March 14, 2017
Is renting a flat a better option than getting on the property ladder? The general consensus is no - but we reckon each option has its benefits.
We’re all told constantly that we should buy a house. It's considered 'good common sense' to take the plunge, and our biased media, banks, and politicians all do their bit to further cement this cultural norm.
If you are thinking of buying a house for any of the following reasons, maybe you should head back to the drawing board for a bit.
Here are five reasons why you shouldn’t buy a property.
1. To make your parents happy
Your parents don’t want to cause you undue stress - they just want to see you happy and ‘settled’. However, there’s a conflict of interest when what they define as important (putting money into a mortgage, creating a home, putting down roots) clashes with what you want (to move around, have no responsibility, to be able to up sticks quickly with minimal fuss).
It’s your responsibility to explain to your parents why buying won’t make you happy. A lot of older people assume this is what younger people want, as it’s what they wanted back in the 1960s and 70s - but times and mindsets have changed.
Buying a home is a massive investment - it’s the biggest, most important purchase you’ll ever make - and you have to be 100% on board. The mortgage is in your name and it’s your responsibility, so don’t buy a property if you’re not willing to be accountable. And just for the record, there’s nothing wrong with not wanting to be accountable. Just be honest with yourself.
2. As a rock solid investment
Another common misconception is that the price of your property will always go up, no matter what. This isn’t true, especially for homes outside of the M25. Lots of things can affect property prices and damage buyer confidence, such as recessions and political turmoil, and you can’t guarantee you’ll be walking away with a tidy profit.
This is especially true if you buy a run-down property you spend thousands on doing up. When it comes to selling up, you may well be able to flog it for much more than you bought it for - but don’t forget how much you’ll have spent to make it habitable.
In parts of the North East, house prices have been falling since 2007 - and still are. It's not just Newcastle - 53% of towns and cities in Britain are still below 2007 values. In 2007, the average home in Blackpool was worth £109,581. In February last year, that had fallen to £77,317.
Plus, according to City A.M, analysts are expecting house prices to fall by 2.5% when the Brexit vote puts the brakes on the British economy this year - so even Londoners aren't safe.
3. To impress someone
We’ve touched on this before - basing where and how you live around another person is crazy. Renting to impress someone is daft. Buying to impress someone is absolute madness.
You should be buying a property because it suits you. The key word here is you. Location, size, condition, price - everything has to line up with what you want. Dragging someone else’s opinion into the mix is asking for trouble.
4. To stop paying rent
Yes, you’ll stop paying rent and you’ll be paying towards the cost of your own home. However, all the little extras your landlord was covering, such as repairs and maintenance, will fall to you. Buying a home and taking care of its upkeep can be a drain on your time and money, and you’ll find that a large part of your salary is going towards things you might not consider particularly ‘fun’, such as furniture, fittings and double glazing.
Buying a home is not a way to stop spending huge sums of money. It is, for several years, a guaranteed way to start spending more until you bring your mortgage payments down.
Average cost of double glazing for a house with 4 windows: From £2,140
Average cost of a new bathroom: £4,500
Average cost of a new kitchen: £3,000
Average cost of a new boiler: £1,995 - £2,550 (Depending on if the boiler is in a new location)
Average cost of painting and decorating a one-bedroom flat: £880
Average price for an off-peak call to a locksmith: £125-£225
5. The Government wants you to
Do you do everything the Government tells you to? Think about it. If you’re paying money to a landlord, that money’s going back into their pocket and also paying off their mortgage. You’re not dealing with the banks, or adding to the country’s coffers.
When you buy, you take out a huge loan with a bank, and then you start paying it back - with interest. The bank is then making money from you in exchange for being good enough to loan you thousands. And guess who gets a share of that money? That’s right - the Government. When you buy a home, the Government gets a cut. They haven’t created all these helpful schemes because they care - they actively want to encourage young buyers to get onto the ladder because in the end, the Government benefits.
We’re not saying ‘don’t buy’. It’s a great way to start to build towards a secure future, it means no more housemates, and it’s a clever strategy to make your money work harder for you (within reason!). All we’re saying is make sure it’s what YOU want, and that you’re prepared for the time, money and effort which comes with buying a property.
Here’s what you should take away from our little counter-intuitive soapbox speech:
- Only buy a home if it’s what you want. Other people should have no say in the matter, as ultimately, the responsibility later on will fall to you
- Don’t assume it’ll be cheaper than renting. It might be, years down the line, but remember that you’ll be paying for everything - not just the mortgage repayments - and that can be eye-wateringly expensive
- Buying to impress someone is the financial equivalent of jumping off a roof shouting ‘Look at me!’
- The Government’s schemes are great if you’re dedicated to the cause, but remember why they exist. They stand to benefit from your investment - they’re not making it easier for you because they genuinely care