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Rent or Buy? Choosing whether to buy or Rent a home could be one of the most important decisions you make in your life. Are you ready to settle down? Will one price work out better than the other?

Buying your own home can be expensive but could save you money over the years. Renting offers less freedom to live by your own rules but more flexibility if you need to move. Here are the benefits of each and how to decide whether to rent or buy.

Whether you rent or buy depends on your financial situation, like how you’d like to manage your savings, if you have an emergency fund, and whether you’d rather try to fix your broken toilet yourself or just complain to your superintendent.

It’s also a decision that’s harder and harder to make for young people, as financial inequality leads more young people to simply live with their parents, and to put off buying a home until later in their lives.

Check out our handy chart, first put together by Business Insider, that factors in all the major decisions you need to make when choosing whether you are renting or buying a home.

 

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Should you buy a home?

The benefits of buying

  • Your monthly repayments go towards buying your home, not into a landlord’s pocket

  • You fully own your home at the end of the mortgage’s term, and can then live rent free

  • You could make a profit if house prices rise

  • You can live by your own rules without needing a landlord’s permission (e.g. having pets)

  • You can make changes to the property such as redecorating or landscaping the garden

  • Renovations and changes you make could increase your home’s value

  • No landlord who could make you move house because they want to sell

  • Buying can sometimes be cheaper than renting

The drawbacks of buying

  • Upfront costs like mortgage fees and stamp duty can make it pricier than renting
  • If you get a joint mortgage and separate, it can be complicated to sell the property
  • Interest rate rises can increase your monthly payments (unless you get a fixed rate)
  • You have to pay for repairs, including if something urgent goes wrong like a leak
  • Moving can take a long time because you have to sell your home first
  • If your finances become tighter, moving to a cheaper property can take a long time
  • There are financial consequences if you fall behind on repayments, like getting into debt
  • If you fell too far behind you could face bankruptcy or your home being repossessed

Should you rent a home?

The benefits of renting

  • It can be easier to move house quickly when you need to

  • Finding and renting a home is usually quicker than the process of buying

  • No risk of losing money if the property’s price goes down

  • Your landlord has to pay for repairs and renovations

  • It is often cheaper and rental payments rarely change, making it easier to budget

  • You may be able to rent a bigger home in a nicer area than you could afford to buy

The drawbacks of renting

  • All of your rent payments go to your landlord, not towards owning a home
  • If you never buy a house you have to pay rent for your whole life, even after you retire
  • If your landlord decides to sell or get new tenants, you have to move out
  • Your landlord can set rules and restrict changes you can make to the property
  • You have to pay a deposit, and the landlord may keep some or all of it
  • Your landlord could decide to increase your rent
  • Improving the property could increase its price, but this only benefits the landlord

Which is cheaper?

It is usually cheaper to rent in the short term because:

  • The rent you pay could be lower than mortgage repayments would cost
  • The deposit you pay is usually much less than the initial costs of buying a home

The vast majority of landlords have not received any information from the Government about the new Right to Rent scheme which was rolled out across England this week, new research shows.

From Monday 1st February 2016 it became compulsory for all private landlords in England to check that new tenants have the right to be in the UK before renting out their property.

Under the new rules, landlords, including those who sub-let or take in lodgers, who fail to check a potential tenant’s ‘Right to Rent’ will face penalties of up to £3,000 per tenant.

But Right to Rent, which was introduced in the Immigration Act 2014 as part of the Government’s reforms ‘to build a fairer and more effective immigration system’, has been criticised after it was revealed that most landlords are still not prepared for the new legislation.

“There has been an influx of new legislation relating to the rental market made in recent years and we know that UK landlords are struggling to keep on top of these changes. Despite knowing many of the basics, many find it difficult to navigate the minefield of changing renting rights and wrongs and this is particularly so for accidental landlords,” said Adam Male (left), Co-Founder, Urban.

A new survey from the Residential Landlords Association (RLA) reveals that 90 per cent of landlords have received no information from the Government about the new Right to Rent scheme, the first phase of which was launched in parts of the West Midlands in December, while almost three quarters of the 1,500 landlords surveyed did not know what the rules obliged them to do.

“Outsourcing border patrol to landlords is like asking passengers to drive trains – a foolish and senseless example of delegation,” said Matt Hutchinson, Director of flatshare site, SpareRoom.co.uk.

Hutchinson (above) believes that many landlords may now seek to avoid the risk altogether by simply letting to people with UK passports.

He added, “This could lead to cut and dry examples of discrimination as landlords look for ways to simplify the vetting process – which also requires follow up checks – by reconsidering who they are inclined to let to.”

Despite the opposition, Immigration Minister James Brokenshire insists that Right to Rent checks are “quick and simple” and many responsible landlords already do them as a matter of routine.

He commented, “Right to Rent is about deterring those who are illegally resident from remaining in the UK. Those with a legitimate right to be here will be able to prove this easily and will not be adversely affected.

“Under Right to Rent, landlords should check identity documents for all new tenants and take copies. The scheme has been designed to make it straightforward for people to give evidence of their right to rent and a range of commonly available documents can be used.”