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To buy or to rent?

Is renting cheaper than buying?

For the first time in six years, renting a home is cheaper than buying. Although it is only happening in four areas in the UK – North East, North West, Yorkshire and Humber, and Scotland, the trend might expand further if the pandemic continues. The average private-sector tenant in Britain spent £71 per month less in rent than if they were repaying a mortgage with a 10% deposit. This equates to a monthly spending of £1,054 on rent compared with £1,125 on the mortgage. The new trend might be convincing for many, thinking that they can avoid the headache of a mortgage and significant expenses, and still be better off than home buyers. But what are the actual advantages and disadvantages of renting or buying a house? If you are at a crossroads between buying and renting, this post is for you.

Pros of renting

Flexibility is one of the most important renting pros for many tenants. You can move out at short notice, and move to another home without making a significant commitment to one place. The maintenance of the place you are renting is the landlord’s responsibility, and all the repairs are their duty. 

Additionally, with the flexibility of living in many different places and with different people, you get to know yourself and your preferences about your décor, localisation, utilities and many more. This knowledge might be useful for the future when you actually do buy a home. 

Cons of renting

Renting a home is more expensive in some regions than in others. London’s rents are much higher than North East’s rents, but it also corresponds with the quality of life and work possibilities. Many people use the argument that renting is ‘’paying someone else’s mortgage’’. 

Moreover, as the maintenance of the property is the landlord’s problem, they often fail to ensure the quality or withhold the deposits for general wear and tear. In unfavorable circumstances, tenants have to account for repairs and maintenance on their own. In addition to the ‘questionable landlords’ argument, many tenants are worried that they will be asked to move out within short notice. The constant uncertainty is one of the significant disadvantages of renting. 

Pros of buying 

First of all, buying a house is an investment. In the case of buying a house, unlike renting a property, the mortgage payments will eventually pay off your debt. Any renovations or improvements are effectively investing in your asset, which should reward you at a later date. 

From a more personal perspective, your house means your rules. You can choose the décor, number of pets, number of tenants and the look of the garden. With this said, you can rent a spare room in your house and make extra income. 

As a nation that has historically loved to own their own homes, buying a property certainly has its appeal!

Cons of buying

Inevitably, there are some disadvantages to owning your own home. 

Firstly, it will be more difficult to move if you buy a house. As one of the pros of renting was flexibility, to sell and buy a house in a short period can be a real burden and a source of stress. Additionally,house prices and the unexpected costs to maintain a house can be very high. There are also additional costs of ownership, such as service charges and ground rent for leaseholders, and homeowners insurance in the case of older properties.

To pay off the mortgage and maintenance cost, you must guarantee a consistent income, even if you have a good credit score. Moreover, you have to consider that interest rates can increase and your monthly payments alongside them. 

Whether we convinced you to buy a property or rent it, check out SearchSmartly’s intelligent property search platform , where you can find houses, flats and rooms satisfying your individual needs. 

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Up to 50% off your first home?

Government’s New First Home Initiative

If you’re a First-Time home buyer, there is no doubt that you have heard about the Government’s new First Home initiative. But maybe you are not sure what it means for you, or whether you are eligible? Maybe buying a home was out of the question before you could get up to a 50% discount on your purchase? If these are the questions you have been asking yourself, then read on as we explain it all in great detail.

What is a First Home Initiative?

Without further ado, if you’re buying a house for the first time, you can get a discount of a minimum of 30% of the house price. The discount can reach 40-50% if the local authorities demonstrate a need for this, based on the social demographics of the area. For the discount to be applied, the first price of the house must be no higher than £250,000 (with an exemption of £420,000 in Greater London). Therefore, this initiative can save you a whopping £100,000 or more! 

Who is eligible to purchase First Home?

To participate in the First Homes initiative, you have to be a first-time buyer. The purchaser can be an individual, a couple or a group of individuals. What is crucial, is that the combined annual household income of the purchasers cannot exceed £80,000 in the tax year immediately preceding the year of purchase. Additionally, the purchaser of First Homes must have a mortgage or house purchase plan to fund a minimum of 50% of the discounted house. 

However, be aware that local authorities might have additional eligibility requirements. Additional criteria might involve lower-income caps, local connection status or employment status checks. Authorities may also prioritize key workers, especially if a particular profession is in-demand in the area. However, you should not feel discouraged as additional criteria requirements are continuously reviewed. They are also carefully monitored to not restrict eligible candidates too much to the point where it becomes too difficult to sell any homes. Another point of concession is that local authorities’ additional criteria is only in place for 3 months from when the house is first marketed. If the home is not sold successfully within those 3 months, the additional criteria is scrapped and replaced with the more lenient national criteria.

Which homes can be First Homes?

Any home can be eligible for the discounted purchase, but for newly-built homes specifically, the home developers must show proof that the houses match the definition of “affordable housing” and meet First Homes’ criteria. The house can not be sold at a lower discount than 30% and the price cannot be higher than £250,000. Additionally, the legal restrictions on the sale and use of the property, must be registered onto the title of the First Home on its first sale. The aim of it is to ensure that the discounted price will be applied to all future sales of this property. 

With the First Homes initiative it is easier and cheaper than ever to finally buy your first property. If reading this article gave you the smallest seed of the idea of buying a house, why not check the available homes that would suit your needs on SearchSmartly’s intelligent property search platform?