For so long it has been a life goal for so many people to become a homeowner. “Get on the property ladder and live happily ever after,” you would easily be led to believe. Generally speaking, in 2018, owning your own home has become much harder to achieve than in previous generations. In this blog post we aim to find out if owning your own home is still desirable, and if in fact, is the right thing to do.
Buying a new home, as opposed to renting, usually requires a large initial outlay of capital. It’s not just the commitment of mortgage payments, but stamp duty, valuation fees and your solicitor's charges. That’s before we talk about the deposit on any property that will be at least 10% of the value of the property. Buying a property is for the long term and we see many of the advantages of not owning a property coming down to matters unrelated directly to money.
When you rent a property it may give you flexibility that owning a property cannot. To be able to move location quickly might be a big advantage for many, for some this isn’t crucial at all. What if you need to get your hands on capital quickly to invest elsewhere? If all of your money is tied up in your home then you may not be able to move quickly if the right investment came your way; assuming that you couldn’t find the capital elsewhere.
Property is (usually) for the long term. Over many decades property has been a sound investment out-performing many other financial investments. Average property prices in the UK tend to increase in value over time. If you bought your home 20 years ago it would almost certainly be worth significantly more today. It is tough to say if you bought a house today that it would be worth significantly more in 20 years. The world’s greatest economist would struggle to give you a conclusive answer as to any financial matter in the long-term future. That being said, property has performed successfully over time. Your home is much more than a financial decision, however if it can be worth something to you in the future, as opposed to renting, then it is a crucial consideration to make. Obviously, upon completion of paying your mortgage, you will one day own your property and so your home then becomes a financial asset.
In many cultures renting is the norm. According to Statista, 56.5% of households in Switzerland choose to rent their home (Statista, February, 2018). That figure is 48.1% in Germany, compared to a UK average of 36.55%. It’s important to look at culturally and economically why that is the case, as it is not just a financial decision that each household has come to make.
So, should you rent or buy the property you live in? It’s almost impossible to give you an answer without understanding you individual personal circumstances and personal goals. Knowing what you want out of your financial life may go some way to answering that question.
If you would like to discuss purchasing a property, or any aspect of personal financial advice, please get in touch with us on 01302 244 977.Publish date: 22nd August 2018