Renting vs buying has been a long debate for many years. Ultimately, the choice comes down to your personal situation and your decisions on lifestyle, goals and finances.
Search the internet, and you’ll often see a few common reasons why someone might want to rent over buying, including:
- Greater flexibility
- A smaller deposit and less frequent rent changes, making it easier to budget
- Having someone else on the hook to handle repairs
Renting offers flexibility
Yes, it’s 100% easier to move at the end of the rental term or when your lease ends, but this flexibility also has its issues. The reality is that it’s not one-sided; there is flexibility on both sides of the contract. Your landlord can also choose to end the contract, raise the rent or decide to sell the property. So while it might sound great, if you like where you are or need to stay longer, you may find yourself without a home (or with a more expensive one) with little notice.
If you’re in a more nomadic phase of your life, i.e., you’re not planning on settling down in one location and want to explore different cities or styles of living, then renting is still an excellent option for you. If packing up your bags and trying on something new is essential, renting is most likely your best choice. Same if you need to move around for work and quickly relocate, or don’t think you’ll spend more than a year in the same location.
However, if security, community, staying somewhere, and getting involved are essential to you, finding a more stable home where you aren’t at the mercy of a landlord’s whim might be a better choice.
At Allbricks, like a mortgage, you own the home. And as long as you pay your rent on time and don’t break the conditions of your contract, you can’t be forced to move. You get all the security of owning, and you aren’t at risk of having to pack your bags because, for example, the landlord wants to sell the flat you live in.
You’ll need a smaller deposit, and rental payments rarely change, making it easier to budget.
Whether you rent, buy with a mortgage or buy with Allbricks, you’ll always need a regular, reliable income to cover your monthly payments. That will never change. But deposits and other expenses will vary.
While you only need about one month’s rent as a deposit, and the rental payment may not change while you are in a contract, that doesn’t mean you’re free from rental payment hikes once your term ends. Recently we’ve seen record rising rents across the UK. Rents jumped 14% in a year in London and by more than 19% in hotspots such as Manchester.
Unlike renting, deposits for homes can cost a lot more. Today there are a few mortgages out there that require a 5% deposit, but on the whole, you’ll need an average of at least 10%. This can take a long time to save up for – at least eight years according to a recent article in the Independent. Plus, don’t forget that you’ll need money to pay fees and possibly stamp duty, depending on how much you want to spend. Click here to find out more about typical mortgage fees.
But paying a mortgage can have its risks as well. We haven’t experienced this for a while, but rising interest rates can considerably impact how much someone will pay each month. Paul Rouse, partner at Mazars, said, “UK households are now burdened by a huge amount of debt. Even a modest rise in the bank rate adds hundreds of millions of pounds to repayments almost immediately.”
Allbricks is another option between renting and a mortgage. To purchase your home using Allbricks, you only need 1% or £10,000, whichever is higher. This smaller amount usually cuts the average time to save for a deposit in half. And at Allbricks, your “rent” is set for the first three years and then is reviewed annually against going rates.
Someone else is on the hook to handle repairs.
Yes, when you’re renting, and you have a responsible landlord, they are accountable for addressing most, if not all, of the issues. A good checklist of damages and responsibilities can be found here. You still need to keep the property in good order and, as a good tenant, handle minor maintenance such as changing light bulbs or smoke alarm batteries.
However, finding a good quality rental can be challenging. In April 2022, a committee of MPs reported that more than one in eight rentals posed a risk to safety and that it was “too difficult for renters to realise their legal right to a safe and secure home”.
On the other hand, buying a home can be scary when it comes to repairs. Suddenly, all those issues become yours to fix. Housing experts agree that homeowners should budget 1% of the value of their property every year for maintenance and repair. But many homeowners forget this and find themselves with a nasty surprise.
In this respect, Allbricks is in a league of its own. Because we have a responsibility to ensure that both the homeowner and the investors have a safe and sound property, we’ve created Allbricks with a unique property maintenance programme. Every month part of your rent is put towards a fund to cover any unexpected problems that fall outside the normal day-to-day wear and tear, like fixing a leak, a broken boiler or even a roof!
It’s your own first-class property management service designed to take the hassle out of home ownership. To find out more about what’s included, visit our overview here. Ultimately, it’s a fund that’s there to help you avoid nasty surprises. And even better, we give you a percentage back every few years to spend on your own updates, wherever you want them. Fancy a new kitchen?