Is it better to rent or to buy your own home?

[MerryXmasMrsHenry]

DH and I have been discussing whether to go back onto the property market while we still have a deposit or to just go all Continental and rent long-term instead.

We've only been renting for 6 months and would love your opinions on the pros and cons of renting and buying.

TIA!

We regularly do a simple comparison calculation as we currently rent.

1. Calculate the current annual cost of a 100% interest only Tracker Mortgage on on the purchase price (plus any doing up costs) of the house we like.

1. Add a realistic ongoing costs of repair and insurance per annum.

1. Find out how much it would cost to rent the same house per annum.

Compare the cost of owning (1 + 2) versus renting (3).

I just did the numbers for our rented house which was up for sale before we rented it so we know the sale price.

We estimate that by renting we are paying about 35% less than we would if we owned the same house.

That 35% coincidentally is what some economists think that house prices still need to fall to bring the market back to a sustainable level. We will carry on renting.

We rent because we have never had enough money to put down a deposit - and were going to buy on a keyworker scheme where we could buy any house and not just a new build but then the funding ran out in this area......and renting is good for us at the moment as the house we are in is cheap, in a fab area with a fab primary practically next door and we know we can stay here as long as we like. BUT i do worry about the future. I would like to buy a house because it would be ours and security for our dds. My brother bought 2 years ago when you could borrow over 100% mortagage though and he now says he wishes they had never bought as they are on an interest only mortage and are basically no better off than us.

We bought because to rent a house in our village would cost us about £150 a month more than our mortgage.We were lucky enough to only need a small mortgage and don't plan to move away,as family and work are here.Plus most of the village is owned by a private estate who are notoriously bad at repairs,and due to there being very few private houses here,they are at a a premium and sold privately more often than not.It wouldn't make sense for us to rent in these circumstances.

FuriosGeorge - obviously the private estate issue is important isssue and you felt buying was still the right decision under those circumsances but if the other costs of ownership are added in such as insurance, repairs and interest lost on your large deposit is it still cheaper than renting?

I have always rented - I have never before had any choice in the matter so its hard to say what I'd do if I did, iyswim.

The rental system in this country is a bastard though. We need more long-term security of tenure, as things are you are only ever guaranteed a year at the most and more often 6 months, or the dreaded rolling contract where you only get 2 months notice.

But thats never going to change until people stop seeing property as an investment opportunity.

Now, we are doing something that seems the best option for us and joining a housing co-operative. Pay the princely sum of £1 to become a member of the co-op that owns our new home, get a secure tenancy, and pay fair rent for as long as we wish to remain there.

I am always genuinely surprised when people say that they find owning cheaper than renting.

We have never paid more in rent than the full cost of owning the houses/flats we live in ver the last 25 years. Typically we have paid 30 - 50% less in rent than the full cost of owning. That way we have always lived better than we could have if we had owned houses. Obviously we have not enjoyed the rise in house prices but we invest elsewhere and we can move quickly if we need to without the hassle of buying and selling.

While I agree that security of tenure does need addressing, we have lived in most of our houses 2 - 6 years which is how long most people live in houses they have bought. We have given notice to our landlords much more often than our landlords have over the years.

When the kids get older and if it makes financial sense we may still buy though.

We rent. We've both owned before (separate properties), bought after a long time in rentals. TBH, sold a couple of years later (the mortgage was far more expensive than rent and the property was a 1-bed flat). Luckily for us, we pay very cheap rent for an expensive area (just luck of the draw, both had our share of bad landlords). But, I did not really like owning, a lot of expense even before I had set foot in the place, etc, etc. I also found myself obsessing about the value (will it fall?). Probably as it was not the type of place that I would stay in long-term. I am rambling, but, when I sold, it was so much easier. We are saving at the moment. We may buy a property in the future. Yes, some could say rent is dead money, but we can save so much more. IMO many things are "dead money" but it's not really thought about in those terms. Plus, for us, is it worth buying if you need to move a few years later? Where we are is very secure (people have been renting for the same houses for more than 15-years!)In short, we are happy renting. Yes, I sometimes think about buying, but IMO we are not going to see the same rises for a very long time (if at all) so whats the hurry?

We are with you on the cost of renting v buying ABetaDad! We used to own a house but hated the area so we sold and can only now afford to rent. However, it doesn't make financial sense to buy at the prices that houses still cost in our village. I know a lot of people in NE and also friends who can't afford to pay their mortgages or do any work needed on their house. Can't see the point in home ownership in that case personally!

On the other hand, I hate the insecurity of renting and think it is appalling that the government look after the homeowner and landlords rather than private tenants. It's about time tenants rights were considered and we get the same rights afforded to tenants in other countries.

When we bought our current home 7.5 years ago we put down an 18% deposit so the mortgage costs were half the price of renting the equivalent property in this area. Perhaps it depends where you live?

Rent has not gone up in this area in that time but house prices are currently 50% higher than then.

for us buying has been a little less than the cost of renting BUT we have an asset that is rising in value slowly. Yes, I know we have a had a blip in the market but generally, historically, property always appreciates in the long term.

Buying has also given us security in that we know that no-one can turn around to us and take our home away for no good reason like they can when it comes to renewing your tenancy agreements.

