Published: 24/06/2022So the question is....rent or buy a home in London ? Either way, you’ll need a significant amount of money each month. While renting is less expensive in the short term, buying a house is more affordable in the long run. You have a sense of stability in a house you own, but not the freedom you would have if you were a renter.
Renting is more expensive than purchasing a property in terms of monthly housing costs. The HomeLet Rental Index states that in February 2022, the average rent in the UK was £1,069 per calendar month. On the other side, the average home cost £277,000, and the monthly mortgage payment was about £750. Depending on the region of the UK you want to live in, the calculation varies. In Northern Ireland, the average monthly rent is £705, compared to £1,757 in London. Many folks do not have a choice between the two since they are unable to afford to climb the property ladder. The price of housing has climbed faster than wages during the last 20 years. The proportion of people aged between 25 and 34 who own a house was 55% in 1997 and is now closer to 34%, according to the Institute for Fiscal Studies. Some individuals will never be able to afford to purchase a home, particularly if they don't receive any financial assistance from the Bank of Mother and Dad.
What is more financially viable?
It's likely that renting a home will be simpler for you than buying one if you're a first-time home buyer. This is largely because you won’t have to stump up such a large deposit to rent. Nevertheless, as rental costs rise, it is becoming more difficult to accumulate the necessary funds for a down payment should you ever decide to buy.. In May 2022, rents reached another record high to an average £1,103 per month according to the Homelet Rental Index. That’s an annual increase of 10.6%.
According to Hamptons International estate brokers, it may take you nearly 10 years to save up a 15% deposit if you decide to buy a house.. This is a difficult task when savings rates are low and many wages are stagnant.
Benefits of renting
- Short-term leases can last as short as three to six months, and you have the choice to leave after that period if it doesn't work out for you, unlike with buying.
- You have the freedom to relocate to a variety of homes in various locations.
- Renting makes it easier to move out than buying, so you can adapt if your circumstances alter.
- You are not responsible for things like a broken boiler because you don't have to worry about maintenance expenditures as you do when you own a property.
Benefits of buying
- A landlord cannot kick you out. In the long run, you will have the security of a home.
- The decoration decisions are totally up to you, without restrictions or a deposit to protect.
- Whilst you have to pay for the repair works, the fact that you have control over their completion means it can be done much faster than going through a landlord, who may be unresponsive.
- Mortgage interest rates remain historically low, despite having risen recently. Also, you will own the entire house after your mortgage is paid off.
- Although you should view it more than a residence than an investment, if property values rise, you will gain when it comes time to sell.
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