Traditionally, people would keep renting till they save up enough to pay for the deposit when purchasing a property. However, with rents increasing by 12% as of December 2022, it may have become harder for prospective buyers to set aside money.
While owning a home is a dream for everyone, renting also comes with its share of benefits. Depending on personal circumstances, financial positions and priorities, both have advantages and disadvantages.
Either way, housing costs have witnessed a steep rise in the past year, with mortgage rates shooting up. As a result, prospective buyers and renters are weighing the pros and cons of getting the cheaper option.
What are the pros and cons of renting?
Although rental prices are increasing, buying may still be out of reach for most people despite the aid of government schemes. For them, renting a home might be more beneficial till they are in a better financial position to buy.
Advantages of renting
– A tenancy contract can be for as less as six months, which gives you the flexibility to move if it isn’t working out.
– You can consider a different kind of property or even an area.
– It’s easier to move out of a rented home.
– Maintenance costs are not your worry.
– You don’t have to spend on furniture if it’s a furniture space.
– There are no legal requirements or fees.
Disadvantages of renting
– Landlords can increase rent at every lease renewal point.
– Maintenance is not in your control, so repair work may take longer.
– Upfront costs would include the deposit and sometimes the rent for the first month, in addition to moving costs.
– If the landlord wants to sell the place and asks you to vacate, you have to do so.
– Getting a deposit refund from landlords may be a battle.
– The rent you pay doesn’t come back to you, as compared to mortgage payments, which add up to owning your own home.
– Any redecoration or changes can be done only after approval from the landlord.
What are the pros and cons of buying?
Even for those who can afford it, buying may seem more expensive from a short-term perspective. But in the long run, it outweighs the cost benefits of renting. As a ballpark timeframe, you could consider two years to be the tipping point when mortgage payments would be lesser than rent payments.
Advantages of buying
– Your home is your own, and you would not be at the mercy of a third person like a landlord.
– You can decorate or redecorate at your pace and convenience.
– Repair and maintenance would be quicker.
– Even though mortgage interest rates have increased, it’s still lower than renting.
– Once the mortgage period is over, you don’t have any more payments.
– It also becomes an investment. Based on property prices, if you want to sell and move to a better property, you can do so.
Disadvantages of buying
– Saving to make your deposit isn’t easy, especially since prices have gone up.
– Payments include mortgage and legal payments, and also stamp duty.
– Repairs and maintenance costs are recurring and lifelong expenses.
– The housing market situation and price movements will affect your home equity and hence affect you if you have to remortgage or sell your home.
– It may take months to sell property, irrespective of the market situation.
– Interest rates are going higher, which translates to higher mortgage payments too.
Please feel free to contact us at Glentree Estates, if you are interested in purchasing or renting a property in the United Kingdom.