Renting or buying – the pros and cons
Renting – the pros
- Long-term tenancies start from as little as six months and you can move after this time if it doesn’t work for you.
- Being able to give notice to vacate lets you test relationships, whether that’s a new flatmate or a new partner.
- Renting gives you flexibility to adapt to a modern working life where people change job, or location, more frequently than they used to.
- Professionally-managed properties take the burden of maintenance away from you, giving you time to enjoy other things. You will have one point of contact and you don’t have the problem of finding contractors and overseeing works.
- The ongoing costs of maintenance and buildings insurance are covered by the landlord.
- As you don’t have the additional costs that are covered by the owner it is much easier to predict your monthly costs.
- Whilst the costs of renting are high, the cost of getting on the rental ladder is substantially lower than the cost of buying a property.
- Property sharing reduces the cost per person, allowing you to move to an area you may have thought out of your budget. It is easier to do this if you rent that if you buy.
- Rental properties must conform to safety standards.
- Shorter term lets are great for those who are in between moves or moving out whilst they do renovations
- Short term lets are generally all inclusive of costs and so you’ll have one regular payment.
Renting – the cons
- All your rent goes to your landlord, not towards owning a home.
- If you never buy a house you must pay rent for your whole life, even after you retire.
- If your landlord decides to sell or get new tenants, you must move out.
- Your landlord can set rules and restrict changes that you can make to the property.
- You must pay a deposit, and the landlord may keep some or all of it.
- Your landlord could decide to increase your rent.
- Improving the property could increase its value, but this only benefits the landlord.
- Although cheaper in the short term, renting for a prolonged period could cost more than buying, particularly if you are a first-time buyer.
Buying – the pros
- You pay off a mortgage – so after the period of the mortgage you live cost-free.
- Your property is an asset that accrues in value, so owning your own home can be considered a long-term investment.
- People are living longer so the benefit of paying of a mortgage and living without having to pay a rent is increasing.
- Although you are responsible for repairs and maintenance to your home, refurbishing and updating your home can increase its value.
- You can undertake home improvements without having to get the permission of a landlord first.
- Sometimes, it can be cheaper to buy than to rent. According to research from the Halifax Building Society, buying a home is £900 a year cheaper than renting. The research also found that first-time buyers can save £27,000 over the term of their mortgage. That’s almost as much as the average deposit (currently £31,751). The average cost of buying a three-bed home in the UK was £679 a month for mortgage payments in December 2017, compared to the average monthly rent of £754 for the same property type.
Buying – the cons
- It’s a big commitment – you need to be sure you can afford what you’re taking on.
- When interest rates rise, your repayments will go up. It’s important you’re prepared for a rise.
- It might not always be easy to sell your home, depending on what’s happening in the market.
- You need to be sure you can afford maintenance costs like fixing a broken boiler or leaky roof.
- If you stretch your budget when you buy you might not have money for meals out, holidays and entertainment.
- If the value of your home falls, you might be unable to sell if you owe more to your mortgage lender than your home is worth.
- You have less flexibility than when renting. For example, selling up and moving is more expensive as you have estate agency and legal fees to pay.
Currently, buying is consistently more financially attractive than renting across the UK. In our region the average monthly saving is £94. The gap between the cost of buying and renting is now at its highest in four years, up 44 per cent from last year’s £623 saving to £900 a year.
Nationally, the average monthly cost of buying has dropped 22 per cent (£192) since 2008, while rental payments have jumped by the same amount (22 per cent or £138).
The widening gap between buying and renting is being driven by a reduction in mortgage rates and a more competitive market pushing down monthly payments. Meanwhile, the cost of rent, household maintenance and average deposits have remained broadly flat.
Despite having to put down a sizeable deposit up front, homeowners are overall better off than renters in all parts of the UK. But those who are unable to get onto the property ladder because they can’t raise enough cash are paying more by renting.
Check out our payment calculators to work out what you can afford here.