31
Jul
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."