31 Jul

Buying v renting: The big debate

Buying v renting: The big debate

When the time comes to move out of the parental home, a choice will need to be made by many young people this year; but do they head towards an estate agents, or should they take the chance to rent first before they buy?

No matter what the eventual choice turns out to be, those looking to move out and into their first home will be looking towards which option is cheaper more often than not.

According to Mark Hayward, chairman of the National Federation of Property Professionals (NFOPP), there are benefits to both of these options for new residents, and it comes down to what people will want in the long run and a degree of personal choice.

Mr Hayward said that for those who want to rent, the benefits include the fact that there is no initial outlay; this can be perfect for people who want to move out of their parental home but have no chance of affording a deposit, of which they would need 20 to 25 per cent of the cost of a house on average at the moment.

However, the expert also said that the cost of renting is very high at the moment, because fewer people can afford to buy, so they move into the private letting market instead.

"Against renting, is that we are seeing unprecedented demand in the private rented sector and therefore we are seeing rents rise. If you are paying a premium rent then it is very difficult to start saving for a deposit for a home, which is just compounded by the fact that you are having to provide a much larger deposit to get on the housing ladder. There are pros and cons," he said.

This point was illustrated recently by LSL Property Services, when it said that the monthly price of renting a property in June had almost reached the peaks seen last October when they hit an average of £720 per month.

When it comes down to whether it is better to buy or rent however, the issue really boils down to whether people have funding in place in the first place.

It was reported this week by Hometrack that the price of houses across the UK has fallen for the first time since the start of 2012. This means, according to Mr Hayward, that now is the time to buy, as the value of homes cannot drop much further.

In conclusion, he said: "At the moment it is cheaper to buy than it is to rent. If you buy, then you will have something with capital value at the end, but if you rent then you will have nothing but expenditure."

This was a thought which was echoed by Stuart Law, chief executive of Assetz, who said that there are now more people moving toward purchasing which means the options for finance are becoming far better.

"The market is recovering and all of the indicators are pointing upwards in terms of developer site visits by prospective buyers, [and improvement in the number of] mortgage transaction levels being made. Everything is gradually [moving] in the right direction."ADNFCR-1222-ID-801419432-ADNFCR

Cookies We use cookies to ensure that we give you the best experience on our website. To find out more about our cookies policy, see our cookies policy here or in the footer.