Renting vs. Buying

Are you contemplating whether to rent or buy a property? Goldex Sales and Letting can help you explore both options and make the right decision for you.

Whether you should rent or buy is an old-age debate that feels particularly loaded at the moment. Many people cannot afford to get on the property ladder so do not have a choice between the two. In the past 20 years the price of housing has increased at a rate that outstrips wage growth. The proportion of people aged between 25 and 34 who own a house was 55% in 1997 and is now closer to 34%, according to the Institute for Fiscal Studies.

Choosing to buy or rent, though, is a major decision that affects your financial health, lifestyle, and personal goals. Whichever option you choose depends entirely on your lifestyle and financial situation. Both require a regular income (so you can afford the payments and associated costs) and may also require a certain degree of effort to maintain. But there are several differences that make renting and owning property distinctly different. Renting a property doesn't come with all the responsibilities associated with homeownership and you have more flexibility, as you aren't necessarily tied down to your property. Owning your home gives you a sizable investment, but it does come at a cost—both upfront and over the long run.

Owning a home isn’t always better than renting, and renting is not always as simple as it seems. Here, we highlight some of the key differences between renting and buying.

The advantages of buying

•            Buying a property means you have an investment for the future

•            You could benefit from capital growth in your home over the long term

•            It’s your home – so you can decorate it and make changes that suit you

•            You have the added security of owning your own home

•            The mortgage you pay may be cheaper than rent

The disadvantages of buying

•            Buying a home comes with a lot of additional costs

•            Owning a property can make things complicated in the event of a spousal break-up

•            Interest rates can go up, which means you may end up paying more on your mortgage

•            Selling a home can take time, which means it can be difficult to move quickly when you own your property

•            Homeownership can be stressful and pressured due to the finances involved

The advantages of renting

•            Renting a property gives you more flexibility to move quickly

•            Renting a property can be arranged quicker than purchasing a home

•            Renting carries a lower financial risk than buying

•            By renting, you won’t have to worry about maintenance or repairs

•            By renting, you may be able to live in an area where you couldn’t afford to buy

The disadvantages of renting

•            By renting, you’re paying off your landlord’s mortgage rather than your own

•            It’s harder to put down roots and settle in an area when you’re renting

•            A rental property isn’t yours – so you can’t decorate or make changes

•            Your rent could increase when your tenancy is due to renew

•            You won’t benefit if the property grows in value over time

Opinions?

Whether it’s better for you to buy or rent will depend on your personal and financial circumstances. If you’re not able to afford a home of your own, renting is a great way to live in the area you like. In addition, renting is a property that suits you. However, owning a property can give you more security for later in life and enables you to put down roots and create a real ‘home’. Renting a property is generally regarded as a cheaper option than buying a home. That’s because the costs associated with buying are considerably higher.

However, mortgage payments are often cheaper than paying rent.

Should I rent or buy?

If you’re financially ready to buy a home and you’re looking to put down roots, homeownership can be a great way to get the home you want and secure your financial future.  But if you’re not yet ready to settle down, or you’re not able to fund a property purchase, renting while saving to buy in the future could be the best approach.                                                        

If you’re unsure on what to do, speak to an independent financial advisor, who’ll be able to assess your circumstances and advise on the best way forward.