… that is the question….
The answer, however, is often a little more complicated. Many choose to rent over buying as a lifestyle choice – after all, there are benefits.
Renting is more transient – it is easier, quicker and less expensive to move as and when lifestyle changes dictate and, as a tenant, there are no costly maintenance issues – those are the responsibility of the landlord – so you know exactly how much money is leaving your bank account each month.
However, being a tenant can also be restrictive – often you aren’t able to paint a room or hang a painting without the permission of the landlord; the landlord can serve notice to you forcing you to seek alternative (perhaps more expensive) accommodation; and any payments you make in rent are not going back into your own property and its capital appreciation (or depreciation). Plus, if you have a deposit saved, buying can actually be less expensive than renting.
Brett Reeves, sales manager at Bewley Homes, says: “The current Government incentive schemes, such as Help to Buy, are making access to home ownership much more affordable. Individuals are able to purchase a new home priced up to £600,000 with the benefit of a 20% equity loan from the Government with the requirement of a 5% deposit from the purchaser. In terms of finance, this means someone wishing to buy a 2 bedroom flat within our Amberley Park development, on the edge of Tetbury, would have to put down a deposit of around £11,000 and would be looking at monthly mortgage repayments of £500 for the first five years, reverting to £697 thereafter*. The current cost of renting a property of similar size in the area is currently between £725 and £750 per month. This means for anyone who has been able to save for the deposit, the cost of home ownership is slightly less, or certainly equal to, renting.”
*Please note these figures do not constitute a fully compliant illustration and are for comparison purposes only. The example assumes a 35 year repayment mortgage on a 2 year fixed rate of 1.39% (APR 3.40%). Always seek advice from an independent financial adviser.