Renting Or Buying A House | The Pros & Cons | M&S Bank

Buying vs renting

Whether you buy or rent comes down to your personal circumstances and whether you have the option to consider both. If you are weighing up the pros and cons, this guide may help you explore the advantages and disadvantages.

The advantages of buying

You’ll be a homeowner

There are many initial and ongoing costs associated with buying a home, but one major advantage is that, once you’ve finished paying off the mortgage, you’ll own your home outright.

Do as you please

Your home, your rules.  It’s yours to decorate, refurbish or improve as you wish. And if you choose to renovate or extend it (subject to planning permission and landlord’s consent if your property is leasehold) you may be adding value to your own property. In addition, you may choose to have pets or start a family – some private rental short term landlords restrict pet ownership and prefer not to rent to people with children.

Move up the ladder

If prices rise, the equity in your home can increase. Once value has built up in your home, you may have the opportunity to move to a larger home or a more sought after area. Some people choose to repeat this every few years with the aim of downsizing in the future and then releasing funds to use in retirement.

The disadvantages of buying

Interest rate uncertainty

While rents can go up, mortgages repayments are also subject to change. It’s important to remember that, unless you have a fixed rate, interest rates are variable. This means if and when interest rates start to rise, monthly repayments can rise too.

Care and repair

Owning your own home means any repairs and maintenance are down to you, not a landlord. Roof repairs, for example, can be costly. So, it’s worth bearing in mind that a professional inspection or survey before you buy can help you avoid nasty surprises further down the line.

Upfront fees to pay

As well as saving up for a deposit, you'll incur a range of fees when you buy a home, so these will need to be included into your budget. They include, but are not limited to, conveyancing fees, valuation reports, inspection or survey fees and Stamp Duty Land Tax, Land and Buildings Transaction Tax (LBTT) or Land Transaction Tax (LTT).

Find out more about the costs you will need to consider

The advantages of renting

Lower initial costs

A deposit for a rented property is naturally much lower than the deposit sum and the fees you will need in order to buy. Private rental short term landlords usually require an initial deposit (refundable on vacating the property) and often one or two months’ rent in advance.

Maintenance free

If something goes wrong with the boiler, or the roof needs attention, it’s likely to be the responsibility of the landlord to meet the costs of putting things right.

More freedom

Renting gives you more flexibility to move on fairly quickly if your circumstances change, depending on the terms of your lease. This could be useful if you need to move for work or family reasons, or are simply deciding whether you like living in the area before you buy.

The disadvantages of renting

No financial gain

It’s likely that your rent is going to pay the landlord’s mortgage, not your own. So, while the property might increase in value while you’re paying for it, there won’t be any financial return for you from your hard-earned money.

Increases in rent

Every landlord has the right to review and raise the rent they charge. If their costs increase, for example if there is a rise in interest rates, it’s possible your rent will rise.

A degree of uncertainty

The majority of tenancy agreements run for 6 or 12 months. If the landlord needs the property back at the end of the tenancy, you’ll be given notice and you’re likely to have to move out, leaving you to find another place to live.

If you are thinking about buying a home, why not find out more about the range of mortgages offered from M&S Bank.

Read more articles

The material contained in this article is intended for information purposes only and not as advice.

You should obtain professional legal or other advice if you are unsure about the effect on you of any matter in this article.

Published: 26 January 2018

Your home may be repossessed if you do not keep up repayments on your mortgage