We all know how difficult it is for young people to get on the property ladder (and even almost-young people like me), but is it really something that you need to do? Renting is always an option, and comes with its own unique set of pros and cons, but with rental prices soaring, is it time to look into putting roots down by buying a house?
I’m in a weird position. I actually bought a three-bed house for £29,000 back in 2002. After selling it for £75,000 a few years later, I bought another property, and signed over half of it to my then-girlfriend. Once I split from her though, I found myself with just £7,000 and an old Peugeot 206 that are both long gone now. What that means for me in the present day, is that as a self-employed non-first-time buyer, I don’t qualify for any of the schemes that are aimed at making house purchasing more accessible.
This stalemate I find myself in has led me to wonder whether renting might be best for me after all. By all accounts, it seems that actually buying one’s house is more of a British-type thing than you might expect, with many on the continent actively choosing to rent instead of being tied down to a long-term mortgage. Whilst they may have a point, renting isn’t all freedom and easy living. Here’s just a few things to consider for those still on the fence (hey, get off it if you don’t own it!).
Finances
We may as well get this elephant in the room out of the way first. Buying a house is expensive. Buying a nice house that you’d be happy living in is VERY expensive. Beyond the deposit, stamp duty and legal fees that you can expect to fork out, you’ll also have to factor in general maintenance.
Yep, no longer can you call up the landlord to fix your boiler or a leaky roof. Any repairs to your home is entirely your responsibility. If you don’t have a relative or friend that’s handy with a toolkit, these can be considerable costs.
That’s not to say that you should rule out buying though. With rental prices being as high as they’ve ever been, you might find that your potential monthly mortgage payments are similar or even less than what you’re paying in rent. With this in mind, calculating your potential payments should be your first port of call. Looking at your finances long term, your rent payments are just lining your landlord’s pockets, whilst any mortgage payments are investing in your future.
Plans for the future
I work from home, have a young family that are settled in local schools, and a network of friends and relatives in the same town. I’m unlikely to need to move anywhere else (even though I’d love to!), so buying would make perfect sense for me.
If your future is a little hazy though, it might be worth holding off for a little longer until your plans crystallise into something solid. Anyone seeking a career change down the line may be better suited to renting for the time being. Even if you’ve already moved to take on your dream job, but hanker after returning to your hometown or abroad one day, you should probably ask yourself when you’d like that ‘one day’ to be.
Singles may also be more cautious when it comes to buying property. Suddenly jumping on a plane to live with that Italian girl you met online is less of an upheaval when you rent.
Passive income from rental properties
Using your funds to invest in rentals is a great idea for those who can afford it. Over time, you can build up a portfolio of properties which can bring in a healthy-looking passive income.
Few investments allow for truly passive income, however. You’ll still need to keep an eye on your properties, and make sure that you have insurance to cover any unforeseen losses or damages. If you click here, you can read more on landlord insurance for multiple rental properties.
Career
If you work for a company that routinely lays off several employees every couple of years, you may find yourself in a sticky situation down the line if you commit to an expensive long-term mortgage. The same applies to any industry that has peaks and troughs: if you don’t feel secure in your employment, then perhaps it may be best to rent until you do. With a number of high-profile closures over recent years, even those working for big-name high street brands should probably exercise caution.
Try to think about how much money you’d be likely to have in a worst case scenario, and then figure out how affordable that mortgage really looks.
Security
Although they have to give you notice, a landlord can decide to throw you out and sell their property whenever they like. If you think you’d struggle to find another rental property in the area you need to be in, then you may want to look at purchasing a home for greater security.
Family
Whether you already have children or not, if you’re in a relationship and around a certain age, then you may not know how many kids you’ll end up with. Unless both of you are adamant that you’re not having any extra children, then you’ll need to be careful not to set down roots in a house that could quickly become too small.
Even the best laid plans can go awry when unexpected triplets arrive, or even an elderly relative to look after. If you do prefer to buy still, try opting for properties that have scope for extensions should you need them in the future.