Britain's Property Boom: To Buy or Not to Buy?

Wednesday, 09 October 2013

With the housing market currently booming and confidence in the economy at its highest level since 2010, it seems like now is the perfect time to step onto the property ladder. Industry magazine Property Wire seems to agree, reporting that UK home buyers are 10% better off each year than their counterparts in the rented sector.

According to the report, the average monthly costs around buying a three bedroom house are £672; £73 less than the average rental price for a similar property. Five years ago the costs associated with renting were almost 50% lower than those associated with buying, and industry experts believe that rental prices will continue to rise.

The problem is that, despite a plethora of government schemes, many people are still unable to save up enough money for a deposit. This is Money notes that the average mortgage size currently sits at 81-83%, meaning first time buyers have to scrape together at least 17% of the total property value. With the average house price sitting at £242,415, and rising at a faster rate than the average salary, that means a lot of saving.

Although buying a home may save you money in the long run, there are a lot of up-front costs to consider. As well as the gargantuan deposit, you also need to put aside some cash for stamp duty: the taxman’s cut. Houses under the value of £250,000 pay a 1% stamp duty fee, and it’s essential that you take this into consideration before spending all of your money on the deposit. There are also legal fees, removal costs, and decorating costs to think about.

Of course, when renting a property from a private landlord, the up-front costs are a lot lower. The tenant also has much less responsibility for the property itself - you still need to arrange contents insurance to protect your possessions and pay the utility bills, but if there are any major issues (for example a leaking roof or a faulty boiler) then the landlord is responsible for getting it fixed.

For many people, unfortunately the decision of whether to buy (or not) is dependent on being able to raise the funds for a deposit - meaning that for thousands of renters across the UK, it's a waiting game.

News Home

Swiftcover and are both trading names of AXA Insurance UK plc, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority