Should I buy a house or continue renting? This is a tough question that most Londoners often grapple with and one that you’re likely asking yourself now.
As a renter, your biggest worry is whether making those monthly payments is sustainable in the long run. On the other hand, if you’re dreaming about homeownership, you’re wondering whether your savings will be enough to get you a decent one.
These back and forth doubts can often put you in a tricky dilemma, which brings us to our topic of the day. Is long-term renting a good idea?
In this article, we outline the pros and cons of renting and buying a house respectively. We’ll also explain the four crucial factors that should guide your decision.
The pros and cons of renting
Pros
- The property owner takes care of maintenance
- You can change houses as you wish
- Rent and most other fees are predictable
Cons
- Limited freedom to modify the rented space
- No sense of permanence
The pros and cons of buying a home
Pros
- Freedom to modify your house as you wish
- Low monthly costs compared to renting
- Ability to build equity if on mortgage
Cons
- You’re responsible for all repairs and maintenance
- Risk of home value depreciating
Renting vs. buying a home: Factors that influence your decision
How long do you plan to live in one locality?
If you’ve already made up your mind to live in London for more than a decade, that’s long enough to buy or build your own house. This decision, like renting, depends on whether you have a consistent cash flow to enable you to pay for your mortgage or put aside savings.
On the other hand, you might need to rethink your idea of buying a home if you harbor dreams of traveling the world or have no plan to stay in this city for long. In these two scenarios, renting offers the kind of flexibility you need.
How prepared are you financially?
Renting is much cheaper than buying a house when you compare the upfront costs involved in both. In the former, the only significant expenses you will incur are the rent, your personal belongings, and maybe the security deposit. The landlord takes care of maintenance, renovation costs, and sometimes even the furniture and appliances if you choose to stay in one of the furnished flats in London available on the market..
The situation is different if you choose to go the homeownership route. Take for example, the case of paying a mortgage; you must raise the agreed monthly payment, pay for the homeowners’ insurance, and the property tax. These are expenses you’ll likely never recover fully unless the value of your house appreciates exponentially by the time you’re selling it.
Change in your status
No one’s life status stays stagnant forever, whether that means getting married and kids, being transferred to a new workplace in another location or accumulating more wealth. All these situations are enough to change your housing priorities completely.
For example, you might get married and both of you decide to pool together money for buying a home to accommodate your growing family. Alternatively, you could be forced to sell off your home due to unavoidable work transfer or change in fortunes.
What kind and level of risk are you willing to take?
Whether you’re buying a home or renting an apartment, there’s a degree of risk you must be willing to take. In the case of rentals, you’ll probably be risking dealing with unreasonable landlords or noisy neighbors next door. In homeownership, you will be risking holding onto an investment that, without any warning, could decrease in value in the long run.
So, what do you recommend?
Well, our advice is simple, weigh your options based on all the information we’ve provided in this short guide. Even so, we highly recommend renting as it offers more flexibility and comes with fewer risks compared to owning a home. For example, you can switch rentals any time you deem appropriate or upgrade and downgrade at will.
Ultimately, the most important thing is to be honest with yourself always. Ask whether flexibility or a permanent place you can call your own is what matters more to you. Also, don’t forget to assess your finances and ascertain that whatever option you take aligns with your goals and is affordable to you.