Buying a house vs renting – which is right for you?
Need to move home and not sure whether to buy or to rent? Find out which option might be right for you.
Deciding whether to rent or buy a property is a common issue that many people face. But as property prices and the cost of living have increased across the UK, the cost of both renting and buying has followed suit, leaving many understandably questioning which option is ultimately the best for them.
The average house price in the UK has risen by 15.5% from July 2021 to July 2022, which means that properties, on the whole, are more expensive. This, along with the cost of living crisis, has likely led to the cost of private rentals in the UK rising by 3.4% (between August 2021 and August 2022), and the average cost of a two-year fixed-rate mortgage reached its highest rate in nine years.
Understandably, this has left many questioning whether they’d be better off paying rent or buying a property and which one is cheaper. With this in mind, we’ll run through whether it’s cheaper to rent or buy, and the advantages and disadvantages of both. Let’s jump in!
Should I rent or buy a property?
To decide whether renting a property or buying one is better for you, there are some things to consider — the main ones being the monthly cost of each and which option better suits your personal circumstances. So, let’s take a look at both these factors.
Is it cheaper to rent or buy?
Renting a property typically used to be cheaper than buying. But with rental prices shooting up, that may not be the case anymore.
The average rental price for a new tenancy in the UK is £1,159 per calendar month as of September 2022. As for mortgages, a homeowner may have previously been able to borrow £200,000 (depending on their income and deposit size) with a 30-year mortgage and an interest rate of 3.5%, making their repayment £898 a month. However, interest rates are likely to go up to 5.5%, which would mean monthly repayments would be £1,135 for a mortgage of this size.
This means that in terms of monthly costs for a property, renting is more expensive. However, the upfront cost of buying a house is more expensive due to things like solicitors fees and Stamp Duty. For this reason, you’ll need to assess your finances to see whether you can afford to purchase a property.
Buying vs renting: Pros and cons
When deciding whether to rent or buy a property, there are plenty of factors to consider, aside from how expensive it is. In this section, we’ll run you through the advantages and disadvantages of renting and buying so you can decide the best option for you.
Advantages of buying a property
The main advantages of buying your own home are:
- The value of a property is likely to increase over time so that when you decide to sell, you may make a profit
- Your monthly repayments go towards paying off a mortgage rather than going to a landlord
- You will own the property after your mortgage comes to an end — usually around 25 years
- More security as you can’t be evicted by a landlord
- You have an asset that you can leave in a will to your family should you choose to
- If you make improvements to the property, its value may increase, and you’ll benefit from it
- You can redecorate and own pets without needing to seek permission
Disadvantages of buying a property
There are some disadvantages to buying your own property, including:
- You’ll need to pay more upfront costs such as mortgage fees, Stamp Duty, and survey fees
- If you purchase a property with another person and you part ways, it can be complicated to take over the mortgage or sell the property
- The process of buying a property can be lengthy, particularly if you are in a property chain with other parties
- You will be responsible for sorting any issues with the property, such as the boiler breaking down
- Interest rate increases can cause your mortgage repayments to get more expensive — that said, you can get a fixed rate mortgage to help avoid this issue
- If you fall behind on repayments, there will be financial consequences such as debt and a lower credit score
- If you default on your mortgage repayments too long, your home may be repossessed
- If your property becomes too expensive for you, it can take a while to move to a cheaper one
Advantages of renting
There are plenty of advantages to buying your own property. However, depending on your circumstances, renting may work better for you. Here are some benefits of renting a property:
- Better flexibility when it comes to moving home — for example, if you need to relocate at short notice for your job
- Finding and renting a property is usually quicker than buying one
- In some cases, you may be able to afford a bigger property in a nicer area than you could if you were buying
- If the property’s value decreases, you won’t be affected
- You won’t be responsible for sorting issues such as leaks
- You won’t need to spend as much money upfront to rent a property — you’ll just need to secure a deposit
- If your landlord manages your utilities, it will be easier to budget what outgoings you have each month
Disadvantages of renting
As with buying a home, there are some disadvantages to renting. Here are some of them:
- If the value of the property increases, you won’t benefit from it
- Your landlord has control over the property and can choose not to renew your tenancy or increase the amount of rent you pay
- Your landlord can sell the property, meaning you will have to move out
- You have no control over repairs and maintenance, which means it can take longer than you would like to get issues sorted
- You are paying money into your landlord’s pocket rather than paying towards a mortgage for your own property
- You’ll need permission from your landlord if you want to own a pet or redecorate
- Many renters struggle to get their full deposit back from their landlord at the end of their tenancy
Is buying or renting right for you?
In short, buying a property is less expensive than renting in terms of monthly accommodation costs. However, to get a good mortgage rate, you’ll need a considerable deposit. You’ll also need to pay more upfront costs like solicitor’s fees and survey fees.
If you’re contemplating the decision between buying a house and renting, and are also considering the placement of a tiny home, you might want to explore the article on where to put a tiny home for valuable insights into this alternative housing option.
When deciding whether to rent or buy, you’ll also need to assess your personal circumstances. Renting may be a better solution if you need more flexibility in terms of being able to relocate quickly for work. On the other hand, you may prefer the security of buying a property and knowing you won’t be asked to move out by a landlord.