“I think renting’s great. I get to live somewhere I couldn’t otherwise afford, and I’ve got the freedom to change location if I want.”

This is Stuart, a long-time renter of a prime location flat on a beachfront in South Wales. Stuart is in his early forties and runs a successful consultancy company. Unlike many members of ‘Generation Rent’, he would be in a financial position to enter the housing market if he chose to. But Stuart is among an increasing number of individuals opting to rent rather than buy, with the reasons mentioned above carrying more appeal than the freedom to paint the walls a new colour or hang art where he pleases.

This attitude may irk some members of generation rent who would love nothing more than to take their first step onto the property ladder. But how much of this desire to own bricks and mortar is fed by a ‘cultural compulsion’ – a very British obsession with property ownership that means we only feel comfortable when we become lords of our respective manors (or two-bed semis)?  Should we as a nation be revising our need to own property and embracing the freedoms that renting brings? Or are those like Stuart who choose to rent missing out on long-term savings and security?

Just a generation ago this would barely have been a conversation worth having. Of course it was better to buy: you built equity and stopped paying someone else’s mortgage. Home buyers could count on the property they purchased as a sound investment. But mortgages were easier to come by then and average house prices less eye-wateringly expensive. Accounting for inflation, house prices have risen by 259% since 1980; average wages have risen by 68%. So can property still be considered a sound investment?

Home-Owning Still Pays Off – Just

Opinion on this varies and it can often depend on which study you look at as to which side of the argument you hear. Plenty of studies in recent years have suggested that renting works out cheaper than buying; in 2017 Zoopla compared average mortgage costs in the U.K’s 50 largest cities and found that average rent was nearly £50 cheaper per month.

Factors such as the costs of maintaining your own home versus a landlord having to pay for repairs also make a difference to the amount you’ll shell out over the course of your time in a property.

More recently, Halifax have compiled a report which suggests that buying does work out cheaper than renting, by about £900 per year, though this is only true if the buyer can put down a deposit. The Halifax also has clear motivation for encouraging people to take out a mortgage, and  other studies suggest that the savings are not so immediate, with it taking up to a decade before a buyer will start to save money. 

Several more studies weigh in to the argument and no doubt more will follow, but the closeness of the two options suggests that perhaps the decision to rent or buy should be based on other factors, rather than solely on the financial benefits of buying.

A Lifestyle Choice

How many people do you know that have lived in their home for ten years or more? Have you remained in one location for a decade at a time? Would you like to? Taking ten years as a loose benchmark against which ownership begins to pay dividends, it may be worth considering these questions to help decide whether now really is the right time to buy. With the nature of work more fluid than ever, the process of selling a house may be more stressful (and costly) than you want if you have to move jobs. For the more adventurous – do you still dream of one day packing up everything you own and heading off to foreign lands for a period of time? Again, renting makes this much easier; with just a month’s notice you could be living an entirely new life in a different country, or fulfilling that dream of cycling around South America.

Location, Location, Location.

The point raised by Stuart at the start of this article is a salient one. A successful business owner, he would still struggle to afford to live in his penthouse, beachfront apartment. In many cases, renting allows you to live in nicer locations than may otherwise be possible. Were you to buy a home in a desirable area, mortgage payments would often be much higher than rental payments on an equivalent property – if you could get the mortgage in the first place.  This may be a consideration if you want your children to attend a good school, or you simply just want to live in more pleasant surroundings.

The Credit Question

Until very recently, home owners have had one huge advantage over their rent-paying peers: Credit Building. Every mortgage payment they make has been slowly increasing their credit rating, while those paying rent saw no change to their status – even if they paid on time for years. The opportunity to build credit in this way has allowed home owners to pull further ahead in a financial sense, with their positive rating qualifying them for better rates on everything from loans to phone contracts. This has now changed. With the introduction of the Credit Builder platform, renters can now build their credit rating in the same way mortgage payers do, simply by paying their rent on time each month. Not only does this help to qualify them for better rates on loans and other financial products, but it improves their chances of being approved for a mortgage should they decide that renting is no longer for them.

In Conclusion

The decision about whether to rent or buy is closer than ever, which means that the choice should be made based on what’s best for the individual at the particular time in their lives, rather than feeling the pressure to buy as soon as possible. With renters now able to enjoy the same credit building benefits as home owners, they are no longer missing out on one of the key benefits of home ownership and will be in a better position to buy when and if they choose to do so.