definitely rent somewhere for the first 6-12 months and settle back in, or consider other areas to live.

No huge disadvantage. It sounds like you should definitely rent, at least until things are clearer for you. The freedom associated with renting is tremendous and is often undervalued. With that said, the main advantages to owning a home vs. renting in my view are:

1. You have some degree of certainty about your outgoings. Rent can go up very rapidly and force you to move / downsize. If you move to the same area as your house, any increase in your new rent for your larger home will be partially offset by an increase in your rental income on the home you do own though.
2. Owning your home with the plan of eventually paying off your mortgage means you need to save less for retirement as a huge portion of your outgoings will disappear once you are a certain age. That will still be the case for you as you’ll own our smaller home. However, if you’d like to live in a larger home when you retire that could be tricky. Depending on where rents and interest rates are, financially you might be better off owning the large home and building equity in that home. That way, even if you downsize when you retire, you’ll have a little nest egg you can use.
3. If prices do jump it might be harder to ever own a larger family home.
4. When you don’t own your home, your landlord can ask you to leave which can be disruptive for a number of reasons. There will be limits on what you can do in your home and you’ll rely on someone else to act expeditiously to fix issues when they arise

Thank you for the advice, sorry for taking a while to get back.

Your list was particularly helpful to talk through with DH, LondonGirl (particularly points 2 and 3, which we have gone over and over and over), so thank you.

I think we have decided that we won't try and rush into buying, we'll hold our horses until we are 100% sure we are in a place we will be settled long-term. And then we will reassess the situation, talk about it again and see what we think.

I think our conflict partly comes from the fact that I feel the most important thing is that we have a big enough house now, while the DC are children, and once they have left home I imagine us living in a small romantic fisherman's cottage by the sea a small place anyway. Whereas DH wants to end up with a sensibly located big house that the DC will eventually inherit.