Renting vs buying: which is best?

• A greater choice

  There are a wide range of properties available on the rental market, from studio flats to million-pound properties, all of which are available to move into without having the finances in place to take on a mortgage. Although you will normally need to pay a deposit before you move into a rental property, this is usually four or five weeks’ rent paid in advance, and nowhere near the sums needed for a deposit needed when buying. This means the world is your oyster when it comes to choosing where to live.

• Greater freedom to move around

  When you move into a rented property, long-term tenancy agreements start from as little as six months, which makes it easier to move around at short notice, should you need to do so.

• Additional costs are covered

  When you buy a house, covering the mortgage payments is only part of the story, and you’ll need to cover additional costs such as buildings insurance and any maintenance or repair costs. If you live in rented accommodation, these costs are usually covered by the landlord, which means they foot the bill for any broken-down boilers and burst pipes. You may even find utility bills are also included in your monthly rental payments.

• You don’t need furniture

  Furniture can be another big expense when moving into your own place, but you don’t necessarily need any when renting, as you can choose to take on a place that is fully or part-furnished.

• You’re not investing your money

  One of the major downsides of renting is that the money you spend on rent is not going towards your own mortgage, meaning you’ll have no investment to show for all the cash you put in.

• A lack of security

  While renting offers the freedom to move around when and where you like, the flipside is that there’s no guarantee you’ll be able to stay in a property once your contract expires. You could find your contract won’t be renewed as the landlord wants to sell the property, meaning you must move from your home at the end of the agreement.

• Decorating could be a problem

  As you’re living in a property that you don’t legally own, you won’t be able to make changes or redecorate without permission. And if you are given permission to make any improvements to the place, you’re paying to increase the value of someone else’s property, effectively using your money to increase the value of their asset.

• There could be restrictions

  Landlords are largely free to choose who lives in their property, so you might find that you’re not able to move into a place that has restrictions on pets living there, for example.

• You’re making an investment

  The most obvious benefit of buying a home is that you’re investing in an asset that could well appreciate over time, and one you’ll own outright once the final mortgage payment has been made.

• You could make money

  Property prices usually increase, and if the value of your home rises over time, any additional money is yours once the mortgage is paid off. Known as equity, this money can be used as a deposit again if you trade up, or for you to pocket if you decide to downsize.

• You can remodel and redecorate as you please

  When you own your own home, you can decorate it to suit your own tastes and even alter it to better suit your lifestyle. This means that your house can potentially grow as your family grows, as you can make extra space by converting the loft or garage, or by adding an extension. Always make sure any necessary planning permission is in place before making any alterations, particularly structural ones.

• You can live there as long as you like

  So long as you can keep up with mortgage repayments, you’re free to live in your house for as long as you want it. This is why buying is often seen as more secure than renting. One exception to this is if you take on a leasehold property, whereby you don’t own the building outright, and only have the right to occupy it for a fixed period of time. Leasehold arrangements are based around a legal agreement with the landlord or freeholder, known as a 'lease'.

Additional charges associated with buying

There are several additional costs you’ll have to cover to ensure the move goes through, including surveys, solicitor and conveyancing fees, alongside stamp duty if the property you’re buying is valued at more than £125,000.

• Limitations of leasehold properties

  Buying a leasehold property can be a bit more complicated, so look out for the following limitations and hidden costs

  • Ground rent, service charges and a share of buildings insurance could all be charged.
  • You’ll need to get a Notice of Assignment to the landlord to informing them you are the new owner, costing around £100 plus VAT.
  • If you are buying with a mortgage, you’ll also need to provide a Notice of Charge that informs the landlord a third party holds an interest in the property. The cost of this could range from £50 to £200.
  • You may also need a Deed of Covenant, which is a contract between the buyer and the leaseholder that confirms you agree to pay all service charges, including those for common repairs and maintenance. This can cost around £350.
  • If you live in a leasehold flat, you may also be required to pay into a communal charge to cover any emergencies, such as storm or flood repairs.
  • If the lease is for less than 70 years, you might struggle to get a mortgage, as lenders will normally need it to run for 25 to 30 years beyond the end of your mortgage

• Market fluctuations

  Although buying a house is generally seen as a solid investment, if your property depreciates in value, this can make it less worthwhile for you. That being said, most depreciations are shorter term and the wider market has tended to trend upwards.

Alternatively, there are a number of Post Office mortgage products available to suit a range of circumstances.

You should always explore your options and seek professional financial advice before taking on any mortgage products.

What are my next steps if I want to buy?

Once you’re in a position to buy, and know how much you’ll be able to put down as a deposit, you can begin searching for your ideal home. When arranging a mortgage, you’ll need to speak to a qualified mortgage advisor to make sure you’re taking out the right type for your circumstances.

Once you’ve started your search, you should think about appointing a conveyancer or solicitor who can help make sure the whole process runs as smoothly as possible.

When you’ve found the property you were dreaming of, you’ll need to make an offer on it. It helps to have a mortgage agreed in principle when making an offer, as this shows the buyer and their legal representatives that you’re serious and in a position to buy.

All that is left then is for the contracts to be exchanged, and once this is done, you can really look forward to moving in and making the place your own.