Should I buy or rent?
It’s a question with no easy answer, and there’s a huge amount to consider when making your decision. Below, we weigh up the pros and cons of both buying and renting, so you can decide which option is right for you.
Which is cheaper – buying or renting?
In the short term, it’s usually less expensive to rent because the deposit you pay at the start will almost certainly be much less than the initial costs involved in buying a home.
But let’s take a closer look at the numbers. According to the Office for National Statistics (ONS), in July 2021 the average UK house price was £256,000. And the average monthly mortgage payment was around £750.
Meanwhile, between April 2020 and March 2021, the Office for National Statistics recorded a median monthly rent for England of £730.
But what you need to remember is that buying a home is a long-term investment. And over the term of a mortgage – usually between 20 and 25 years – it can work out cheaper than renting.
What are the pros of buying a home?
As well as potentially proving less expensive in the long term, buying a home has all these other benefits:
- Your money will be going towards a place of your own, rather than making your landlord richer.
- You can’t be forced to leave by a landlord.
- When the mortgage term is up, you’ll own your home outright.
- If house prices rise, you could end up making a profit.
- You don’t need permission to keep pets or make alterations to the property.
- Any maintenance or renovations you carry out could add to your home’s value.
Should I buy a new build?
If you do ultimately decide to buy, another choice you need to make is whether to go for an existing property or a new build. If you’re wondering if new builds are worth it, then consider the following:
Government-backed schemes like Help to Buy are only available on new-build homes.
- They’ll almost certainly need much less maintenance than older properties.
- They’re likely to be better insulted than period homes, so your energy bills may be lower.
- If you’re buying off-plan, you may also be able to make certain design choices.
- Government-backed schemes like Help to Buy are only available on new-build homes.
What are the cons of buying a home?
With mortgage fees and Stamp Duty payable upfront, buying a home will initially be more expensive than renting. Plus there are several other things to bear in mind:
- If interest rates rise, so will your monthly payments – though you can avoid this by securing a fixed-rate mortgage.
- If something goes wrong with the property, you may have to find the money for repairs.
- If you don’t keep up with your mortgage repayments, you could get into debt and risk bankruptcy or repossession of your home.
- If you get a joint mortgage with a partner and later separate, selling the property can be a hassle.
- Moving can be a long process because you have to sell your current home first.
- If your circumstances change and you need to move to a cheaper property, this may take longer than you’d like.
What are the pros of renting a home?
If you need flexibility – you have to relocate regularly for work, for example – then renting means you can move home quickly when the time comes. And that’s not the only reason why it can be a good idea:
- Finding a home to rent can be a faster process than buying a home.
- Repairs and renovations are the landlord’s responsibility.
- Renting may allow you to live in homes and areas that would otherwise be unaffordable.
- If the property’s value falls, you won’t lose money.
What are the cons of renting a home?
The biggest disadvantage to renting is that the payments you’ll be making each month will go to your landlord, not towards owning a home. And there are plenty of others to be aware of:
- Not buying means you’ll have to pay rent for your whole life, even after retirement.
- You’ll be asked to pay a deposit, which the landlord may retain all or part of at the end of your tenancy.
- Your landlord could decide to raise your rent.
- If your landlord wants to sell up or get new tenants, you’ll have to find somewhere else to live.
- Your landlord is free to impose tenancy rules and may only allow minimal changes to the property.
- Any improvements you make will ultimately only benefit the landlord.
So, should I buy or rent a house?
Whether you’re better off renting or buying your home depends on your financial and personal circumstances. To help you make up your mind, here are five key questions to ask yourself:
- Do you have enough money for a deposit?
Most mortgages require you to put down a deposit, and you usually need at least 5%. The government-backed Help to Buy scheme could make buying your own home more affordable and is available to first-time buyers on new-build homes.
- Can you afford the upfront costs of buying a home?
Moving obviously incurs costs, while buying a home means paying conveyancing or solicitors’ fees – which can run into thousands of pounds. You may also be liable for Stamp Duty, a tax based on a percentage of your new home’s sale price.
- Do you earn enough to secure a mortgage?
Remember, you can only get a mortgage if your income will cover your repayments while leaving you with enough to live on each month. You also need to prove to lenders that you can afford the mortgage.
- How long will you stay in your next home?
If you only intend to live in an area for a short time, renting is usually less expensive and gives you more flexibility. This is because the initial costs involved in buying a home – mortgage fees, stamp duty, valuation fees, and your solicitor’s charges – are far greater than the deposit you pay at the start of a rental. However, if you plan on staying in an area or property for a while, buying a home can work out cheaper.
- Will you be living alone or with someone else?
If you’ll be living with a partner, you may be able to pool your resources to secure a bigger mortgage. It’s also possible to buy a home with friends rather than rent.
If you think buying your own home is the right move for you, explore our exciting new developments today.