It's pretty common for a property owner to want to sell their home quickly. Sometimes, moving house is necessary for your job, family, or financial situation. Or perhaps you've renovated and want to sell it to start your own property portfolio.
So how soon can you sell a house after you buy it?
In this article, we'll take a look at the sort of timelines you should expect when you're selling a property.
There is no UK law regarding the legal minimum period of time you must own a home before selling it again, so legally speaking, you can sell it as soon as you want to.
However, if you sell and pay back your entire mortgage, your lender could hit you with hefty early repayment charges (ERC).
Another issue you may encounter is that banks, building societies, or online lenders may refuse to finance the home. The buyer of your property may struggle to get a mortgage as the lender may see the quick turnaround as a risk. Unless your buyer intends to pay in full and in cash, selling quickly after purchasing a home could cause difficulty when finding a buyer and limit interest in the property.
To avoid the risk to lenders and limit difficulties for yourself and potential buyers, try following the 'six-month rule’.
Many mortgage lenders (but not all) will not allow a new loan to be taken out on a property until the house has been registered with the same owner on the Land Registry for six months.
If both you and your buyer are paying in cash, you may be able to avoid this issue. Certain circumstances will persuade a lender to dismiss the six-month rule — if property investment is your business, for example.
Even if you wait six months to sell, potential buyers may be naturally suspicious about why you want to sell up so soon. They may wonder if there are issues with:
If neighbours are the issue, you'll have to declare it on your TA6 Property Information Form, or else you could be subject to legal action. Property searches will reveal damp or structural problems, so buyers will find out even if you don't want to admit that's why you're selling so soon.
Not necessarily - depending on the market, you could receive an offer that matches what you paid (or even more if you're lucky).
However, depending on how you use the house, you may need to think about Capital Gains Tax. If the home was your primary residence, you would likely be exempt from this tax. But if you've bought the house to renovate or as an investment property, then you may lose money to this added tax as you're using the house as an income source.
Find out more about Capital Gains Tax on property here.
This will depend on the market conditions and could take 2-5 years. You will need to cover not only the house price you paid, but epc charges, agent fees and legal fees before you breakeven or make a profit. You may be able to sell your home quickly if there is demand in the market, but will you make a profit? We'll look at how to understand if you've made a profit on the sale.
The breakeven point is when you make enough on the sale to cover both what you owe on the property and the costs you've incurred to retain the home. For example, say you receive an offer on a home that matches what you paid for it initially. You still won't break even because you'll owe estate agent fees to sell, and you likely paid fees to solicitors to buy the home in the first place.
So how do you calculate how much you need to get for the house to make a profit or simply break even?
First, take the total that you owe for the property. For example, say you have a mortgage of £300,000.
Then total up the costs you incurred to buy the property initially. For our example, we'll say you paid £5,000 in solicitor and search costs.
Now calculate your ownership costs, including the fees you'll pay to sell the home and any expenses you've paid to own it. In our example, we'll add £5,000 in estate agent fees to sell and another £5,000 for renovations you carried out while you owned the property.
Then add the total costs (£15,000) to what you owe (£300,000) to get the breakeven price of £315,000. If the property is not valued at this much, you may have to wait longer until the value appreciates. You might also want to accept a lower offer and forego breaking even to get a fast sale.
You can sell immediately if you choose, but you could encounter issues with getting a mortgage in the future. On top of that, your buyer may struggle to find a lender to buy the home from you.
As a general rule, you should keep the house for six months before selling it to avoid any issues with reselling the home due to lenders restrictions.
There's no time limit on how long you have to be in a property to avoid Capital Gains Tax. The tax is based on how you use the property — if the home was your primary residence only, you would be exempt. However, if you use the property as a business premise or use the home as an investment purchase, you should consider the tax as part of any selling costs.
As a general rule selling your home takes between 3 and 6 months.
You can expect to advertise your property through an estate agent for approximately 4-7 weeks and have viewings throughout this period. It then takes about 12-16 weeks to complete all the legal administration of a home sale. Legal administration includes organising the buyer mortgage, carrying out surveys, searches, financial and identity checks, and then the final signing of contracts.
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