Is Renting Really Worse For You Than Buying?

Getting that first foot on the property ladder is hard. For some people saving up for a down payment may even seem like an impossibility. Whilst there are some clear advantages to owning a property such as having more freedom over improvements and being able to potentially sell it for a profit, there are some benefits to renting that rarely get mentioned. Here are some of the main pros and cons when it comes to renting vs buying.

Rent vs a mortgage

Both rental properties and mortgaged properties generally require a deposit. However, in the case of rental opportunities, these deposits may only be the equivalent of a couple months’ rent. With a mortgage, the deposit or down payment can be huge, in some cases up to 20% of the property’s value. Most people can’t afford this mortgage deposit without saving up for a long time or alternatively getting money from other people. Renting is often far more realistic for many people that don’t have that money behind them.

The main downside of this is that the monthly payments can be cheaper for a mortgage than renting. If you’re relatively young, you may be able to get a mortgage repayment of a couple hundred pounds a month. If you were renting, you might end up paying three or four times that amount on the same property. Landlords will often be paying mortgage and so will want their rent to cover this cost, which means charging tenants more.

That said, interest rates are likely to rise on these monthly mortgage payments over time. Whilst landlords may increase the rent, you’ll most likely get more warning and it won’t be so dramatic. You also have the option to find another property when the rent rises. When the interest rate rises on your mortgage, you have the option to sell up and pay it off, however you’ll still have to cover the raised interest.

Home improvements

Without a doubt, buying a property gives you more freedom over home improvements. You own the property and so can choose everything from the colour of the walls to the type of flooring without having to ask a landlord for permission first. In some rental properties, you might not even be able to hammer a nail into the wall to hang up a picture. Others may be more flexible, but generally they will draw the line when it comes to extensions and conversions.

Of course, that doesn’t mean that you can’t still live freely in a rental property. There are many ways that you can turn your rental into a home without any major remodelling. Besides, even as a homeowner, you’ll most likely still have to ask permission from your local planning committee when it comes to most remodelling jobs. You should aim to get to know your landlord and earn their trust. In most cases, this should gain you more freedom over home improvements (so long as you’re not painting the whole house pink or requesting something equally controversial).

Maintenance

When you buy and own a property, you are in charge of its maintenance. If the roof starts leaking or mold starts appearing on the walls or there’s a plumbing fault, you have to pay to get it fixed. Generally in rented properties, such maintenance costs will have to come out of the landlord’s pockets. This can save you a lot of money in the long run, especially in an old house.

There are of course exceptions. If you’re renting a property and cause damage to it yourself, you may be expected to pay for repairs or it may come out of your deposit. And unless you have property insurance, damage from theft or fire may not be covered either. However, compared to the maintenance responsibilities that a home-buyer has, these duties are very minimal.

Moving home

When it comes to moving home, there are some major pros and cons in each case.

When selling a home that you own, you’ll most likely be able to make back the money that you’ve spent on it. If you’ve done any remodelling or just so happen to live in an upcoming area, the value of your home will have risen and you could end up making a big profit. In a rental home, you may get a deposit back – but that’s about it.

Selling and buying a new property is a much more complicated process than simply moving to another rental opportunity. Not all properties will be easy to sell and you may have to invest in the help of an estate agent to help push the process along. You then have other costs to consider such as hiring a solicitor to hand over the paperwork to the next owner as well as potentially using a mortgage broker to find the best mortgage deal. When renting you simply have to deal with a landlord. You may be able to go through an estate agency or tenancy agency, who may pay a charge for using them, but the costs are unlikely to be anywhere near as much as selling and buying a property.

So which is better?

Renting and buying both come with an equal amount of pros and cons making them both suitable options. Generally, if you’re looking for a short term and cost-efficient solution, renting should be the way to go. If you’ve got some money behind you and you’re looking for a more long-term solution, buying a property is probably the better route to take for future plans. 

In both cases, you may be able to find the perfect home for you by shopping around and being diligent. It also pays to go with the right people. A good landlord may offer you more freedom to make home improvements whilst not overcharging rent. Similarly when buying a property, choosing a trusted seller, hiring an experienced surveyor and choosing a credible mortgage lender can all save you money and hassle in the long run.

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