by Mark Johnston
Renting or Buying…the Great Debate Continues!
Overall it appears we are a nation that is still in love with home ownership.
However, a study published by insurance firm LV showed that the aspiration to home ownership is no longer as strong as it once was.
The study said that the previous generation, those now aged 55 to 75, saw 93 per cent of people ranking the purchase of a house as their biggest aspiration, but among under 35s in 2013, this has fallen as low as 33 per cent.
At the current time, it is believed that more than half of the homes in the UK are occupied by people who are not owners.
It seems that whilst buying a house in the UK remains cheaper on balance than renting, the gap between the costs of both is becoming narrower.
Lawrence Hall of Zoopla.co.uk said: “As a general rule it is much more cost effective to own a property than rent it. This is particularly true in the north, where a big gap has opened up between the cost of renting and owning.”
Research has shown that the cost of renting properties in many parts of the UK is actually less than that to purchase a home, meaning that demand will remain high in these areas which is good news for landlords.
Owning a home remains 13 per cent cheaper than renting on average across UK but buying is now 3.2 per cent more expensive than this time last year according to property search website Zoopla.co.uk
With all the headlines talking of dirt cheap mortgages and sky rocketing rents, consumers might think that buying a home is the obvious choice. But of course, the reality for would be home owners is far more complicated.
On the one hand, rents are rising around the country and have increased by as much as 10 per cent over the past year alone, which leaves many tenants unable to save much for a deposit.
On the other hand, mortgage lenders are charging house hunters with small deposits double the interest they offer to their best customers, leaving many first time buyers struggling to get on the ladder.
Many previous studies that show that taken as an average, buying is the cheapest option. The average rent is 14 per cent more than the average buyer would pay in interest on an interest only mortgage.
However, there are some significant exceptions. These figures assumes buyers can get an interest only mortgage and these particular mortgages are getting rarer by the day, so most buyers will end up with a repayment mortgage, where monthly payments are much higher.
Then there are the running costs to consider. Where a tenant can call in the landlord to deal with a broken boiler or water pouring through the ceiling, an owner has to shell out hundreds or thousands of pounds to put the problem right.
So it would seem that this is one debate that will carry on for the time being and the difference between buying and renting may simply be a lifestyle choice.
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