To buy or rent – the great debate that rumbles on

It is one of life’s great debates that often dominate our lives year on year: is it better to buy your own home or rent someone else’s? The simple answer is: there is not right or wrong decision, but financial trends – a stable or unstable economy – will often dictate that decision. Here Chris Hope, Senior Partner at Dawsons Estate Agents, weighs up the pros and cons of the buy or rent conundrum. “People are always asking what is the best course of action when it comes to buying or renting,” said Chris. “Of course personal circumstances will always dictate and every four or so years the buy/rent debate shifts one way or the other. “To be perfectly honest at the moment it is probably a 50/50 scenario when looking at a decision to buy or rent.” Just to put into context Chris gives an example of a three-bedroom terrace in the Morriston area of Swansea. At around £100,000 to buy that would give you a £385 per month on a typical 25-year mortgage with a 10/15% deposit. That would compare to £500 rent per month. “So looking at the averages there is not a great deal of difference when you take in consideration the buyer’s initial outlay with a deposit,” reflected Chris. “Looking at it historically – 20 years ago those that rented were those who couldn’t afford to buy. “But whereas there has been a social status element with owning your own home it’s nowadays become a lifestyle choice. Renting is now socially acceptable, and to put that into perspective in our Marina Office we only have one or two lettings properties at any one time. The demand is that great. “Renting now gives young professionals flexibility. The fact the house needs painting or decorating is not longer and issue. You can just move! “The culture has definitely changed – renting is a socially accepted way of living. Renting has given people freedom and gives you flexibility and latitude, especially when a career may take you around the country.” But where rent gives you flexibility and no real ties buying is seen more and more as an investment. For instance fairly recent figures from Santander Bank indicated that ‘lifetime renters’ who never manage to climb on to the property ladder are likely to hand over around £300,000 to private landlords during their lives. “But rental does look attractive especially when you look at people who have bought at the wrong time have been caught in a negative equity situation – that brings it’s stresses and strains,” added Chris. “Despite that, compared to other countries such as USA and Germany we are still largely a nation of homeowners. Some people see an investment in a property is an extra pension at a time when pensions cannot be relied on to fulfil financial needs in retirement. “There is still an advantage on buying a property because of the basic economics of what it costs to buy compared to cost of rent. Having a mortgage-free environment is a comfort blanket.” To put that into perspective a recent survey from HSBC talked of a growing divide between property ‘haves’ and ‘have-nots’. Analysing that the generation of owners who bought in the early 1980s tended to become mortgage-free at 56. Recent buyers – average age 29 - are expected to be mortgage-free at 60, whereas young people who say they do not expect to be able to buy until age 35 are likely to be approaching 68 before they own a home outright. In conclusion Chris says: “There is no right and wrong to be honest – but it changes its balance determined by financial stability.”