Renting vs. Buying: Should I Rent or Buy a House?
Owning a home is something most people strive for. Of course owning your own home comes with a lot of satisfaction and pride but, it also comes with extra costs, maintenance and sometimes a lot of stress. Renting on the other hand can be more flexible since you can move quickly and you don’t have to worry about unexpected repair costs. Yet, you can be served noticed to move at any time and have to deal with certain limitations on what you can and cannot do with the property.
Deciding whether you should rent or buy a home is not a simple decision and there are many factors that need to be taken into consideration including your personal, professional and financial situation. However, the decision is completely yours to make.
In this guide, we’ve highlighted some of the advantages and disadvantages of both buying and renting so you can make an informed decision when it comes to moving home. If you’re considering renting or buying a house in Liverpool, we’ve also included some recent data on the housing market in Liverpool to get you started with your search.
Advantages of Buying a House
Greater Freedom– When you own your home you have full control over your property and what you can do to it, with the exception of leasehold properties and where planning permission is required to carry out work.
Potential For Growth– If your house has room for growth, you can add value to it by adding an extension or upgrading certain parts or the entire house.
Lower Monthly Payments– If you have a mortgage on the property, your mortgage payments may be cheaper than what you’d pay in rent.
Long-Term Value Gains– History has shown that homes tend to appreciate over time and if your plan is to invest in a home long-term, buying a house can be a great investment.
Disadvantages of Buying a House
Additional Costs– Buying a home comes with a lot of added costs in addition to the lump sum you pay for your deposit (i.e. Stamp Duty, Solicitor Fees, Unexpected Maintenance Costs).
Affordability– If you lose your job or interest rates on mortgages rise, you may not be able to afford your monthly payments and this can put a strain on your financial situation. If you don’t make your mortgage payments on time and in full, you risk losing your home and this will in turn affect your credit score.
Complicated Selling Process– If there’s a marriage breakdown or you need to move quick or need access to the funds tied up in your house, you will have to wait until your home sells first. Liquidating a home can be complicated and costly, and will not happen over night.
Advantages of Renting a House
Flexibility– You have the freedom to give notice and relocate if and when you need to and this can happen quickly since you don’t have to deal with the selling process. If the place comes furnished, this will make it easier and quicker for you to move.
Lower Financial Risk– You don’t have to worry about losing money if property values go down and you don’t need a large deposit to rent.
No Repair Costs– Most often landlords are responsible for repair costs so if anything needs fixing, you don’t have to pay out of pocket to fix them.
Disadvantages of Renting a House
Uncertainty– Rents tend to increase overtime so you could be faced with a rental amount that you cannot afford forcing you to move. In additional, if your landlord decides to sell their property, you will either be asked to move or you may run into issues with the new landlord if they don’t honour the previous landlord’s terms and conditions.
Lack of Control– As a tenant, you have less flexibility when it comes to decorating or making changes to the property, as well as rules around keeping pets in the house. You may also be penalised if you break any of the terms and conditions of your tenancy agreement.
No Wealth Creation– When you pay rent, you’re creating wealth for the landlord. You’re either putting money in their pocket if the house is paid off, or paying down their mortgage. Moreover, if you make any upgrades to the property, only the landlord benefits from the added value.
Should I rent or buy a house in Liverpool?
According to HomeLet Rental Index the average rental price in the UK was £1,103 pcm in May 2022, which was up 1.1% from last month. In the North West, the average rental amount increased from £790 in May 2021, to £879 in May 2022.
On the other hand, according to Rightmove, the average price of property in Liverpool was £202,832 over the last year. For example, if you buy a house in Liverpool for £200,000 with a 10% deposit, your monthly mortgage payments could be as low as £625 pcm. Of course the payment could be higher or lower depending on current interest rates and your deposit amount. The more deposit you put down, the lower your monthly payment will be.
If you are a first-time buyer looking to buy your first home in Liverpool, you can check out our latest guide for First-Time Buyers.
Bottom Line:
When deciding on buying or renting you should consider both your short and long-term plans and goals as this can help with your decision making. Historically, it has been shown that buying a house can be a good long-term investment since their value tends to grow gradually, and if you’re renting, you’re paying off someone else’s mortgage instead of creating wealth for yourself.
In contrast, if you’re planning on selling the house after just a few years, you might be better off renting instead since the market can be more volatile in a shorter period of time. That being said, buying a house isn’t always a good investment and renting isn’t always throwing money away. At th end of the day, only you can decide whether you should rent or buy based on your personal and financial situation.
If you’re looking to buy a house in Liverpool and need assistance in finding the right home, you can contact Lavelle Estates today!
