Renting Vs Buying – Which Is Better?
Is it better to buy or rent? It is a question that is always at the forefront of everyone’s mind before making their first steps into the property market. There is not a right or wrong answer – it is best to consider the needs of the individual.
Read on to gain knowledge of some points you can consider making the best choice for you.
In the UK, is buying better than renting?
Depending on your financial circumstances renting could be better than buying if you cannot make a large deposit for a home. With renting, you can live in your preferred area and have a short-term commitment to a property that suits your needs.
However, owning a property that can be a sound investment for your future as, you are likely to profit from the equity in your house when you decide to sell.
What’s more affordable, renting or buying?
Here are some quick bullet points of the pros and cons of renting and buying.
Renting a home
- You can move in and out easier when renting – there is more flexibility
- Arranging a rent agreement is quicker than buying a property
- There are fewer financial risks when renting
- Maintenance or repairs are carried out by the landlord when you rent a property
- An area where you could not afford to buy may be more accessible by renting
- You are paying off your landlord’s mortgage when renting, money that could pay your mortgage instead
- It is harder to put down roots and settle in an area when you are renting
- You cannot personalise your home because you do not own the property
- When your tenancy ends, your rent can increase when renewing
- If the property grows in value, you cannot profit from it
Buying a home
- You can invest in the future by purchasing a property
- You stand to make a profit from your home as increases in value over time
- You have the freedom to decorate and change your home to your taste when you buy a house
- You have security by owning your own home (if all mortgage payments are on time)
- Mortgage repayments may be cheaper than renting
- You deal with a lot of additional costs such as repairs when buying a home
- Owning a property with a partner/spouse can make things complicated in the event of a break-up
- Your mortgage can increase with interest
- It can be hard to move into a new property, depending on how long it takes to sell your home
- Owning a home can be stressful due to the large sum of finances involved
If you are a first-time buyer, it may be more financially viable for you to rent than buy your own home; this is because:
– Rent deposits are cheaper than home buying deposits
– It is harder to pass mortgage lender checks
– You do not need to deal with additional costs or renovations for the house.
Overall, renting is considered a cheaper option, although this is only in the short-term sense. Compared to buying property, research shows buyers in London save £4,000 per year, from low mortgage rates and high rental costs. Mortgages payments tend to be less than monthly rent costs. Interest rates are at record lows, meaning quite a few new mortgages come with attractive fixed term interest rates. Whereas, at the end of June 2021, rents in the UK grew by 6.2%.
If you are planning to settle down in one area for a long time, then it is best to consider whether you can buy a property as you may be better off.
So … should you rent or buy?
It all comes down to the individual. Homeownership can be beneficial, building your financial security if you’re ready to settle down and establish roots in an area.
However, if you’re not quite ready to commit to property or don’t as yet have the means to fund a property purchase renting is a good option. In addition, you can implement plans to save while you rent in order to realise your home buying dreams in the future.