Renting can work out cheaper, but owning a home is still a good investment
People renting a home pay 43% less than home owners for housing costs and could see savings of £77,241.61 over a standard 25 year mortgage period, new research shows.
The best savings can be found in London and Bristol, according to the study into housing expenses, with insurance and maintenance costs driving factors in higher costs for home owners.
Lending experts Ocean Finance analysed monthly housing expenses data from the Office of National Statistics, and talked to 2,000 UK home owners and rental tenants, but while savings can be made, buying a home is probably still a better investment overall.
The study report says that while getting on the property ladder has the well-known costs of funding a deposit, solicitor’s fees and surveys, the real savings for renters were found in the accumulation of home maintenance, decoration and buildings insurance costs over the span of a mortgage period.
Even though rental tenants will incur higher moving charges, as the study shows renters are most likely to move to a new house every two years compared to home owners moving every 10 years, these additional costs still didn’t make an impact on the overall savings.
While those in rental accommodation don’t have the security of owning their own home, the maintenance and buildings insurance costs that are covered by a landlord build up to huge saving over the years.
Other findings suggested that one in 10 home owners regret buying their home and 75% of had at least one major house maintenance issue each year, spending an average of £380 in order to fix it.
It also found that the average home owner will spend £2,805 on buildings insurance over a 25 year period, and an additional £9,500 on maintenance costs outside of insurance cover and
£1,068 on home decoration each year.
With so many ongoing costs to consider when buying a home, unexpected maintenance was cited as one of the biggest reasons for those that regret purchasing their current home. Some 44% of them said that spiralling costs relating to maintaining their home made them regret entering into a mortgage.
The data also suggests that those who jump into the housing market early have the biggest chance of regretting their decision, with 35% of 18 to 34 year old home owners showing remorse at entering into a mortgage.
‘For many, owning their own home is the ultimate dream as it symbolises achievement and success. One of the major benefits of home ownership is that you are building equity, meaning that if a home appreciates in value you have an investment asset that will generate wealth upon sale or refinance in the future,’ said Ugo Arinzeh, managing director of Onyx Property Consultants.
According to Ian Williams, director of communications at Ocean Finance, while there are hefty savings to be made by staying in a rental agreement rather than stepping onto the property ladder, the money saved would need to be invested wisely to match the equity gained on a mortgage over 25 years.
‘What is clear from the research is that more care and attention is needed before entering into a mortgage agreement, in order to better plan for unexpected costs and minimise the chance of regretting your financial obligations to a single property,’ he said.
Original Source: Property Wire https://www.propertywire.com/news/uk/renting-can-work-out-cheaper-but-owning-a-home-is-still-a-good-investment/