To rent a property or buy? A question that many people will have to answer for themselves at least once during their lifetime.
Deciding which is the best option is not always an easy process and the age-old myth that buying is always better than renting is simply not true.
It all comes down to individual preferences and circumstances. Both options have their benefits and their weaknesses, too.
Here we will explore some of the reasons why renting can be a great option and even better than buying.
Buying a house is typically a long term commitment. This is great if you know for sure that the house you bought is right for you and in a location you are happy to reside in for a long time. But often situations change. With renting a property there is much more flexibility. If your preferences or personal circumstances change, it’s much easier to look elsewhere for a new place to call home.
2. No Maintenance/Repair Bills
It’s usually the landlords responsibility to maintain the property to a high standard. This includes repair and maintenance costs such as fixing a broken boiler or a leak in the bathroom. When owning a house, all of these things will of course have to be dealt with personally.
Living with housemates may not be everybody’s cup of tea. But for many, living with other people is seen as a great benefit of renting a house. This kind of living arrangement can allow you to meet new people and form life-long friendships. It also means you can have some people to share the bills with!
4. Cheaper Urban Living
In locations where house prices are high, renting provides an opportunity to become a resident of the area without the many costs associated with buying a property. An example here in the North East would be a young professional looking to rent a property in Jesmond or Gosforth – allowing them to have easy access to the city centre and their place of work but without the worry of having to put down a large deposit and buy a place.
5. Lower Insurance Premiums
Renters insurance is always going to be cheaper than homeowners insurance, for the same property. This is because homeowners insurance includes cover for the structure of the building as well as the personal contents within the property. Renters insurance protects the individual’s personal belongings – which is all that is needed seeing as the actual property is not owned by the tenant.
6. Much Smaller Down-payments
Coming up with a deposit to buy a house is the main stumbling block for those looking to get on the property ladder. A minimum of 5% of the value of a property is usually needed as a deposit when buying, but often it’s advised to save up even more and make a larger down-payment, as explained here in this Which.co.uk article.
With renting, the money needed upfront is much, much lower. A deposit will be required, usually amounting to four or five weeks’ worth of rent. Tenancy deposits in England are actually capped at 5 weeks’ worth of rent, if the total amount of rent per annum is below £50,000.
7. Money Management
If you choose to rent rather than save up for a deposit to buy a property, you can consider other opportunities for investing your money. Renting also means you can reduce the amount of debt you owe, by avoiding taking out a mortgage.
Doing this may only be preferable for a short amount of time. Many people look to rent initially and save up for a deposit to buy a property at a later date – but this is not always the case. Some people prefer to never be tied down to a property and use their money in other ways.
8. Avoid Being Affected by House Price Fluctuations
Buying a house can be a great long term investment. There is the potential to buy a property and then sell it for a significantly higher amount in 20, 10 or even 5 years from now.
But house prices can also go down. Unfortunately, in extreme cases, some people have been left with negative equity after buying, where the value of their house drops below the outstanding balance which remains on their mortgage. This means that the individual would owe more to their lender than what their property could be sold for and is without doubt an undesirable situation.
With renting, the fluctuations in house prices become largely insignificant.
To Rent or Buy?
As mentioned earlier, deciding whether to rent or buy will come down to personal circumstances and preferences.
Situations may change. Renting may be a good short term strategy for some, with the ultimate aim of getting on the property ladder in the near future. Regardless, the benefits of renting are numerous and hopefully this article has helped explain some of the main reasons why you may consider this approach over buying.