To rent or to buy? There is no easy answer. So many young people are itching to get on the property ladder, believing the idea of owning their own home will somehow make them more of an adult.
Photo by Eduard Militaru on Unsplash
But owning your own home in the current climate isn't all it's cracked up to be. In fact home ownership can be an expensive money pit that ends up costing you more than you get back.
And whilst being lumbered with the moniker Generation Rent can have negative connotations, it could be one of the wiser financial decisions you make at the moment.
So rejoice, there is much to celebrate about not being tied into a mortgage. But that isn't the only thing that is great about renting.
Here are 9 more reasons you should celebrate being a part of Generation Rent.
1. You don't have to foot the repair bills
If you're a homeowner, every little thing that goes wrong with your home lies squarely at your feet. You're responsible for ensuring your nest egg stays safe, cosy and water tight. That includes doing routine repairs, annual services, making sure the boiler works and the plethora of other jobs that mean your home remains your castle.
If you rent your home on the other hand and something goes wrong, all you have to do is phone the landlord or letting agent to let them know there's a problem. It's taken care of for you without so much as a glance toward your wallet.
2. You don't have to save up a large deposit
If you're wanting to buy a house, you are looking at saving up to 20% for a deposit, and given that the average house price in the UK currently stands at £230,776, that means saving £46,155 towards a down payment.
When you rent, all you have to put down, usually, is a month's rent, which you then get back at the end of your tenancy.
As a renter there is no squirreling around trying to make your savings work harder for you, you have surplus cash to play with each month - you can go on holiday, live your best life, hang out with mates, have expensive hobbies; the choice and money is all yours.
3. If you don't like the property you can walk away
If you've invested in a house and you realise it's in the wrong area, you don't like your neighbours, it's too small, the shops are too far away, whatever your gripe is, you're stuck with it. If you want to get rid of a property that you've just bought it will cost you a lot of money in early repayment fees.
Photo by David Clarke on Unsplash
If on the other hand you rent your home and you realise you don't like it for whatever reason, you simply hand in your notice to vacate (as per the terms of your tenancy agreement), and you are free to Goldilocks your heart out until you find your perfect rental home.
4. You pay a fixed amount each month
Rent is fixed for the length of time of your rental agreement. The landlord can't put the rent up as and when they see fit. Nor is the rent tied to the Bank of England base rates, unlike mortgage repayments.
No, as a renter your fixed term contract means you can budget better, knowing exactly how much money you have to pay toward rent each and every month, without worrying about an increase.
5. You can invest your money wisely elsewhere
Not having to pile money into your home means you have surplus cash to invest elsewhere. And not saving up for a deposit means you can save and invest your spare cash however you want.
Why not set up a #LootGoal via the loot.io app and watch your savings grow into sizeable piles of cash. You can also add their new Round Up feature that saves the change from your transactions to your chosen #LootGoal to help you get there quicker.
6. Renting is more affordable
Buying your own home is a huge financial commitment and if you can't afford to keep up with mortgage repayments, you could find yourself losing your house to the bank.
If on the other hand you find yourself struggling with the rental payments, you can cut your losses and downsize to a more affordable property, or look to rent a room in a property with friends.
7. Moving costs are cheaper when you rent
If you want to move home as a homeowner, firstly there are no guarantees that someone will buy your property from you, for the amount you want to sell it for. And secondly, if you do end up selling, the cost of moving will be significantly higher for home owners than for renters.
This is because homeowners need to factor in estate agent fees, stamp duty, capital gains tax (if applicable) and legal feel on top of moving fees.
8. Insurance as a renter is cheaper
There is no denying it, if you rent your home, insurance costs are much lower than if you were to own your home. Because as a renter you only have to pay for content insurance. So if you don't have a large diamond ring, or a whole heap of stuff to your name, your insurance premium will be at a minimum.
If on the other hand you own your own home, you will have to fork out buildings insurance too. And that is at the mercy of the insurance companies.
Do you know how much subsidence affects a premium? Or how proximity to that beautiful river will hike up the premium? It is scandalous.
9. Tenant's rights are only getting stronger
Your rights as a tenant are pretty fierce anyway, but the law is changing the way tenants are treated by unscrupulous landlords and lettings agents.
First off, tax relief that landlords were benefiting from has been cut significantly, meaning they can no longer get relief for not maintaining the property you rent. But more importantly as of the 1st June 2019, it will be illegal in England to charge tenants fees for anything other than:
- Refundable deposit
- Refundable holding deposit to reserve the property
- Changes to the tenancy as requested by the tenant (capped at £50)
- Early termination of the tenancy as requested by the tenant
- Defaults by the tenant
And how does loot.io fit into renting?
Loot.io is a fab piece of tech that can help you manage your budget whilst you're renting. The loot.io app means you can set daily, weekly, monthly and custom budgets allowing you to manage your money whilst ensuring the rent remains covered.
It is so easy to set up a loot.io personal account. Saving doesn't have to be soulless, so get in touch today to find out how we can help you make the most of your money.