Renting versus buying a property
16 Feb, 2018
Landlords grow rich in their sleep – John Stuart Mill
“Should I buy or should I rent” is something that a lot of people ask themselves. Purchasing a house is one of the biggest financial decisions that one makes. Hence, it is crucial to get it right. The housing market in U.K has seen some significant changes in the past decade. The property prices, mortgage rates, and other economic conditions have witnessed considerable fluctuations.
The latest trend shows that there has been a rise in property prices and London by far is the most expensive. There are various factors that affect the housing prices and rentals in each city. However, it is important to consider the pros and cons of both before you take any decision. Let’s have a look -
Benefits of owning a property
- Once you have paid off the mortgage, your home will be yours and you will not have to worry about moving out.
- In general property has always increased in value in the long term.
- You can increase the value of your property by making some home improvements so that in future if you plan to sell, you will get a good ROI.
Downside of owning a property
- Purchasing a property is a big investment and before you take that plunge, you need to be sure that you can afford it. Interest rates on mortgages may fluctuate and you should be prepared for a rise.
- As an owner of the property, you will have to set out a budget for the maintenance of your property.
- Depending on the city you live in, there is a possibility of fall in your property value due to availability of stock, market sentiment, economic downturns, and political instability. This can make it difficult for you to sell the property.
Benefits of Renting
- You have a flexibility to move as it is a short-term commitment.
- Landlord is responsible for the house maintenance cost.
- Even if the market sentiment is negative, and the prices fall, you don’t lose a penny.
- Renting accommodation is quick than shifting into own house which can take months.
Downside of renting a property
- If landlord decides against renewing the contract, you will have to look out for another property to rent out which can be a big hassle and a costly affair.
- You cannot make changes to the property according to your taste.
- There is no financial gain or tax benefits.
So, whether you buy or rent it all depends on your local housing market along with your personal circumstances but to own a home is still the ambition of most.