We were sorting out our gardens for last week's Finance Fridays with 15 thrifty gardening tips. For this week we are thinking about bricks and mortar and whether it is better to buy or rent a property. For most people it would seem the ultimate aim is always to be able a buy a property but is it always the best option? Let's have a look at some of the arguments for and against.
- We live in an uncertain world at the moment. If we thought Brexit was causing ups and downs in the economy now we have a General Election to throw into the mix. House prices generally rise year upon year but there are factors will can cause them to drop. Even without political intervention you could find plans for a new road or building development will find lead to a drop in the value of your house. Where I live the plans for HS2 rail network have been changed so many times that many people don't know what is happening with the houses they have bought.
- Are you ready for the commitment that comes with owning your own home? When you buy a property you will be the one responsible for maintaining it and dealing with the repairs.
- Renting gives you flexibility. Generally if you buy a property you need to stay put for at least three years. If not you will be wasting a lot of money in buying and selling fees, legal costs, surveys and stamp duty.
- When you do buy make sure it is 'the one'. A rural location may be your dream until you start living there permanently and find you you have to drive 10 miles just to buy a pint of milk and there's no public transport. On the flip side city living may seem exciting until you're still awake at 3am due to the nightclubbers hanging about outside. Renting somewhere for a while in the area may help you decide if you want to buy a place.
- In the long run buying somewhere usually saves you money as the payments go towards owning your own home rather than paying your landlord's mortgage.
- If you do buy you have an asset you can use if you fall on hard times. Your first step could be to sell the property but there are alternatives. You could rent it out at a higher rate than your mortgage and rent somewhere cheaper.
- Do you have a lazy landlord? Have you kept telling your landlord about the missing roof tiles or the dodgy guttering? Some landlords will keep their properties looking top notch whilst others will simply be interested in pocketing your rent money.
- With renting there is a lack of security. Many people do stay in the same property for years but depending on your type of tenancy you could be homeless within a week. In some tenancies such as excluded tenancy or licence your landlord only has to give you 'reasonable notice' to leave. This can be the length of your rental payment period so if you pay your rent weekly you'll get one week's notice. Even if you think you are on good terms with your landlord you could be given notice to quit at any time. This could be because they want to sell the property or change it from one dwelling into flats.
Do you own or rent your home? Which one do you prefer?
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We are lucky enough to own our own home with a big mortgage but not as big as some. I think it is better to own your own house if you can as it is more secure however, with mortgages rising and getting harder to get, I can understand why so many people rent.
ReplyDeleteI'd love to be able to buy one day - I'm lucky that my landlord is amazing though!
ReplyDeleteI've always wanted to buy but never have. I have always rented off the city council which means more security. I was in my last house for 24 years! In our new house I couldn't have done better by buying, it's worth a lot more than I could ever afford. The rent is high but it's still cheaper than a mortgage and if anything goes wrong with the house then the council will fix it. (we've had a few issues with plumbing since moving in.) I know with a bought house you have an investment to pass on to your kids, but my mum rented her home too and it ended up in a big family split over her belongings, I think adding the sale of a house would have made things a lot worse. I've also heard this is a regular happening once someone dies. :(
ReplyDeleteI have always aspired to buy my own home and think that it is something to do with the fact that my parents generation were ex council families
ReplyDeleteI find it interesting that in the UK we seem to aspire to own our homes where people in Europe, France and Spain for example, often rent for the long term. Personally I own my home so I'm a typical Brit!
ReplyDeleteWe've just moved from a rented place to buying a house and it's saved us tons of money.
ReplyDeleteWe own our own home and hope to move soon to something bigger. I have been nagging my daughter to start saving to buy a home but she is having none of it
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