If you’re looking for a new home, you may ask yourself whether the best decision is to rent or buy. See the potential benefits and disadvantages of both options.
Benefits of renting
Renting a home gives you lots of flexibility. As a tenant, you’ll usually have a fixed-term contract that sets out the length of your tenancy and the terms and conditions which apply to it. Once the term is over, you may want to enter a new fixed-term contract (if your landlord is happy to do so) or move home. This means if you don’t like your rented home, you can move and find a new one. And if you do like it, you can stay.
Moving is easier when you rent, as there’s no need to find a buyer or use a conveyancer. You can tell your landlord you’re moving out (giving the right period of notice) and leave it up to them to find a new tenant.
Another benefit of renting is that if something big goes wrong with the property (such as a burst pipe or a broken-down boiler) you typically won’t have to pay to fix it. These bigger, more expensive repairs are usually the landlord’s responsibility.
Benefits of owning a home
If you have a repayment mortgage, the money you pay each month for your mortgage brings you closer towards owning the property outright. You may be able to sell the property for a profit when it comes time to move. However, it may also sell for less than you bought it for.
If you own a property you have much more freedom to alter it than you do when renting. You may need planning permission or building regulation consent to make big changes. But you can paint the walls, hang up pictures and fit a new bathroom or kitchen without having to get anyone’s permission.
Disadvantages of renting
Your landlord will have final say on any changes you want to make to the property, which means you may not be able to do things like put up shelves and pictures without permission.
You may also be subject to rent increases and your landlord can choose to sell the property.
Disadvantages of buying a property
Buying a home requires a large amount up-front. Typically, you’ll be expected to put down a deposit of at least 5% of the value of the property.
There are lots of extra costs associated with purchasing a property, too. You’ll need money to cover things such as conveyancers’ fees, valuation fees and Stamp Duty. You may also need to extend the lease if you buy a leasehold property.
If you’re purchasing certain types of property, such as an apartment, you’ll also need to pay monthly ground rent and service charges. This is to pay for the general upkeep of the whole building.
Once you start a mortgage, you’ll need to keep up your monthly repayments. If you don’t make the repayments, your home may be repossessed. If your mortgage has a fixed or discounted rate for a set period, you can remortgage once this is up to find a cheaper deal.
There’s no guarantee that the value of your property will go up, which means that when it comes time to sell you may not get the amount you want. While there’s no certainty when you buy a property, doing as much research as possible will help you make the best decision.
Is it cheaper to rent or buy?
That depends on a number of factors, most of all the location, the size and the general state of the property you’re living in.