To Buy or Rent

Whether to  Buy or Rent a property has long been a dilemma.

There is no definitive answer but with careful consideration you can choose what is right for you.

The choice is a very personal one based on your individual situation. Some of the elements to consider are finances, lifestyle and life goals.

To get a balanced view start by weighing up the costs of each based on your income, your savings and how you live.

Check out the local area of where you are planning to buy or rent. Try Researching  a few options for properties that you may consider suitable and then start adding up the costs.

Considerations when Buying a Property

Once you start  thinking  about an opportunity to get on the property ladder  book an appointment as soon as possible to speak to a Mortgage advisor and ask for a Decision in Principal (DIP). This is a great way to find out what you can afford and gives you a really good idea of the properties that you can start looking at.

When considering whether to  buy or not be realistic about how much deposit you could put down on a property. Ideally 10% of the cost of the  property you have in mind so as I say make sure that you feel comfortable to put this amount of deposit forward.

Be sure to discuss with you Mortgage advisor the cost of valuation, arrangement and broker fees.

You should also consider setting aside around £2,000 for Conveyancing fees which really are an essential.

Also make sure to factor in the cost of Survey fees and Estate Agent fees as well.

And Don’t forget Stamp duty – this will be the biggest additional cost when purchasing a home. You may be exempt as a First time buyer, or if the price of the property you are buying falls below the threshold as detailed below but do check it out.

As I say – Do your research and find out how this will affect you.

Property price Stamp duty rate
£0 – £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1,500,000 10%
£1,500,001 and over 12%

Depending on your circumstances you may also need to factor in the purchase of furniture and white goods for your new property. This can be a considerable expense based upon your tastes and the size of the property to be furnished but it really does need to be considered as an additional cost to be incurred at the same time as the purchase of the property goes through

Other costs you may want to consider could be removal services if you already have furniture and white goods that you are planning to move with you .

It is also a good idea to think about potential renovations. If you are planning any changes to the property from a simple redecorate project to extensive building work (making  sure to check out local planning permissions if you are going down this route), and  get a rough estimate on how much this is likely to cost you. Even if this is going to be a little way off in the future you do still need to factor it in to the overall cost and consider how much work you would be prepared to do to your new home.

You do also need to  think about insurance and the ongoing costs of utility bills and any service charges that the property may incur.

Considerations when Renting a Property

In the UK Rents are usually quoted as price per week (ppw) or price per calendar month (pcm).

Remember a calendar month does not equate to four weeks rent. If you wish to calculate a yearly  rent multiply the ppw by fifty two or the pcm by twelve.

Recent changes to Tenant fees and deposits – A new law on residential letting fees, which came into force on 1st June 2019, means it is now illegal for landlords and estate agents to charge renters additional fees, such as admin fees for which they were previously able to charge.

The Tenant Fees Act 2019 means that for properties in England, in addition to the rent, letting agents can only charge tenants the following permitted payments.

  • Holding Deposits (up to a maximum of 1 weeks rent)
  • Deposits (up to a maximum of 5 weeks rent for annual rent below £50,000 or 6 weeks for annual rental of £50,000 and above).

For the  majority of rentals  in the Uk tenants are likely to be liable to pay all utilities like water, gas, electricty, broadband, TV Licence and Council Tax. Some tenancies may include  a range of utilities as part of the price but it is very rare for the agreement to cover the cost of all utilities that the tenant uses .

Check your Tenancy Agreement.

Is it Smarter to Rent or Buy Right Now?

So now that  you have weighed up the financial costs or buying versus renting you also have to consider how this fits into your lifestyle and ambitions?

Does your lifestyle plan see you staying in one place for a substantial period of time  or are you more likely to want to move around?

This can completely change the outcome of your decision even if you are financially ready to buy a property.

In general, renting is better for short term accommodation while buying a property is a much longer term consideration.

What could be the Reasons For Me to Rent

No down payment needed

Insurance tends to be less expensive

Ongoing maintenance is not your responsibility

Much easier to move on either to a different property or different area


So why do people want to become homeowners?

Home ownership offers stability especially if you have or are considering a family

The money you spend on housing is going towards building equity – houses nearly always increase in value over a period of time.

It can create an opportunity to own a property outright by the time you retire

Owning you own home offers financial stability, financial strength, a permanent home and a sense of community


Final Considerations

When considering whether to buy or rent always look at the whole picture and remember that it is important to consider your lifestyle choices and future ambitions.

Renting is never a waste of money as you are simply paying for a place to live without much of the responsibility that home ownership may bring. But it may not offer the stability and sense of belonging that you desire.

This is simply a guide to help you consider what is best for you “renting or buying”.

Always seek professional advice and use the many tools that are freely available to assist in your decision making.

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