Renting a house doesn’t build equity, but could be more convenient than buying a house. With the direction of house prices still uncertain, maybe property rental is better for some.
Renting a house is often perceived as wasting money, but there are a number of situations where property rental can be beneficial. Escalating house prices can make it impossible to get on the property ladder, meaning that house rental is the only viable option.
Advantages of Renting a House
Lower deposits: Those buying a house will often need to raise 20-25% of the property value, especially for bad credit mortgage loans. However, those renting a house will normally only have to find 3 months rent; part of which is refundable deposit.
No repair costs: When renting a house, the landlord is legally responsible for any repairs and maintenance; Buying a house passes on this responsibility to the buyer.
Falling property prices and negative equity: According to a survey by Nationwide, the average cost of a house fell by £29,000 to £153,048, representing a fall of 15.9% during 2008. Although house prices have since increased; many new first-time buyers are struggling with negative equity problems. This can make it difficult to refinance or move home.
Easier to move: While buying a house has its advantages, it is vastly easier to move when renting a house. During a recession, it can take many months to sell a house.
No building insurance: While those that rent a property are still responsible for the contents insurance; building insurance is paid for by the landlord.
State benefits: Access to state benefits, in the event of losing a job, is vastly better for those renting a property than for a home owner.
Disadvantages of Renting a House
Dead money: Only the landlord benefits from capital appreciation. As property prices double every nine years, on average, property rental can mean that a wonderful investment opportunity has been wasted.
Notice from the landlord: If the landlord provides the required period of notice; the tenant will have to find somewhere else to live.
Possible lack of energy efficiency: When the tenant is responsible for bills, not having quality wall and roof insulation can result in higher utility bills.
Difficult to save for a house deposit: Trying to cover the cost of property rental along with other household bills, can make it extremely hard to save for a house deposit for future buyers
Bad landlords: While there are laws in place to protect those that rent a property; bad landlords can make life very difficult for tenants. This could mean extremely long delays before getting problems satisfactorily resolved.
Bad credit: Renting a house can be very difficult for those that have a history of bad credit. Letting agencies perform credit checks, which can lead to applicants being rejected. Those that do have bad credit will probably only be able to rent a property directly from the landlord.
Buying a Property vs Renting a Property
Renting a house is an excellent short-term housing solution, especially during a recession, or when moving area or job remains a possibility. However, those wishing to settle down would be well advised to consider buying a house to take advantage of capital appreciation and make modifications to where they live. The greatest challenge when buying a property is saving for a house deposit, but there are ways around this problem.
Post supplied by: http://www.easyloftconversions.com