We have a family home which we can make ammendments to as and when, whether it is a simple case of wallpapering or putting a picture up, having a pet or building an extension. I have no regrets as a homeowner / mortgage holder.

My friends received two weeks notice to leave their rented property from the County court - as their landlord had stopped paying the mortgage and the bank was in the process of reposessing it.

They have a toddler, no savings, no car and were in a dreadfully anxious state about being evicted. (managed to sort it all out, but very much out of pocket)

It is the first time i have really, truly appreciated owning (well - sharing with the bank!) my own house. You are really at the mercy of outside forces if you dont.

I'm not sure about now due to house prices, but I just can't understand how you can be better off renting. We bought our first house 11 years ago, and paid about £300 a month mortgage (a new house so no repairs/upkeep) compared to the £400 to rent a similiar house. We then moved a few years later and then paid nearly £500 a month for a large victorian period 3 bed house in a great location. Again much less than the rental equivalent, even with £30 a month insurance.

We are still in the same house and have paid off most of our mortgage due to me dropping to part time work once we had ds (wanted to cut our monthly outgoings), and currantly pay £53 a month on our mortgage.

We would not have been able to do this if we had rented.

I think, if you are able to, then buying, (in the long term) is the 'cheapest option. Especially, if like us, you don't intend to move around much. But if you do move quite a bit, then you do have to factor in moving costs too.

HTH

We bought with a reasonable deposit because we could overpay quite a bit on the mortgage. We have a flexible mortgage so can take payment holidays etc, but at current repayment rates we will have paid the mortgage off before our fixed rate comes to an end so obviously buying will work out much cheaper for us long term.

ABetaDad,yes we still feel we are better off buying than renting.The village is tiny with only 40 properties,including outlying farms.There are no homes similar to ours to rent,and the nearest comparable property would cost £150 a month more than we are paying,but is a lot smaller with no garden to speak of and no parking.We have a strong emotional attachment to the village as my children are the 5th generation of our family to live here,my family and work are here too,so are planning on being here for the long haul.Paying someone rent for something that we will never own and will still need to pay to maintain didn't make sense to us.There have only been 2 houses for sale here in the past decade,one of which was ours and ours had 3 other people wanting to buy it.We were lucky enough to be friends with the vendor so bought it privately.So,if we ever needed to sell,I don't forsee any problem.We are overpaying our mortgage by a good amount each month,so hopefully it will be cleared by the time the dd's leave school.

Our previous house was cheaper to buy too.It was in a nearby town and our mortgage was £240 a month,whereas renting something similar would have cost us. £400-500.

It sounds as though you have a good deal though!

if i could ever afford to buy i would in a heartbeat, no doubt about it.

because of the insecurity of private rentals in this country.

we are social landlord tenants now, but have to deal with constant neighbour problems and trashed out building.

i used to rent in parts of london i could NEVER have afforded to buy in (Southfields and Putney). Southfields did serve us notice but it was pretty easy to find the flat in Putney instead which was no more than a mile away from the previous one.

i bought when i first moved to Edinburgh as it was actually ever so slightly cheaper but that was back in 2004. it isn't anymore and i'd have been better off continuing to rent.

The main con for renting is the insecurity of it. If you are renting through the council or a housing association, you have some security, but private renting can be soul-destroying. I hated the dread when 6 months was nearly up- do we get the option to keep the property or do we need to move again?

Our last landlord was awful, would turn up pissed for the rent when he knew DH was working, kept our while deposit, told people we had let our dog poo all over the carpet and ruined the property, all lies, I even had photos to prove it, but didn't want a court battle.

I would say buying over private renting any day, but if you were lucky enough to get social housing you can still make a rented place a proper home.

'I would say buying over private renting any day, but if you were lucky enough to get social housing you can still make a rented place a proper home.'

you can.

as long as you don't have thug, ghetto neighbours.

We are renting, but we're lucky enough to be renting from a housing association. Our rent is probably half of private rents in the area, and of course it's a secure tenancy. It's nice having the landlord to call on for major repairs - though we are trying (unsucessfully) to persuade them to replace our kitchen and bathroom at the moment!

I have lived in Berlin, and pretty much everyone there rented - buying was very unusual. Private tenants have loads more rights though, so it's a completely different system to the UK.

I guess it depends on where in the country you are. In London, we rented for a while in an area where we could never have bought a comparable flat.

However in my particular part of the North, renting costs around £650-750pcm for a standard 2.5 bed semi. Our mortgage is sub £600 per month.

And yes, the costs of maintaining a home are considerable. However, at least the home maintenance gets done. No landlord from whom I rented ever gave a flying fuck about fripperies such as fixing the boiler, sorting a dangerously loose stair carpet, or stopping a bowed ceiling from falling in.

One of the advantages of buying your own home is that over time the cost of the mortgage decreases in real terms and after 20 odd years it stops.

Rent increases over time and never ends

The Englishman's home is his castle, home sweet home etc. We are a nation which loves to own property in a way the continentals don't. It is within our national psyche. It feels so much nicer that the place is yours and over most 40 year periods most people end up making money in terms of capital gains in their house. Despite my high earnings more of our wealth came simply from owning homes than anywhere else and I am sure in the next 30 - 40 years I will be alive that will remain the case.