Here, we look at the potential benefits and disadvantages of each option.
Renting a home gives you lots of flexibility. As a tenant, you’ll usually have a fixed-term contract that sets out the length of your tenancy and the terms and conditions that apply to it.
Once the term ends, you may want to enter a new fixed-term contract (if your landlord is happy to do so) or move home. If you don’t like your rented home, you can find a new one. And if you do like it, you can stay.
Moving is easier when you rent, as there’s no need to find a buyer or use a conveyancer. You can tell your landlord you’re moving out (giving the right period of notice) and leave it up to them to find a new tenant.
Another benefit of renting is that if something big goes wrong with the property (such as a burst pipe or a broken boiler), you typically won’t have to pay to fix it. These expensive repairs are usually the landlord's responsibility.
If you have a repayment mortgage, the money you pay each month for your mortgage brings you closer to owning the property outright, which can give you more financial freedom.
Over time, you build up home equity. Let’s say your house is £250,000, and you have £150,000 left on your mortgage. Your equity is £100,000.
You may also be able to sell the property for a profit. However, it could sell for less than you bought it for.
If you own a property, you have much more freedom to alter it than you do when renting. You may need planning permission or building regulation consent to make big changes. But you can paint the walls, hang up pictures, and fit a new bathroom or kitchen without anyone’s permission.
Your landlord will have the final say on any changes you want to make to the property, which means you may not be able to do things, like put up shelves and pictures without permission.
You may also be subject to rent increases, and your landlord can choose to sell the property.
Finally, the money you spend on rent goes to the landlord, rather than towards your own home ownership.
Buying a home means putting down a deposit, so you’ll need money available for this.
The minimum is 5% of the property value, although if you can afford more, you could have a smaller mortgage, which would mean paying less interest. There are lots of extra costs associated with buying a property too. You’ll need money to cover things such as conveyancing fees, mortgage valuation fees, Stamp Duty (if payable), and home insurance. You may also need to extend the lease if you buy a leasehold property.
You might also have to pay monthly ground rent and service charges on some properties, such as apartments. This is to cover the general upkeep of the whole building.
If you take out a mortgage, you must be able to afford the repayments. If you don’t make the repayments each month, your home may be repossessed.
There’s no guarantee that the value of your property will go up, which means that when it comes time to sell, you may not get the amount you want.
While there’s no certainty when you buy a property, doing as much research as possible will help you make the best decision.
