The majority of people in the UK have occasionally fantasised about owning a property. But it can occasionally feel unattainable because of skyrocketing home prices that are outpacing salary growth. As a result, renting has long been a viable and cost-effective choice for people who wish to live in a certain area but are unable to purchase there. Working with experts like Tooting letting agents help you find perfect homes for you. However, there may be a price to pay. The HomeLet rental index indicates that house rent costs have reached a record high, rising 8.6% annually between February 2021 and February 2022. This implies that more of your hard-earned money is going directly to your landlord. So, renting or buying is better? Well, it all depends on your own requirements and financial situation.
Benefits and drawbacks of home ownership
A home purchase is an investment. Additionally, since housing costs are constantly rising, especially in major locations like London, it doesn’t take long to see a return on your investment. The UK’s average property price rose by a staggering 9.8% in 2021 alone. Therefore, if you’re buying a home, you’re probably making smart use of your money. Additional advantages of property ownership include:
Lower monthly payments: Monthly mortgage payments are frequently less than rent, depending on the area you live in and the size of your mortgage.
You own the home: When you own a home, you make the decisions. This empowers you to make whatever structural alterations, live with anyone you choose (including pets), and decorate the home as you please (assuming the relevant permits have been obtained).
Security: In addition to being a wise investment, purchasing a home also establishes a stable and secure living situation. You won’t have to move because your landlord suddenly decides to sell up.
Total command: You have control over how long you reside somewhere when you own it. You won’t be constrained by a tenancy agreement, and you won’t have to rely on others to fix problems like leaky faucets and broken boilers.
Buying a house gives you a sense of pride and delight. You’ll feel like a valuable member of the neighbourhood as well as have a fantastic accomplishment. However, purchasing a home has its drawbacks. Hamptons International estimates that it takes over ten years on average for someone to accumulate the 15% down payment required to purchase. Among the other drawbacks of purchasing a property are:
It’s pricey: In addition to the sizeable down payment needed to secure the home, you’ll also have to pay for upkeep bills, legal fees, and stamp duty. Additionally, your monthly mortgage payments could go up if interest rates rise. While purchasing a home is an investment, there is no assurance that the value will increase. You risk losing money if the value of your home declines below what you paid for it. Selling your home may take some time, making the transition more challenging. You are at the whim of the market if you decide you want to move.
The benefits and drawbacks of home rental
Renting are sometimes viewed as the most attractive and feasible choice for individuals who can’t afford to climb the property ladder due to the financial requirements of buying a home. Among the advantages of renting a property are:
Renting a home is less risky financially than buying one. Since you won’t be locked into a long-term mortgage agreement, you can move wherever you want if your financial situation changes. Additionally, you don’t need to stress about changes in interest rates and housing prices. All you have to do is make your monthly rent payments on time.
It’s quick and simple: Gaining a foothold in the rental market is quicker and easier than purchasing. Furthermore, you won’t have to deal with the hassle of initially selling your house if you decide to move. You don’t need to buy furnishings because rental homes frequently come furnished, saving you the money and inconvenience of doing so.
Higher standard of living: Renting frequently allows you to live in a better quality home in a more desirable area because it needs less money up front and a smaller down payment than owning.
Less additional fees: Unless otherwise specified, any maintenance expenditures are your landlord’s responsibility. So you won’t be responsible for paying for any damages caused by a shattered window or leaking pipe.
However, renting a house has drawbacks as well. Some of the drawbacks are as follows:
Zero equity: Any money you pay in rent goes directly into your landlord’s wallet. However, when you purchase, your monthly payments go toward paying off your mortgage, assisting you in amassing housing wealth.
Few options: Typically, a rental house cannot be altered or decorated. You must first get your landlord’s approval before painting a wall or hanging a bookcase. If you want to live with a pet, your landlord’s permission is also required.
Less stability: Your landlord has the power to modify your terms once your leasing agreement expires. Theoretically, he or she has the authority to evict you or raise your rent obligations.
Less options: Depending on the location in which you want to reside, it could be challenging to find a house that’s suitable. For instance, people with families could find it challenging to rent a property with three or more bedrooms in some places.
Whether you decide to buy a home or rent one entirely relies on your unique requirements and circumstances. The wisest course of action right now, if money is no object, is to buy because you’ll probably be making a wise investment. Security and total control over your property are further benefits.
But renting is a good choice if you can’t afford to buy where you wish to live. You can leave at the conclusion of your tenancy agreement if you’d like, and it’s simpler and more flexible than owning a house.