What Are The Differences Between Renting And Buying A Home?

The winds of the housing market are beginning to subtly but noticeably change, with estate agents noticing that the focus of the market has become less about sellers and maximising house prices, but buyers looking for affordability.

Whilst House Price Index figures are still suggesting that the average price is increasing, it is by much smaller amounts compared to how the market has been over the past few years.

A public focus on house-building targets means that there is the potential for a much greater supply, and for many people who are currently renting to start thinking about making the jump to buying.

In many fundamental ways buying and renting is similar, at least on a week-to-week basis. You pay monthly repayments towards the house itself, as well as various utility bills and council tax.

However, the difference, of course, is that renting is a treadmill where that money goes to the landlord, whilst buying a house means that the repayments go towards building equity and paying off a mortgage.

In practice, there are three major differences between renting and buying.

The first is that it is a much bigger initial commitment. Initial deposits can vary but generally range from between a month to three months of rent, whilst a house requires at least a five per cent deposit, and often triple or quadruple that outside of first-time buyer schemes.

There are also a lot of costs associated with buying a home that need to be factored in, although an estate agent can help you navigate these.

It is a major commitment that is much harder to break than a rental agreement. If you want to move when renting you need to give a notice period and that is it. With a purchased house you need to sell it first.

Finally, the responsibility for the house is completely with you, such as a leak, an appliance breaking or an infestation, which can add hidden costs if you are not ready.

At the same time, owning a house can sometimes be cheaper depending on the mortgage you get and it becomes an asset you can sell or leave behind to others in the future.