According to the Chartered Institute of Housing, the golden age of ownership” within the UK housing market has ended for a lot of people who can no longer afford to buy a home and must therefore look to live in rented accommodation. This may not seem like the ideal situation for a generation of people that have come to believe that homeownership is the best and maybe the only way they want to live, but perhaps it’s not such a bad option and we should change the way we see things.
Paying rent to live somewhere is often described as ‘dead money’. I personally think this is a term we need to get away from using, it only adds to the stigma people have about renting. We don’t describe any other use of money in this way, such as holidays or expensive new clothes, yet once your holiday has ended or your clothes are worn out, we don’t look back and say it was dead money, because we appreciate what we had. If you are enjoying living in a home, then surely that’s money well spent?
I rent the property I live in, and I think I get a good deal for what I pay (hopefully my landlord won’t be reading this and think that means it is ok to bump up my rent). I don’t pay for the building to be insured, I get a free cooker which gets maintained, free maintenance of my boiler and electricity supply and some landlords will often give you assistance with decorating and general maintenance if you have lived in the same property for a long time. You also get the added bonus that if you ever do need to move or upsize, you can do so without paying out thousands of pounds in mortgage costs and solicitors’ fees.
Renting a property is almost always cheaper than buying one in the short term, and especially in the current mortgage market where you need to have a good credit score and at least a 10% deposit, there are not as many restrictions that can stop you living where you want.
On the other side, if you purchase a property, even though buying your own house may cost more money at outset, you should hopefully one day own it without a mortgage, meaning you don’t need to commit as much of your retirement funding to pay to put a roof over your head. Over the long term you would hope to see a rise in property values that beat inflation too, giving you options such as downsizing or equity release to boost the money you have available for day to day living and luxury items.
Overall I would say that if you can afford to buy a property and live comfortably, it should be a good investment over the long term and is probably the option I would pick over renting if I could. However, owning the home that you live in is not the most important aspect of the house, the most important thing is to make sure you are happy there. If you are ready to start thinking about buying a house is it worth contacting an Independent Financial Adviser who specialises in mortgages to help you obtain the mortgage that is most suited to your needs and discuss the pros and cons of buying and renting. Kieron Bassett Financial Services has two Independent Financial Advisers. Contact us on (01524) 832057, via e-mail, info@kieronbassett.com, or log onto www.kieronbassett.com.
Jason Hinde CertPFS
“