To Buy or Not To Buy?

19 May 2012

It is generally assumed that renting is a far cheaper option than purchasing a property. In some cities across the world it's almost unheard of for people to buy, rather choosing to rent as climbing the property ladder can feel virtually impossible.

The difference is understandable - people would pay less to rent a home because you're going to have nothing to show for it at the end.

However, recent research by Halifax has found that buying in the UK is actually around 14 per cent cheaper than renting. In March, the average costs incurred when buying a three bedroom house were pegged at around £608, while the average rent for the same size property was almost £100 more, at £706.

So how has renting become so much more expensive than actually buying? Lower interest rates have seen mortgages drop, making repayments more achievable. But, while mortgage rates seem appealing and manageable, there is one significant issue hindering some from actually buying - the deposit.

In order to achieve optimal rates buyers need a substantial deposit behind them - this is, more often than not, the only issue holding buyers back and in turn may force them into the rental market.

So what exactly are the advantages and disadvantages of owning a home compared to renting?

Homeowners are continually investing in their future by working to pay off a mortgage which will leave them with an extremely valuable asset. They are also free to make any changes to their property, within reason, without having to seek permission and they aren't reliant on a landlord to maintain the property.

As with anything, there are some disadvantages to buying. The initial stages can be fairly expensive - alongside a large deposit people must also factor in fees plus the cost of furnishings. Also, should anything go wrong with the property it's ultimately the owner who is responsible for any repairs. Falling house prices can see homeowners forced into negative equity if they need to sell at the wrong time.

While initial fees to buy can be high, preliminary costs associated with renting are much lower and should a person's situation change it is much easier for them to move on to a new property if they rent.

To help protect themselves renters should make themselves aware of any repairs which are carried out as some landlords may attempt to 'cut corners' when it comes to maintenance. There can be a feeling of insecurity when renting as landlords can easily decide not to renew contracts or choose to sell the property on. Finally, all money paid in rent goes directly to the landlord and the tenant is left without any real assets at the end of their lease.

Unfortunately the decision to buy or to rent may often come down to the simple fact of a person's financial situation - especially at a time when money is at the forefront of everybody's minds and worries.

And more and more, regrettably, this particular decision is not just being faced by new buyers - some current homeowners are having to look at their existing situations and as a result are being forced to either downsize or sell their home completely.

Anyone worried about their housing situation or facing money worries should contact DAWN Advice for free support and legal advice through the county's advice line on 0844 4111 309.