There are times when it’s better to rent and there are times when it’s better to own a home. This post compares the pros and cons of renting vs the pros and cons of home ownership so that you know when to choose each.
The pros of renting
The upfront costs of renting are much less than buying a home, making it a much more accessible option for many people. For those who need to move in a hurry and don’t have much money saved up, renting is often more convenient.
Renting is also much more suitable if you’re looking for short-term accommodation. There are leases out there lasting as little as 6 months that can be useful if you’re looking to take up temporary work somewhere or studying for a short period.
The cons of renting
Unlike mortgage payments on a house, there’s no chance of getting back any of the money that you pay towards rent. You’re lining the pockets of a landlord, who ultimately has control over the future of your home.
This leads to probably the biggest downside of renting: the restrictions. Because you don’t own your home, you cannot make your own home improvements or take on a lodger. You may even be restricted when it comes to owning pets, smoking or throwing parties in your home. A landlord can also choose to raise your rent or even evict you at any time (although they do legally have to provide some warning in advance).
The pros of home ownership
Most people cannot buy a home outright, which means taking out a mortgage. However, every mortgage payment that you pay goes towards building equity. If you’re spending £600 on your mortgage each month (minus interest), you’ll have access to £21,000 in equity after three years. And there’s a chance you’ll gain even more equity over the years as your home appreciates in value. That’s money you can get back if you sell your home or opt for an equity release.
Home ownership also gives you total freedom to do with your home as you please. Leasehold restrictions and planning restrictions aside, you should be able to remodel your home the way that you want to. You can also take on lodgers and set your own house rules.
The cons of home ownership
Home ownership costs a lot of money upfront. As property prices increase, fewer people can afford to save up these costs. For many young people that want to move out of their parents’ home, there’s often a difficult choice as to whether to stay put for a few years in order to save up a deposit or rent somewhere so that they can move out quickly. If you can’t stick around your parents house or have to pay high rent to your parents, saving up a deposit may not even be an option.
Owning a home can also cost you more in the long run when it comes to maintenance. When renting a home, the landlord pays for structural repairs in most cases. When owning a home, you have to pay for these repairs. Of course, maintenance costs can vary depending on the condition of the property.
Should you rent or buy a home?
Buying a home is a better investment. In most cases, if you are able to save up a deposit to buy a home, this is the option you should choose. Saving up a deposit once you’ve started renting is much more challenging, so if you can buy straight away, you should.
Renting is a better option if you need to move fast or only want to stay somewhere short term. Most mortgage lenders require you to stay at home for a minimum period of time before selling, and even when you’re able to sell, you may not have built up enough equity to afford to move.