The ‘To Rent or Buy a house’ is a debate I see furiously debated on social media often. I think its a hugely personal decision and depends on so many factors, affordability, location and stage of life. Yet I see so many people debating it with passion.
I thought I would hand it over to the UK Money Blogger Community to see what views they had. Will it sway you one way or the other?
Lets start with me though. I bought my first house when I was 24, back in 2001. The only reason I was able to do this was because I was with a boyfriend who has sold a previous property and we had that magic 10% deposit. Buying a property becomes so much easier when you have a another person to share the deposit with, the affordability checks and the subsequent monthly bills. Its also easier if you have a good indepandant mortgage broker, check out Trussle, if you use them we both get a £100 Amazon voucher bonus.
I have mortgage owned a house since then and am on the ‘Buy a House’ side of the ‘To Rent or buy a house’. In 20 years I have gained around 200k of equity, or the profit I would make through the sale of my house. I would not have this asset gain if I had rented for all those years.
But I am very restricted. I have tried to sell my house twice and it has failed to sell. I am now the sole owner, yeah, but of a big family house in the South East. Its too big for me and my children that live here 50% of the time. And despite having 200k of equity I also have 300k worth of a mortgage.
I plan to keep on throwing money at the mortgage to increase my equity as much as possible for 10 years and then sell up and hopefully buy a house outright, or with a small mortgage, with the equity somewhere near the coast and much cheaper than the home counties.
But I have always been of the view that renting is throwing money away, paying someone elses mortgage, making them money. Lets see what the UK Money Bloggers Say.
Hollie, my good friend from Thrifty Mum. If you’re looking to live with someone else, renting has my vote. You really don’t know someone, especially their money habits until you live together so renting is a good tool to try before you buy (into your relationship).
This is great relationship and financial guidance from Hollie. Extracting a partner from a mortgage is difficult, as I have experienced.
Emma from Make Money Without A Job talks about some key benefits of renting. She says, we need to stop this privileged argument that renting is ‘dead money’. Renting gives you so much freedom that owning might not allow you, not to mention the fixed cost every month instead of having to budget for boiler breakdowns, general maintenance etc.
Kate from Money Bites says buying a house is a huge commitment and it needs to be the right choice for you at the right time. The pressure of expectations, real or perceived can often push us into a decision, including proving that we’ve achieved a mark of adulthood. The rush to buy a house might also be to avoid paying “dead money” on rent. The “dead money” stereotype about renting ignores the benefits that being a renter can bring, including the freedom to choose where you live and how you spend your time and money.
Team Inbetween for a bit of Balance
Qin from Hey Money Talk is more balanced. He says whether you should rent or buy depends on your situation. It’s currently cheaper to rent in London than to buy a home so if you’re only going to be in the city for a few years for example, it might work out cheaper to rent, especially when prices are inflated by the stamp duty holiday. Being tied to a home also means that you might forgo opportunities to live and work abroad, or in other cities, as the logistics of moving will be more complicated.
But if you’re in a good situation financially, and you intend to stay in a home for a decent stretch of time, say 5 years, property can be a good way to invest your money as prices have tended to rise in line with inflation. For first time buyers, I would suggest to wait until the market settles down rather than buying right now, especially for flats. There are many schemes that will help you get onto the property ladder but they can end up costing you more in the long run.
When things in Life go Wrong there is more help with rent
Sara from Debt Camel is also balanced with her views. Anyone whose circumstances are secure and not likely to get worse should buy a house if it looks genuinely affordable and they are not likely to need to move in the next five years. But you get almost no help from the benefits system if anything goes wrong in your life – you get a lot more help with the cost of rent, so stretching too far can be disastrous.
David from Money for Monday raises a good point about other things that we ‘rent’. When push comes to shove, it depends on your current situation. I have been a renter and lodger and at the time these were the best option for my situation, I was single and didn’t know where my work would take me or whether I would meet someone that I would eventually move in with,
I’m now a family man and a home owner which now suits that chapter in my life. There are some that call renting dead money, but there are a lot of things that we probably spend a lot of money on every month that we don’t see any benefit from like high mobile phone tariffs for one. We have to choose what is right for us, regardless of what others might think.
Emma from Bee Money Savvy says buying a house was my first big money goal and pushed me to have better money saving habits. I love the freedom and responsibility of owning my own home; decorating how I want to decorate, having builders/plumbers/etc round when it suits me, and upgrading and increasing the value of my home. It all feels like an important life lesson for me.
Eileen from Your Money Sorted says I’d definitely encourage people to purchase a house as soon as they are able to. Renting has it’s place but as part of a long-term plan to build financial security buying a house is often a good idea. That said, I would encourage people to buy a house that they can easily afford and get the mortgage paid off quickly, rather than being tempted into buying a house with a mortgage so large that they can’t afford to live a full life!
Scott is Mortgage Free!
Scott from The Grumpy Git has a powerful personal story. Buying for me has proved to be the best financial decision I have made. I bought my first property in the Isle of Man at the age of 30 for £60K and rode the rising property market plus overpaying my mortgage to a 3 bed semi before downsizing and relocating to Edinburgh and buying a lovely one bed ground floor flat outright with no mortgage in June 2014.
I have saved £60K in rent and it’s risen in value by at least £30K in 7 years in Edinburgh. It’s a no-brainer for me. I have a lovely home I can call my own with no mortgage and I am sitting on a goldmine which is rising in value by about 15% a year in a capital city.
Gemma from The Work Life Blend is all for buying a house if you possibly can. Borrowing money has never been cheaper which can help with affordability. I always try to stretch myself but I also stress test the amount I’m borrowing to ensure I can still afford it if the interest rates increase. You have to remember to factor in all the other costs such as stamp duty, legal fees, moving costs etc. I also love the fact that you can overpay on your mortgage and get closer to owning your house outright whereas with renting you’re benefiting the landlord!
Thank you to everyone who has contributed to this article, there is lots to consider with renting or buying, I appreciate the balanced views and experience from the UK Money Blogger community.