Buy or rent a house? The pros and cons of both

2021 was a year like no other, especially so if you work for the NHS as much like the daily challenges we faced due to the pandemic, the housing market had its fair share of challenges too.

House prices increased rapidly with around 10% growth from early 2021. The UK experienced a large spike in house purchases due to the stamp duty holiday and low mortgage interest rates. With this in mind, should we be thinking of renting or buying a property in 2022?
Should you rent or buy a house?


How has the pandemic affected the property market?

Our lifestyles have changed dramatically. Not only has there been social and economic impacts on the way we live, but the pandemic also affects the way we work, the hours we work, and also the place – often from home. Although working from home is not so much the case for those working in the medical field, all of these factors have impacted the property market as a whole.

Some younger people are opting for a more outgoing lifestyle, possibly a more luxurious one. Consequently, they may look to spend their money on the more lavish things in life rather than save for a home, therefore opting to rent. Others have decided they need bigger gardens and office space to separate themselves from their family during their working hours, thus looking to upsize their property.

According to recent research from Hamptons Estate Agents, it is now cheaper to rent than buy, based on soaring UK house prices. The research is based mainly on the comparison of monthly repayments. It is the first time this has been the case since December 2014. The average monthly rental price within the UK sits at £1,058, stats by the Homelet Rental Index.* This means the average tenant spends £71 less per month in rent than those with a typical mortgage when buying with a 10% deposit. By comparison, homeowners were £102 better off compared to renters at the start of the pandemic.

So, should you buy or rent?

Of course, if you’re wondering whether to rent or buy, then the argument is and has always been that the money you’re spending per month on rent could be going towards your own property, instead of going into someone else’s bank account, making it all the more harder for you to get onto that elusive property ladder. 

However, there are some advantages to renting, such as; shorter-term tenancies being available, some as little as 3-6 months. Plus, the ability to give shorter notice to vacate gives you much more flexibility should you be in a variable job role that takes you to different locations. Also, renting a property comes with fewer maintenance costs, along with the simplicity associated with the renting process, in comparison to the buying process.

These are just some of the advantages of renting a property. Comparatively, renting also has its pitfalls. Some landlords see the market pressures as an excuse to increase the rent on their properties due to the increase in house prices and mortgage interest rates, as well some landlords deciding to sell up and cashing in whilst house prices are rising.

Further to the above, recent research shows that it can take up to 10 years for the average UK adult to save a 15% deposit for their first home, and research by Nationwide showed that a 10% deposit equates to around 50% of a first time buyers’ yearly salary.**

Whilst nothing in this current climate is easily predictable, there are some forecasts in the UK property sector that seem a fairly safe bet. Certain industry experts and groups alike predict that house prices will continue to rise throughout 2022. Albeit, returning to more normal levels of growth with around a 3% rise expected, matched by rental growth by the same percentage. Others believe that the rental market will outperform the housing market and rise by as much as 10%.***

Looking ahead there could also be an impact from the end of the government furlough scheme with more homes coming onto the market with owners downsizing and selling their rental homes being key drivers.

It’s a tricky one…

The question of renting vs buying is now more than ever a tricky one to answer. In the long term, it is better to buy due to the increase in house prices over time and the fact that you’ll have more security in owning your own home and being able to upsize or downsize as needed. For those with big deposits available then mortgage rates are very favourable. However, remember mortgages are a long term commitment so you need to be able to afford them in the future.

Whilst we’ve faced 18 months of uncertainty due to the pandemic the housing market has been extremely resilient. Traditionally early spring has always been the best time of year to buy a house, with longer days, more time to view properties and most people wanting to buy and sell before the summer holidays.

If you are thinking of buying a property, or, you just want to chat through your options please do get in touch. Many of our advisers are qualified in dealing with mortgages, so we can guide you to the correct adviser in your area.

Are you currently renting but looking to buy a house? Let us know by adding a comment below.

Always remember your home may be repossessed if you do not keep up repayments on your mortgage.

* Is now a good time to buy a house?
** Should I buy or rent a house?
*** All change: predictions for the UK property market in 2022


This article was written by Rob Gibbens

Robert has worked in the financial services sector since 2010. He holds the Diploma for Financial Advisers (DipFA) and CeMAP, the Certificate in Mortgage Advice Planning.

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