Considering whether to rent or buy a home? The answer will come down to more than cost, as we explain in these pros and cons.

For many of us, whether to rent or buy isn't topic for debate. Renting is simply the only option until you can raise a minimum 5% deposit, alongside other associated home-buying costs, on a property you want to buy.

But if you're already in a financial position to put your name to some property deeds, what should you consider first?

This guide weighs up the pros and cons of each option.

Is it better to rent or buy?

Like any big question, the answer is not always straightforward. As well as your financial position, the answer comes down to your personal circumstances, long-term plans and even the prevailing housing market conditions.

You'll need to consider ongoing monthly costs, as well as upfront ones.

For example, while household bills – such as council tax and water  may be comparable between renting and buying, current low mortgage rates can actually mean that owning your home is cheaper.

Our buying and renting guides offer a further insight into this.

And our latest Zoopla research, which ranks the most cost-effective places to buy and rent, could also help point you in the right geographical direction.

Pros of buying

1. Investing in your future

Providing you're on a repayment style mortgage (rather than interest-only), your monthly repayments will be gradually building up your equity stake in your home.

And if your property increases in value, you can add the rise to the equity that's yours too.

You can then take the total equity and use it to put down as a deposit on a different property at some point in the future if you so choose.

And if you've bought your home, once you’ve paid off your mortgage, you'll own it outright. And this means no more monthly payments at all.

2. Autonomy over where you live

If a home is yours, it gives you the freedom to do what you like to it (within given laws and restrictions). You can renovate it to add value and create a home that suits your particular taste and style.

You’ll also be in control of deciding if and when you move, rather than a landlord.

3. Building up experience

The buying process can be a daunting one, but once you have done it, it is very similar for future purchases.

If you're a first-time buyer, owning your first home can be a great way to kick-start financial planning for your future and help you to create a household budget to manage the costs of running a home.

Semi detached house for sale

Cons of buying

1. A big financial commitment

There’s no doubt, buying a property is a major financial commitment. You’ll need to stump up significant upfront costs, including putting down a deposit, solicitor’s fees and Stamp Duty, in addition to covering your monthly mortgage repayments.

Furthermore, you’ll need a pot of money to cover the ongoing maintenance of the property. Leaking shower? Broken boiler? It’s your responsibility.

2. Less flexibility

You can’t be as fleet of foot as a renter when your own your home, because moving becomes a costly and time-consuming process – particularly if you’re part of a chain.

As a homeowner, you’re also subject to the influences of the wider housing market, which means the value of your property may go down as well as up.

If conditions turn against you, you could even find yourself in negative equity (when the total borrowing that’s secured against your home is greater than the price you could sell it for).

And it may not even be possible to sell your home at all. 

3. The prospect of rising repayments

Interest rates, which translate into mortgage rates, are currently at a record low. So, it’s important that you’re prepared for a potential rate rise – and in turn, higher monthly mortgage repayments. Check the small print on your agreement.

There are severe financial consequences if you fall behind on monthly repayments to your mortgage lender, and you risk having your home repossessed.

Riverside modern flats 

Pros of renting

1. Maximum flexibility

Renting allows you significant flexibility, as it's typically quicker to rent a home than to buy one.

Plus, it’s easier to move around. In many cases, you can break a rental contract after six months by giving two months' notice. In fact, renting can be a useful test before you decide to commit and buy in a given area.

2. No major financial responsibility

While you will of course have to pay rent, you won’t be tied into monthly repayments on a loan with a bank and risk the repercussions of falling into negative equity.

Furthermore, you won’t have to foot the bill for the maintenance and general upkeep of the property. It is the landlord’s responsibility to keep the property in good condition, pay for decoration and its general upkeep.

3. Ban on tenant fees 

An outright ban on lettings agent fees kicked in on 1 June 2019. Landlords and their agents are no longer able to charge you for things like credit checks, inventories and references, putting hundreds of pounds back in your pocket.

A well maintained period terraced house 

Cons of renting

1. Rent could be dead money

Your monthly payments will be going to a landlord rather than building up your own stake in bricks and mortar.

2. The ball's not in your court

You’ll be at the behest of whoever owns your home. That means that if they increase the rent at contract renewal, get different tenants or decide to sell, there's not much you can do about it.

The landlord will also typically impose restrictions on what you can and cannot do in your home. Many, for example, won't allow you to keep pets.

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Phil Spencer's advice: Should I rent or buy?

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