London: Renting versus buying a home

Renting versus buying a home

In the UK, particularly London, buying a house is quite expensive and for most people, it is one the biggest and most expensive decisions they’ll ever have to make. However, the decision to either rent or purchase a home is based solely on what is most affordable.

In some boroughs in London, it is much cheaper to rent a property than buy it—with places like Chelsea and Kensington recording nearly 40 per cent difference between renting and buying. While everyone’s financial strength is different, most Brits are quite obsessed with buying their own home and eventually settle for a mortgage—through homeowners eventually try to find the best remortgage deals to save more money on interest rates.

However, there are advantages and disadvantages to both renting a property or buying it. With renting, it is much easier to move into the house quickly and you are not bothered about declining property prices. If you’re renting a property in London, you’re bound to discover that the monthly rent is a bit cheaper than mortgage payments in addition to not having to pay a large initial deposit.

According to research by Hamptons International, the average time it would take for a first-time buyer living in London to save enough money to make a 15 percent down payment on a property is 15 years and nine months. Due to stagnant wages and low savings rates, many people find it extremely difficult to put aside enough money towards their deposit, making rentals a much more suitable alternative.

With rentals, it is much easier to budget appropriately since changes in rent are less frequent than with mortgage interest rates. Also, you can afford to pay for a more tastefully furnished apartment in a highbrow location without having to break the bank.

Considering how expensive the average prices of home in London are, renting is a cheaper short-term alternative but buying a home is suitable for those planning for the long-term. If you’re still wondering whether renting or buying a home is better for you, then you need to understand that buying a home isn’t the best for everyone. However, if you must buy a home in London, you would need to have a very stable but growing income to cover the financial responsibilities that come with it.