Should you buy or rent? In today’s ever-changing housing market it can be difficult to know when’s a good time to buy and whether renting really is “dead money”.
The truth is, it depends.
Buying your own home involves some serious cash saving and commitment in the short-term, but is typically more cost-effective than renting in the longer term.
Renting is cheaper than buying in the short-term.
You don’t need a large deposit, and it doesn’t involve upfront costs like mortgage fees and stamp duty.
Here we look at why more people are choosing to rent property in the UK instead of taking out a mortgage.
One of the important benefits of renting a property is that there are no maintenance costs we can pay or repair bills. When you rent a property or home, your property landlord is responsible for all maintenance you have, improvement, and repairs. If an appliance or any other equipment stops working or your roof starts to leak, you call the property landlord, who is required to fix or replace it.
#1 More flexibility to move
Buying a house can be exciting, but it’s also a massive commitment.
Paying off a mortgage can take anything up to 30 years depending on the lender, and once you’ve signed up, you’re in until it’s paid off.
If you decide you want to move again a few years later, it means renegotiating a new mortgage, plus repaying all the fees and potentially capital gains tax if your property has increased in value since you bought it.
On the other hand, if you’re renting you can just up sticks and move whenever your lease expires without worrying about being part of a chain.
Most lease agreements have fixed terms which you negotiate at the start of your tenancy, so you know exactly how long you’ll be at the property.
Even if you decide you want to leave before the end of the agreement, it’s easier to negotiate an early release.
#2 It’s cheaper
For the last five years, buying a home has been cheaper than renting monthly. But like most things, the pandemic has had an impact on this.
Rents in Great Britain have risen by 7.1% over the last year yet – despite this – the stamp duty holiday and higher loan-to-value mortgage interest rates have made it more expensive to buy and own a home.
Studies from Hamptons show that in May 2023, it was £71 per month cheaper for a first-time buyer with a 10% deposit to rent than it was to buy. And for buyers with a 5% deposit, renting becomes even more affordable.
Therefore, if you only have a small deposit (10% or less), renting accommodation is ideal as it will give you more time to save a bigger deposit before rushing into getting your foot on the property ladder.
#3 More choice
One of the biggest benefits of renting is that your property search isn’t limited to one area. While homeowners tend to have a set budget and are restricted by the size of the deposit they can put together, tenants can potentially afford to rent in areas that they may not be able to buy in.
For example, if you wanted to live in London (the most expensive place to buy a home in the UK), you would need to put down a deposit of at least £130,357. That’s more than twice the average first-time buyer deposit of £57,278!
Most first-time buyers don’t have that sort of money to part with, but they can afford to pay between £410 and £1,480 a month on rent.
What’s more, there are fewer hurdles to jump through and the process of finding a suitable house to rent is often quicker than buying a house – especially if you engage the expertise of letting agents in Warrington, like Easylet Residential.
#4 Less responsibility on you
When you own a property, you’re liable for maintaining it – that includes everything from checking the roof tiles and gutters to ensuring the boiler is in working order.
It also includes any historical problems that weren’t identified before you moved in.
This could include any unknown structural issues, and the costs of putting them right can be substantial.
Although you need to take good care of the property when renting, you needn’t worry about any of these things as the landlord is responsible.
#5 Fewer costs
With estate agent fees, legal fees, stamp duty, and removal costs, you could easily be looking at a five-figure sum when buying.
That’s not even getting into the cost of the deposit which can easily be in the high tens of thousands for even a 5% or 10% deposit.
That explains why tenants these days are opting to house share instead.
They split rent and bills with their housemates to reduce their financial outlays and, in turn, alleviate the stress of debts and mortgage repayments. And who blames them?
Ready to take the next step and rent?
If you’ve been offered your dream job in a different city, or you can’t afford to commit to a mortgage, being a tenant will give you the freedom to choose what works for you – both at this moment in time and in the future.
If you’re thinking of moving to Cheshire, be sure to get in touch with letting agents. They have an extensive portfolio of properties in Warrington and will happily arrange viewings and assist you in finding the perfect place to rent.