Renting Vs. Buying - Which Is Right For You?

Property prices, Interest rates, increasing rents!

Everywhere you look there are conflicting stories. What seems to be evident is that nobody really has a definite answer to what the outlook is. Assuming that you are like us, we regularly hear opinions being thrown around but then another source throws shade to the initial argument and we are back to square one!

Moving home is a big decision in itself, establishing whether to rent or buy is another headache that you could probably live without. Whilst wider economic conditions may influence your decision, we wanted to lay down the hard facts... the pro's and con's on renting, versus owning your own home.

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I think that I want to rent.

Just over 19% of the UK population currently live in privately rented accommodation. The reduced commitment, the flexibility and the ability to move more freely. It certainly has it's appeals!

The key advantages are;

• Flexibility: if you need to move around for work, you can quickly relocate
• Finding and renting a home is usually quicker than buying
• You won’t lose money if the property's price goes down
• You won’t need to pay for repairs and renovations
• You’ll need a smaller deposit and rental payments rarely change, making it easier to budget
• You might be able to afford to live in a bigger home and nicer area than you could if you were buying

Whilst that may all sound like the perfect recipe for you, you should also consider the disadvantages. The main one being that you will be making large monthly payments to your landlord rather than towards owning your own home.

Things that you should be considering:

• It’s becoming more expensive to rent: the cost has increased by 8.6% in the past year
• You won’t benefit from any increases in property values
• If you never buy a house, you have to pay rent for your whole life - even after you retire
• If your landlord decides to sell or get new tenants, you have to move out
• Your landlord can set rules and restrict changes you can make to the property
• Your landlord could decide to increase your rent
• Improving the property could increase its price, but this only benefits the landlord

Renting clearly has its advantages, particularly on a short term level. We experience many owners who sell, choose to rent for a year, whilst shopping for their next home as a chain free buyer.

I think buying is right for me

Owning your own home is aspirational. Whilst it has become more difficult to achieve over time, it's a goal with worthy rewards. 63% of households in England are owner occupied.

The key advantages are:

• Your monthly repayments all go towards buying your home, not into a landlord's pocket
• You fully own your home at the end of the mortgage's term - typically 25 years
• You will make profit if house prices rise
• You don’t need anyone’s permission to have pets or redecorate
• Any maintenance or changes you make to your house could increase its value
• You can’t be forced to move by a landlord  
• You have an asset that can be passed on in your will

Whilst this all sounds fantastic, their are responsibilities and limitations that also come with the territory.

Things that you should be considering:

• If you get a joint mortgage and separate, it can mean taking over the mortgage or selling the property
• Interest rates can change your monthly payments - although a fixed-rate mortgage can help budgeting  
• You have to pay for repairs, including urgent problems like leaks
• The moving process can take a long time, particularly if you’re in a lengthy property chain
• If your finances become tight, moving to a cheaper property can take some time
• There are financial consequences if you fall behind on repayments, like getting into debt

Renting or purchasing your next home is clearly a personal decision, and will be largely influenced by your current situation. Whichever route you choose, we hope that you can make a more informed decision with this insight. If you would like an expert opinion, or talk with us about your options, please do get in touch.

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