- Real Estate
Is Renting a Home Better than Buying?
In the balance
Home owner or tenant?
Many people have no option other than renting their home and will be tenants all their lives but even if you are in a stable enough financial position to choose, buying your own home may not always be the soundest decision.
The decision whether to rent or buy is very much a lifestyle choice nowadays and the previous stigma associated with renting a home has practically disappeared. Several other factors as well as income now come into the equation and there will be periods in virtually everyone's lives when renting may be far the better option.
Buying a home is a huge commitment which will tie you to one place for many years to come. Tenants can thus maintain their freedom to move elsewhere at just a month's notice and this can prove better for those who are always searching for better employment prospects. As a tenant, if that fantastic job you've always wanted is offered to you in another area you'll be in a far better position to accept it than any home owner who may experience difficulties in selling his home quickly. Home ownership does have its downside and it can severely compromise your flexibility in this respect.
Being a home owner will cost you more as you will have regular repairs and maintenance to carry out. For older properties there will also be unforeseen problems with the fabric of the building that will need to be addressed if and when they arise. There is also buildings insurance to pay which in a rented property would be the sole responsibility of the landlord. Budgeting to run a rental property will thus be easier than if it were owned by you and your monthly outgoings will be more predictable. If you're not the sort of person who wants to take on the responsibility that inevitably comes with being a home owner then renting would be the better choice.
The legal formalities and costs for purchasing a home are far more complex and expensive than setting up a tenancy agreement - you may even think you are signing your life away many times over with all the documentation a house purchase involves. You will also need to take out adequate life cover to pay off the mortgage should you die during the course of the term. Any decision to rent or buy should be made after much careful assessment of your financial position and be based on the predicted permanency of your employment.
Here are some handy calculators to help you gauge what suits your individual situation whichever side of the Atlantic you live upon: USA buying versus renting calculator or UK buying versus renting calculator
For those who can't decide between renting and buying a home there is a solution in the form of shared ownership. This is a great idea and an ideal compromise. Such schemes allow you to part rent a share of your homes current value and part buy the rest with the option to purchase the remaining share at a later date (at the market value it would be then). This can be a great boost up the housing ladder for those who want to buy but find the total cost of a home beyond their current means. Find out how shared ownership works.
There is often the option to buy a rental property from your landlord at some point if you have been his long-term tenant already and he may be happy to offer you the property at a sizeable discount if you have always been reliable and responsible and cared for the property as if it were your own.
Whatever choice you make, there is more help available to tenants and home owners alike nowadays in any search for a suitable place to live. Internet sites such as Rightmove and MSN real estate can make the whole process far less daunting than in the days when there was only the estate agent or lettings agency to ask for advice.
© 2015 Stella Kaye