Renting and buying are both expensive business, and both come with pros and cons. What is the right decision for you may depend on your long-term goals, and it’s important to know what you need from your home before making a final decision.
Renting used to be seen as the more affordable option, however depending on what the markets are doing, both in sales and lettings, this may not always be the case anymore. Letting a property, is often viewed as a waste of money, and gets this stigma because you’re spending a lot of money that won’t actually lead to ownership. However, there are a lot of perks to renting a home rather than buying. Owning a home is a big responsibility and can end up being VERY expensive is you’re not careful.
There may be some people who are not currently in a position to buy but are debating whether to start saving for a deposit or whether that money could be put to better use elsewhere. Your decision will depend on a large number of factors, but generally considering finances, responsibility for maintenance, flexibility and security, will be a good place to start. The choice on whether to rent or buy is a relative one, however we will explore the things you need to assess to hopefully make this important choice just a little bit easier.
Affordability
Buying a property is a huge investment, you’re entering into an agreement with a bank for a long time (usually 25-35 years), and therefore you’re at the mercy of the housing market. But, once you get the deposit out the way, mortgage payments are generally cheaper than rental payments. Recent research from Rightmove (April 2024) has found that this is the case in the biggest cities. With average mortgage rates steadying out a bit since they peaked in July 2023, it is now easier for first-time buyers to budget for a move, and depending on the terms of your mortgage, you can be fixed into a comfortable agreed rate for a longer period than you would if you were renting, which will usually only be set for 12-months at a time.
The main draw to owning a property rather than renting, is that it will be yours, and the money spent each month is going towards your own assets, rather than someone else’s. However, saving for the deposit is still the biggest hurdle to buying, with the average being 25% in England, and once you’ve purchased, there is no guarantee that your property will hold its value. You could buy when prices are peak, leaving you with an expensive mortgage and the value of your home slowly plummeting until you reach a stage of negative equity and no way to gain back your investment aside from staying put for the long-haul which may no longer suit you or your lifestyle.
Renting is more expensive as you’re paying for more than just your landlords’ mortgage, you’re also paying for the luxury of maintenance taken care of and low responsibility that comes with it, which we will explore more later. A big plus is that renting may allow you to live in an area you couldn’t afford to buy in. Although renting is still expensive, it allows you to quickly access locales without the time needed to save for a deposit. You can also scale your home according to your income. So, for example, if you take a large step forward with your career, you can fairly quickly rent somewhere to match your brand-new salary. Buying on the other hand can see you stuck in a property that was perfect for you when you first got on the property ladder, but you may have quickly outgrown. Or the unfortunate other end of that scenario, you can no longer afford to pay your mortgage and you are sadly left with few possibilities on what to do. In the short-term renting is definitely the cheaper option and could allow you the space to save up for a deposit if homeownership is your end-goal.
Fees and Taxes
Thanks to the Tenant Fee Ban legislation that came into play in 2019 tenants are now left with very few fees they need to pay before renting. Although saving enough for the first months rent and security deposit is no easy feat, there should be few payments you need to make aside from the monthly rent and bills. Buying a property on the other hand comes with a whole ream of taxes and fees to enjoy such as stamp duty, council tax and re-mortgage fees. There will also be fees to pay when it comes time to sell the property such as Capital Gains Tax.
Maintenance
An important aspect to consider when deciding whether to rent or buy is how much responsibility do you want to take on with the property? If you’ve purchased a home then you are solely responsible for its upkeep, however if you’re renting then the landlord takes that pressure of your hands and the stress that comes with it.
Owning a home is not just a financial commitment, it can also be hard work. Although searches, surveyors and valuations are conducted (and paid for) as part of the buying process, these can never guarantee that the property is in the condition you expect it to be in. Aside from optional cosmetic work, there will always be repairs and issues that need to be addressed during home ownership, and the responsibility to get these fixed is solely down to you. The cost, organisation, and stress that comes with this is also yours alone, which depending on the scale of the issue can be a big factor to swerve people away from buying. It could be argued that maintenance costs are the epitome of money down the drain. Homeowners may spend thousands of pounds keeping their home in a good condition or renovating and never seeing a return on that investment. Renting, however, side-steps these costs and allows you to spend your hard-earned money elsewhere.
