Deciding whether to buy or rent a property
While many people would prefer to own their own home, others prefer the flexibility of renting. Some people may rent in the short term while they save for a deposit to buy their first property while others choose to rent in the long term. This article looks at some of the pros and cons of buying a property compared to renting. The choice between buying and renting not only varies from person to person, but also depends on personal circumstances which can change over time.
Advantages of buying a property include:
- You can make alterations to your own taste.
- Have the security of your own home.
- If you have a mortgage, you will own your own home at the end of the mortgage term.
Disadvantages of buying a property include:
- You will be responsible for maintenance and insurance of the property.
- If house prices fall and you have a high mortgage you might find yourself in negative equity.
- If you need to move to another area, eg for work, you may need to sell the property. This may take longer when the housing market is slow.
- If you have bought the property with cash you will have a large amount of capital tied up in the property, money which is not available for other purposes without selling (or arranging finance).
Advantages of renting a property include:
- The landlord will normally be responsible for maintenance of the property.
- The landlord will normally be responsible for insuring the building.
- If you want to move you would typically only have to give one months notice to a landlord. This can be particularly useful if you need flexibility, eg, you might wish to move to a different area for employment.
- You can live in a property without long term commitment. This can be useful if you are new to an area and do not yet know which area most suits your needs.
Disadvantages of renting a property include:
- You will normally need to get permission from the landlord/agent before decorating.
- When rents are high it may be more difficult to save for a deposit to buy a first property.
- In some areas there is less choice of rental properties than properties for sale and you may find it more difficult to find a property which suits your needs.
- A rental property may not feel like “home” particularly if it is short term.
- If you rent in the long term you will never own your own home and will have to continue to pay rent.