To rent or to buy: Which home is right for you?For a long time owning your home has been seen by many as a life goal, a stage in life which signifies a new level of maturity and qualifier into adulthood. And whilst there is still some truth in this, we’re now seeing people move away from the tradition: moving between cities for work, working remotely while travelling. Many professionals are now open to seeking future opportunities across the globe, meaning purchasing property in the UK might not be the best choice for them.
If you’re looking to make a move but you’re not sure what option is best for you, allow us to help. In this article we examine the pros and cons of renting vs buying in the UK.
Buying a property: The prosSecurity: When you own your property you are protected from being asked to move or being served a notice to terminate your lease, although this is only likely to happen in a private rental. Those renting properties specifically built to rent enjoy almost the same level of security as those who own their own homes.
Freedom: As humans, it’s in our nature to nest. Our own pictures, palettes, tastes and furnishings let us know we’re home. When you own your own home, you have freedom over every element. Decorate, furnish and even extend your property as you please (within the legalities of your local council of course).
Responsibility: If something breaks or needs work in your home, you’re responsible for fixing it. Now, while this might not seem like an advantage at first, it does mean that you have control over which tradesmen and suppliers you use and how quickly work is carried out. However, the likelihood of this is small if you buy from Lendlease, with brand new energy efficient (A rated) appliances – Bosch or similar – in your home from the day you move in.
Low interest borrowing: Currently, interest rates are low. And in the last 10 years mortgage interest rates have, for the most part, remained lower than the majority of loan products from financial institutions.
A long-term investment: When you pair the above with the fact that properties tend to appreciate on a long-term basis, you can be reasonably sure that you’ll make your money back and then some if you’re planning on keeping your property on a long-term basis. Do your research, get the calculator out and do your sums before buying to give yourself added security.
Buying a property: The consCommitment: It’s a commitment, owning a home. And we don’t just mean financially. For many people, owning your home means committing to life in one city, or even country. If you still have dreams of working abroad or moving city, buying your first property may be unappealing.
Deposit: Saving for a deposit and the fees and taxes associated with buying a property can be difficult. Particularly when you’re buying property in London where property prices are higher. Whilst schemes like Help to Buy are on hand for many new-build properties, you still need an initial deposit sum to get on that ladder.
Vulnerability: Whilst mortgage interest rates have been relatively low in the last ten years (when compared to the late 70s and 80s.), there’s no guarantee that they won’t rise in the future. If you own your property you may need to remortgage at some point, and there’s no guarantee that, when you do, the rates you got for your last mortgage will still be available.
Responsibility: We have this listed as a pro too, but ultimately you are responsible for any repairs required in your home. There’s nobody on hand to fix any issues – the onus is on you to maintain your home and protect your investment.
Renting your home: The prosFlexibility: With minimum leases of three months and less, renting adapts to your lifestyle. Relocating? New job? Moving in with a partner? These life changes can be made easier when you don’t have to commit to living in one place for the next 30 years.
Convenience: With many new purpose-built rental developments come many conveniences. Concierge desks, 24-hour maintenance teams, fitness suites, cinema rooms; you may find there are perks with renting that don’t come with purchasing a property. This isn’t true of all rental accommodation though – so select your property (and landlord) wisely.
Fewer associated costs: We all know of the cost of stamp duty and fees associated with buying property, let alone saving up for a deposit. When you rent the fees are much simpler. One monthly payment, no hidden fees or large lump sums.
Zero risk: When looking at property from a financial point of view, there is no risk in renting, because there’s no ownership. You don’t need to worry about the state of the property market, mortgage interest rates or how desirable your area is. In short – you can just enjoy your home, free from worries.
Join a community: There are an increasing number of rental communities in cities now. Buildings that are designed for renting, which means communal areas accessible to all. This means if you’re new to a city or area there are opportunities to be part of something bigger, as opposed to being isolated within your own four walls. Many of these communities are also breaking down rental stereotypes, like no pets and no decorating, meaning you can enjoy many of the same freedoms that property owners enjoy.
Renting your home: The consMonthly cost: It’s not true for every rental, but generally speaking in the UK, monthly rentals are more costly than monthly mortgage payments, due to the low mortgage interest rates currently available. That said, if interest rates rise, the playing field may become more even in the next five years.
You could miss an opportunity: By choosing to rent long-term as opposed to buying a property, you could miss out on the opportunity to make your money back. You also wouldn’t benefit from any rise in the market over-time. That said – you wouldn’t have any financial risk either.
Less freedom: While we’ve mentioned that many rental properties now allow you to decorate, furnish and even bring your pets, not all do. And if you’re decorating you are likely to still be asked to do it within set limitations. Home ownership offers creative freedom over your space.
So, is it better to rent or buy in the UK? Our answer is: it depends on you. Buying a property is usually a smart, long-term investment that gives you a unique amount of control over your home. But with new purpose-built rental accommodation tackling many of the stereotypes of renting, you can now enjoy many of the perks of owning your home without the 25-year commitment. If you value flexibility and have no desire for any financial risk*, is it worth buying a home? Perhaps not. But you could be doing yourself out of a rewarding, long-term financial asset.
If you’re looking to purchase property in the UK, take a look at our current developments. And if you’re looking to rent, why not check out our rental communities at Elephant Park.