A huge upside to renting is that any maintenance issues that come up during your tenancy are not your responsibility to fix. In theory, all you have to do is inform your landlord of the problem, and then make sure the property is accessible for the repairs. Although the landlord is obliged to get these fixes done in most cases, we realise this is sometimes easier said than done. This downside if you’re not responsible for the maintenance, is that you have little to no control over when the work is done and by who. When you’re renting this can be extremely frustrating if you don’t have a good landlord, who doesn’t quickly get things sorted for you, or to a lower level than you would expect. This could potentially lead to conflict, and although tenants should always be able to go to their local council, or property ombudsman for help and advice, living in the property for the time where there are outstanding issues may not always be pleasant.
Flexibility
The need to be flexible is highly dependent on your lifestyle, with your job, travel and family all having large impacts on this decision. The flexibility of renting in an undeniable benefit. You can decide the location you want to live, and how long for, to whatever suits you at this stage of your life. If you’re current rental doesn’t fit the bill as soon as your contract has ended, you can move on without too much bother or cost. Finding somewhere new to live to suit your needs may be the biggest challenge, however, once you’ve found somewhere, only minimal checks and effort is needed to set up a new rental contract. The ease and efficiency that renting offers is the perfect choice for those who want to try out new areas, and types of property.
Buying a home on the other hand is a long-term commitment and although you have the option of selling or possibly renting the home out, the admin, time and resources that need to be in place in order to do this are vast. Your tastes and needs will undoubtedly change as you move through life, and to keep up with these adjustments will cost money. However, if you have roots in place, and are committed to your lifestyle then buying a property could be the best option for you.
Security
Although a much bigger commitment and responsibility, a definite plus in owning your own home is the level of security it offers you. There will rarely be a circumstance that forces you to leave your home, aside from not being able to afford your mortgage repayments any longer. Generally speaking, you will know how much you need to pay each month in terms of mortgage payments, bills, taxes etc., with only maintenance costs being an-avoidable extra, and therefore if you live in a location you are happy with, in a home that is suitable for you, then the security of knowing you can’t be moved, can be a huge benefit. It also allows you the option of putting your personal stamp on your home, for example you can decorate however you choose, and make improvements/changes without needing permission. The downside of this again comes down to flexibility. For example, if you suddenly get a neighbour, you don’t get on with, or a new-build development is being planned for your once idyllic view, then this security quickly becomes detrimental.
The opposite can be said for rentals. With the above scenarios if you were renting, you could merely leave the property at the first chance you get eliminating the need to deal with the nasty neighbour or the building site view. But the huge draw back to this is you don’t get to feel the same level of safety and security that a homeowner can enjoy. A tenancy will typically start as a 12-month fixed term contract, in which you know you will be in the property for that length of time. Following this, your tenancy will then either be renewed for another fixed term, move onto what is known as a rolling or periodic tenancy, or you will be served a notice to leave. Therefore, this leaves most tenants with a consistent level of security for only 12-month at a time, with rents being able to be raised at the end of this fixed period. Under current legislation if you’re on a rolling tenancy, then a no-fault section-21 notice can be served at any point, leaving you with 2-months to find somewhere new to live. This inability to put down roots and make your rental property your home can have large negative mental health effects to some people that want to find somewhere permanent to live, but don’t have the resources to purchase somewhere. The controversial topic of pets is also something that is frequently reported as a negative to renting. If you rent with a pet there is no guarantee that you can stay in the same property for the long-term, and then finding a new property that allows pets can be a huge struggle, leaving many people with a heart-breaking choice. Additionally, even the option of owning a pet in the first place can be taken out of your hands if you’re renting and have to ask for permission.
If you’re ready to settle down in one area, with finances in place then buying could be the best option for you. However, if you need flexibility in terms of area, price and taste, then renting can be a hassle-free way of living in a home of your choice, without the stresses of ownership.
If you’re looking to rent or buy in Bath and the surrounding areas, then we would love to help you find the perfect home. Get in touch or head over to our website to either register your details or see what properties we have currently available.
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