Living in an area for 3 years - buy or rent?

[N0numbers]

We currently live in a rental property.

We are now in a position to buy.

But we know in 3 years time we will be moving to a different area that is approx 1.25hrs from current area.

Would you buy for the 3 years and be in the property market regardless if it goes up or down?

Would you carry on renting, and continue to save as already been doing and just increase available funds for purchase in 3 years time?

Would you buy THE house in new area and either commute or rent it out (with the hassle that entails) for the 3 years?

Or another idea we've not considered?

I would buy in the new area and rent out, possibly not 'the' house as then you will have the annoyance of other people living in your dream property for 3 years! But something you could see yourself moving into, so that in 3 years you can look for 'the' house when you're already in the right area (this would also buy you some time to work out where exactly you want to live after you move).

I wouldn't buy in the current area unless you could afford to buy something which you can turn into a rental property in three years' time - too much hassle if you can't sell it in your quite specific timeframe. I wouldn't commute, too much of a drag for three years when you already have a local property.

However, you do need to look carefully at the implications of renting out a mortgaged property as our friend Mr Osbourne has just moved the goalposts, so you will be taxed on the turnover (all the income) and not the profits (income less expenditure, which currently includes the mortgage payments).

In my circumstances I'd say buy and commute.
My circumstances don't include DCs, schools and the commute would mean public transport not walking.

There are many variables not includes in the OP which make a huge difference, budget, ongoing costs and all that.

I'm imagining you'd save a huge amount in costs by not buying and selling on to move again in time when the home could well cost considerably more, depending on area.

It would depend on how much more expensive it was to buy than rent in my current area and whether the area I was moving to was going to be more expensive and require extra savings. It would also depend on how desirable my current area was, and how easy it would likely be to sell on further down the line.

I don't think I would be tempted to buy somewhere that was that far away and rent it out - too far when something goes wrong. Plenty of people do buy to tide them over for periods shorter than three years - and, who knows, your plans may change - but it is a bit risky, you may not be able to ride out any market "correction" that could happen in the intervening time.

Thank you for the comments they have given me more things to consider eg I had missed that change from George!

Can you buy somewhere between the two?

I don't think I would be tempted to buy somewhere that was that far away and rent it out - too far when something goes wrong.

lala, I use an agency to manage our rented property - never get involved in anything directly. It's more expensive but I much prefer it that way. However, of course the agency costs can't be offset against income any more either!

Unfortunately not its a bit now here's land in between and not somewhere I'd want to live.

I'm pretty sure agency costs can be offset against income (as well as replacing items, insurance, gas safety, repairs etc). What Gideon has abolished from 2017 is higher rate tax relief on mortgage payments - you will only be able to claim 20% rather than the full 40-45% if that is the bracket your rental income brings you into or what you already pay before rental income - and you will no longer get an automatic 10% wear and tear deduction.

Ah thanks lala - I haven't looked at it in any detail yet as we don't have a mortgage and my DH isn't a higher rate tax payer so I'm hazy.

I would buy and commute if you can. The thought of buying and selling twice in 3 years makes me feel a bit faint. It took us 9 months to buy our last house from starting looking to moving in. Five months to sell it to chain-free buyers (even going under offer the first weekend), and we've been trying to buy one for about ten months. It has cost thousands in surveys, fees and stamp duty, not to mention being a massive stressful headache. We are never moving again if we actually end up getting the house we are currently trying to buy, even if it means having fewer children than planned. And being a landlord is not necessarily a walk in the park either.

would you be buying and paying stamp duty? Conveyancing costs etc. If so I wouldnt suggest buying twice. Id just buy the right house in the right area, maybe needing work ie OK to rent out now for 3 years, but youd want to do work on moving in.

How about buying 45 mins away (in between) and then staying there with only a 30 min commute when you are relocated in 3 years