Is it better to rent or buy in the UK

Renters
Homeowners

Is it better to rent or buy in the UK

There’s undeniable pressure to get your foot on the ladder. Having spent your 20s or 30s slogging away at work, you’ve *finally* secured a decent salary that gives you a bit of spending power. The assumed next step? Settling down and buying a house.

However, just because you’re able to buy, doesn’t necessarily mean you should.

There are huge pros and cons to both; stability vs flexibility, short term gain vs long term investment - to name just a few.

So, when should you buy instead of rent? When should you rent instead of buy? That question is a biggie.

To help you along the way, we’ve weighed up the pros and cons of renting and buying.

The advantages of buying over renting

A house to call home…

  1. Money in your pocket: Month on month, your mortgage repayments bring you ever closer to owning a house…rather than boosting the landlord’s bank account. Hands down one of the biggest benefits of homeownership vs renting.
  2. Making your place your own: You don’t need the landlord’s permission to redecorate or have pets in the property. You have the freedom to do what you want and put your own stamp on the place. On top of that, any aesthetic changes you make might add to the value of the property.
  3. It’s an investment: If house prices rise, you could make a profit when you come to sell it. This could enable you to climb up the ladder and buy a bigger place next time round.
  4. No more packing up every year: No more end of tenancy cleaning woes, tricky landlords or deposit disputes. You can stay put for as long as you like.
  5. Improve your credit score: Every on-time mortgage payment will help improve your credit score. Read ‘How to boost your credit score in 11 simple steps’ to find out more.
  6. Save money: Depending on the property and the area, your mortgage payments might actually be cheaper than paying rent!

The disadvantages of buying over renting

Money, money, money…

  1. It’s far from cheap: The cost of buying a house cannot be underestimated, and one of the biggest upfront fees is the deposit; expect to pay around 20% of the purchase price. However, it’s not all doom and gloom. If you need help with the deposit you could look into setting up a Lifetime ISA. Find out more on gov.uk here.
  2. Extra costs: On top of the deposit and mortgage payments, there are a few other costs that might sway you in the renting vs owning a home debate. These include legal fees, surveys, and valuations. Find out how much it’ll really cost you in ‘Things to know about as a first-time buyer’.
  3. Unexpected bills: And the money doesn’t stop there! It’s likely that the property will need a bit of TLC from time to time, whether that’s fixing a leaky tap or something much bigger, such as a broken boiler. Be prepared to have to cover these unexpected (and unwelcome) costs.
  4. It’s a big commitment: Crucially, you must stick within your financial comfort zone and only borrow what you can afford. If you run into serious money troubles the lender can repossess your home.
  5. Unpredictable housing market: Don’t assume you’ll make a profit on the house. If the market falls you might struggle to sell it.
  6. Location: It often takes months (and months) to sell a property, it’s not something you decide to do lightly. Therefore, you need to be confident that you’d like to stay living in the area for at least a few years.

The advantages of renting over buying

It’s not all ‘money down the drain’, there are a few reasons why it’s better to rent…

  1. Quick process: Yes, the rental market can move quickly, but it’s often a much smoother and easier process than buying.
  2. No unexpected costs: Heating broken? Damp issue? That’s not your problem, the landlord must pay to get these issues fixed (and deal with the faff of finding a reliable contractor who’s not going to rip them off…) Check out 'UK tenants rights on repairs - things you should know while renting'.
  3. Initially more affordable: You might be able to afford to rent a better property in a nicer area than if you were buying (especially if you’re looking in London). A big plus when considering whether it’s better to rent or buy. Don't forget there are some costs of moving when renting. Check them out here 'Cost of moving house when renting'.
  4. Flexibility: Renting gives you freedom and flexibility. With tenancies often running for a year or two, you can move around and find where suits you best. London to Lisbon - don’t mind if I do…

The disadvantages of renting over buying

You’re probably well versed on this one, but here’s a refresher.

  1. Paying someone else's mortgage: Each month you pay a chunk of money to your landlord, rather than towards owning a home.
  2. Lack of control: You’re at the will of the landlord. If they decide to sell the property or don’t want you renewing your contract, you must move out.
  3. Rent increases are common: There’s nothing stopping the landlord from increasing the rent at the end of your tenancy and pricing you out. To put yourself in the best possible position, read our tips on ‘How to negotiate rent’  and 'How much can a landlord increase rent?'
  4. Restricted as to what you can and can’t do: The landlord has the final say on what you can or can’t do to the property, often giving you little room to redecorate and make it feel truly your own. Check out our 10 tips to make your rental flat feel like home.
  5. Deposits: Each time you move to a new rental property, you must put down a new tenancy deposit. And there’s a high chance you’ll have at least something chipped away from the total, whether that’s the odd scuff marks or something much bigger. Get clued up and read ‘5 things you should know about tenancy deposits’.

So, buying a house or renting - which is better?

Ultimately, it depends on what stage of life you’re at and what your priorities are.

In the long run, despite the significant upfront costs, it’s often cheaper to buy a house than rent. So, if you can afford it and you want to start building your future, homeownership could be the right way to go.

However, if you’re not ready to commit and you enjoy the flexibility and freedom of moving around, renting might be better than buying.

Decisions, decisions, decisions…

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