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Is it better to rent or buy?
There is no simple answer when you’re deciding whether to rent or buy a house.
It can depend on your finances, personal circumstances and your plans for the future. We can help you to work out what would suit you best.
Handy to know
Equity is the difference between what you owe on your mortgage and the current value of your house. As you pay off your mortgage or the price of your house rises, your equity will increase.
Renting pros and cons
Advantages of renting
There are plenty of benefits to think about if you’re thinking about renting:
- Your landlord is responsible for repairs. If the boiler breaks, your landlord will pay for a new one. If you owned the property, you’d have to pay.
- It's flexible. Depending on the length of your tenancy, it can be easier to move on if things don’t work out.
- It’s easier to budget. The price of your rent is generally fixed for the term of your contract. You usually don’t need to pay out if something needs fixing or replacing.
- You often get a better location. It’s often possible to rent a property in an area you couldn’t afford to buy.
- No legal fees. You don’t have any expensive legal costs that you get with buying a house.
Drawbacks of renting
There are some drawbacks:
- You aren’t paying towards owning the property. Your rent is going into someone else’s pocket or paying their mortgage.
- The landlord could increase the rent or ask you to move out. While most tenancy agreements have rent fixed for a set period, the landlord can put it up if they want to. If you’re on a rolling contract, the landlord could end it before you want to leave.
- Landlords can be unreliable about repairs. Getting broken appliances and faults fixed can take time. Landlords won’t usually let you sort it yourself.
- You might not be able to have pets. While some landlords are willing to be flexible, finding a rental property where you can have pets can be tricky.
- You can’t usually re-decorate. Some landlords won’t let you make the place your own.
Buying pros and cons
Advantages of buying instead of renting
There’s plenty of advantages to buying a house:
- You’ll own the property. Once the mortgage is paid off, all the equity in the house is yours. Subject to Capital Gains Tax.
- You can decorate any way you like. When you own your home, you don’t have to worry about anyone else’s rules or tastes.
- You could have a pet! When you own your home, there’s no one to say you can’t have a dog! Unless your partner says no. If you buy a leasehold property, check the leasehold terms, as it may say ‘no pets allowed’.
- The value of your property could rise. As the value of your house goes up, you could make money when you sell.
- You can fix your mortgage payments. Most lenders offer fixed rate deals, typically between 2-10 years. You can choose which term suits you and review your options when your deal ends.
Drawbacks of buying instead of renting
There are some drawbacks:
- There’s less flexibility. Moving house when you own your home is much harder, as you’ll need to wait for the property to sell.
- You’ll need a deposit. Most lenders ask for a deposit of at least 10% of the property value. Our savings tips could help you save for your deposit.
- You’ll have to pay for any repairs. When things go wrong, it’s up to you to fix it. With expensive repairs like roofs and boilers to consider, the costs can really add up.
- You could lose your home if you don’t keep up your mortgage repayments. Any mortgage you take out is secured against the property. This means your lender can take it back if you don’t keep up your mortgage repayments.
- Monthly repayments can change due to interest rates. If you have a tracker mortgage or you're on the lenders standard variable rate, your monthly repayments can be subject to change.
- The value of your house may fall. If the property prices fall, your house may be worth less than the price you paid for it. This could mean that you have negative equity in your property.
Questions to ask when deciding
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A mortgage deposit is a significant amount of money.
You also need to factor in solicitors' fees, stamp duty, building insurance and your monthly mortgage repayments. If you won’t be able to afford everything that comes with a mortgage, maybe think about renting, at least in the short term.
A strict budget, financial help from your family and saving could mean you’re in a better position to buy later.
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All homes come with unexpected costs, such as a leaky roof or broken boiler that need replacing.
Repairs might cost thousands of pounds, so it’s important to make sure you have some cash set aside in case there’s an emergency. An insurance policy may help, but make sure you understand the terms and any exclusions.
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If you’re new to an area and don’t know it well, or are likely to move around, buying might not be the best option.
Renting makes it easier to move when you’re ready for a change of scenery. You can check the rental prices in the area you are interested in, on the Rightmove Rental Price Tracker.
Other things to consider when thinking about where to live include schools, amenities, crime and transport connections. Zoopla has a guide that may help you.
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