Renting vs buying

Both renting and buying have their own unique advantages, and the right option will vary from person to person depending on their needs. Renting, for example, allows you more expendable money in the short-term, whereas owning a property outright provides homeowners with a long-term sense of security.

Buying a home

Advantages of buying

1. Your monthly payments are contributing to an investment. 
2. Most homes increase in value over time and buying has the potential for capital growth.
3. When you buy a property, it is legally yours, giving you greater freedom in its use without the restrictions of a landlord.
4. Legally owning a property also gives you more security as you cannot be evicted by a landlord. 
5. You gain creative control of the property and can alter it how you see fit, from small interior changes to larger renovations. 
6. You will have the option of renting out your home in the long-term with a buy-to-let mortgage. This enables you to generate income from the property.
7. You own your home at the end of the mortgage’s term, reducing living costs in later life. This can be especially important when you’re retired and no longer earning.

Disadvantages of buying

1. Getting on the property ladder is expensive. The costs of homeownership include a deposit, survey fees, solicitor costs and stamp duty. 
2. There are more ongoing costs of buying than with renting, including insurance and the costs of maintenance and repairs.
3. If you’re on a variable rate mortgage, you’re subject to fluctuations in your mortgage repayments depending on interest rates. 
4. You will run the risk of not making any profit through resale. This can be caused by external economic factors such as a recession or inflated interest rates.
5. You’ll likely become dependent on selling your home before being able to invest in a new one.
6. Falling behind on your mortgage repayments can cause serious financial implications.
7. The process of moving can take time, meaning buying may not be the right option if you need a new property quickly. 
8. In areas where property prices are very high, monthly mortgage repayments may be higher than renting.
9. The cost of buying a home is expensive and property prices are up year on year. It may be complicated to get out of a joint mortgage if a relationship ends.

Renting a home

Advantages of renting

1. Letting a property is often much quicker than the process of buying a house. 
2. Renting gives you the opportunity to live in an area you would otherwise be unable to afford.
3. The cost of moving between rentals is very low. 
4. You can often find properties that cover bills, meaning all your costs are consolidated. 
5. The only insurance you’ll have to cover is the contents of the home, while all maintenance work is the landlord’s responsibility.
6. With many property costs covered by your landlord, you may have more disposable monthly income.
7. You have greater flexibility to move at the end of your tenancy.
8. There’s no risk of losing money on the property if the value depreciates.

Disadvantages of renting

1. You are bound by the rules of the lease agreement, impacting the way in which you live in a property. For example, no pets allowed. 
2. You won’t be able to make changes to your temporary home without the consent of the landlord.
3. There is no full guarantee that your lease will be renewed when the tenancy expires.
4. You have little control over rent price increases. 
5. You have far less security than with homeownership, for example being forced to leave if your landlord chooses to sell the property.
6. If you choose to always rent, you will still have property costs in retirement. Many homeowners have paid off their mortgages by retirement and so living costs are lower.

Is renting or buying better? 

Whether renting or buying is a better option for you depends on what you want from a property. 

Renting is often cheaper than buying a house; the costs of buying are higher and as a homeowner you’re responsible for the costs of maintenance and repairs. Renting also offers more flexibility, which may be a good option for those looking to move around often. 

However, owning your own home can offer fantastic long-term returns for those looking to make a financial investment. It also offers greater security.