buyabetterhome.co.uk

is it so bad to rent?

 

With Britain currently in the grips of the so-called "global credit crunch" and the average house price standing at a whopping £230, 474 its no wonder that its residents are having a tough time getting onto and moving up the property ladder. Taking these factors into account, it's really quite surprising that more people aren't choosing to rent. The purpose of this article is to make some comparisons between home ownership and private rental.

Twenty years ago, it was the norm to be a tenant, rather than a home owner. On the continent, it still is. Although this may not be a particularly fair comparison, because in a lot of European countries, such as Germany for example, tenants have a lot more rights than in Britain. Its only within the last two decades that home ownership has become the lifestyle of choice, no matter how much pain we have to go through to get it, and quite often, to keep it. Being a tenant is often frowned upon, especially if you're in your thirties and still renting. How many terms have you heard the phrase "dead money"?

 

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First, let's talk figures: In a recent survey by the Abbey they concluded that home owners were better off by an average of £24,000 when paying off a £184,000 mortgage over a 25 year period. The home owner would have paid around £379, 000 whilst the tenant would have paid around £403,000 in rent. In addition to these figures you must take into account the key fact that the mortgage payer then owns the house and the tenant has no such asset. Although you are undoubtedly worse off, financially, as a private tenant than as a home owner, you have a much greater flexibilityabout where you live. You are also protected under the Landlord and Tenant Acts, you will have no repairs to pay for and there's zero chance of falling into negative equity.

Of course most people who rent, do so because they simply can't afford to buy. One in four of the UK population live in rented accommodation, with two thirds of those doing it unwillingly. Being a tenant with aspirations of getting on the property ladder can be a catch 22 situation, paying rent and bills will leave the average earner with very little left to put away to save for a deposit, and with house prices racing into the distance over recent years, the situation has become even more desperate.

Taking these factors into consideration, research by Birmingham Midshires suggests that a section of our society is making a conscious effort to rent rather than buy. One in six of today's renters no longer aspire to own their own home and a further 12% chose to rent to enjoy the greater flexibility it offers. These figures are borne out by the fact that the buy-to-let market has grown consistently over the last 10 years but demand continues to outstrip supply. The society found that 12% of Britons would rather rent in their ideal area than own a property elsewhere. Is it time for other would be home buyers to follow their lead?