There are pros and cons on both side of the property fence. If you buy, you tend to feel as though you have a measure of security. Rent and you know that you’re at the mercy of your landlord. Delve a little deeper and one prospect starts to look better than the other. And that prospect would be rental property.
Myth One: you don’t own your home, your mortgage lender does. You’re also not buying your home from the vendor. Your lender buys it, you buy it from them. A long-winded and conveniently overlooked aspect of buying a property, and something that the majority of buyers never think about.
Sound familiar? It should, because chances are you’ve done exactly that.
Myth Two: buying your home offers a higher level of security. It does? Says who? Tell that to those losing their homes hand over fist. Buying your home provides a false sense of security; there is no tangible refuge in the so-called ownership of house buying.
See Myth One – you own your home the minute you make your last mortgage repayment. Up until you hand over that final sum of money, your home is owned by your mortgage lender. Yes, the deeds say otherwise however the minute you start to default on your agreed payments you are in danger of losing your home to … that’s right, your lender.
The ‘myths’ aren’t exhaustive and yet I don’t think that there’s a need to continue listing each and every one. The above two speak for themselves, and when you also add in the overall costs of buying your home (from your lender!), then things really start to make sense.
On a standard rate of 5%, over a period of 25 years on a £100,000 market, you will pay an extra £75,000. And even in today’s housing market £100,000 won’t buy you a great deal.
That doesn’t sound much in one sense but, doubled up that’s £150,000 on a £200,000 mortgage. And so on. Who receives the better deal? Your lender. Yup – the guys that you’re buying your house from in the first place!
So, why rent? What’s in it for you? Well for a start off you’re not tied to the house. On a standard short-hold tenancy you’re tied in for six-month periods. This is in the private rental market. Rent from your local authority and, once you’ve reached the secure tenant stage (generally after the first 12 months), you’re set for life.
That’s security. Okay, a short-hold tenancy isn’t exactly secure but it does work both ways. Maybe your landlord decides to oust you for some reason and you’ve got to move out. By law you have to receive an agreed level of notice, which allows you plenty of time to find something else.
Fall lucky and you’ll stumble across a landlord that prefers secure, long-term tenancies, which suits both you and the owner. On top of that the repairs and general maintenance are the landlords domain. Need a plumber? Call your landlord. Lost a few roof tiles? Call your landlord.
Again this becomes far easier when you rent from your local authority. And whilst many people may think that renting from their local council is a step down, these days council tenants have very fixed rules to live by.
The average tenant, living in a manner that matches that of modern society (i.e. being a ‘good neighbour’) has nothing to worry about. However if you’re the type to play raucous music at 3 every morning or let your dog bark away to his heart’s content then you’re out on your ear.
So saying that both local authority housing and housing association groups have tightened their belts in recent years, and self-centred tenants are now a thing of the past. In short renting has far more benefits going for it than house ownership.
If you’re not in the position to buy, and renting is your only viable option, think yourself lucky. Owning your own home isn’t all that it’s cracked up to be.