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Is Renting a Waste of Money? - Essential Living

Is Renting a Waste of Money?

Blog Guide to Renting
03.09.19

The UK is passionate about homeownership. Although many people rent, the prevailing mentality has been one that champions homeownership above all else. Nevertheless, it seems that once again, times are changing. These days, UK residents are being bombarded with soaring property prices. While most would still prefer to buy their homes outright, many have embraced the fact that it may not be economically feasible in the foreseeable future.

Therefore, many millennials have been forced to totally revamp their home-buying plans. Rather than trying to purchase homes early in life, they’re living at home with their parents for longer and saving up for years in order to be able to make substantial down payments on their own properties later in life.

So, is renting a waste of money?

Happy woman moving into rented apartment

Is Renting the Solution?

In the past, renting was considered by some to be a waste of money, but these days, many UK residents are realising its many benefits. Although renting has a stigma of being ‘dead money’, the perks of renting a home are alive and well.

Sure, you are still required to pay your landlord every month, which is the income they use to support their own lifestyles, but this doesn’t mean that you are wasting your money. One of the main reasons some people believe that renting is dead money is that our society has constantly focused on only the positive aspects of buying while also pointing out the negative aspects of renting.

However, by taking the time to do the opposite, it becomes quite clear that renting also offers a wide array of benefits.

Rent Vs. Buy: Which Should You Choose?

The rent vs buy debate is one that has remained one-sided until recent years. With house prices at record highs, owning a home has never been more expensive. Because of this, the various benefits of renting are becoming increasingly obvious.

You can read more about this specific question in our Renting vs Buying blog.

 

A happy woman in a rented flat

Live On Your Own Terms

One of the top benefits of renting is that it allows you to live on your own terms. Buying a home requires a long-term commitment, and no matter how tough things get, there is no way to quickly jump ship. However, when you are renting, you have much more control over the terms of your agreement. For instance, you can look for places that allow you to sign month-to-month, annual, bi-annual, and other types of renting agreements.

Additionally, you can also enjoy the freedom of travelling and relocating as often as you like. So, for instance, if you sign an annual lease, you can totally relocate to a new home once your lease is up. This gives you the opportunity to sample various places in order to find the one that is the best fit for your unique living preferences.

Homeowners are not afforded the same luxury. Once they sign a mortgage, they are locked in for decades. If, after moving in to a new home or neighbourhood, you realise that it’s not quite for you after all, you’ll have to wait longer to move if you’re a homeowner. While there are ways to get out of a mortgage, the process is typically highly stressful and costly. No matter how great you feel about buying, the flexibility of renting is an undeniable benefit.

 

A woman worried about cost of bills

Scale Your Lifestyle with Your Career

Another major benefit of renting is that it can allow you to scale your living arrangements as you continue to elevate in your professional life. When it comes to buying a home, it is entirely possible to buy a house that eventually becomes too expensive. Also, you may purchase a home that your income outgrows within just a few years. Luckily, when renting, you can up or downsize your home as often as you’d like.

Arguably the biggest factor when it comes to the question ‘is renting a waste of money?’ is what you can afford.

Affordability

Additionally, renting will provide you with access to homes and dwellings that you are cannot afford to buy. For instance, the average renter in London isn’t likely to have many issues finding a place within their budget in Zone 2 and 3. The savviest among us may be able to get a decent flatshare in Zone 1. However, if you try to purchase a home in these areas, you will face significantly more obstacles.

Moreover, renters can benefit from the budding build-to-rent lifestyle that’s spreading across London. This trend involves offering high-quality apartments, 24-hour on-site building management, and an array of other amenities, which will make the costs worth your while.

Did you know that the average house price increased by 9.8% over the year to March 2022?

 

A group of women enjoying a roof terrace

Achieve Autonomy

You don’t have to wait until after you can afford a home to live on your own. Renting allows you the benefit of having your own space without the responsibility of ownership. So, if you know it may be a while before you can afford to make a down payment on your dream home, renting provides you with a way to live in your own space while working towards ownership.

Living on your own will give you the ability to set your own hours, decorate and create your own unique aesthetic, have gatherings with your friends and family, and much more. So, rather than being forced to live by your parents’ rules until you can afford to own a home, you can start your journey towards self-sufficiency immediately.

You’ll still have to pay the cost, but you also earn the privilege of being the boss.

 

A couple stuck in home ownership

No New Taxes

Another major benefit of renting your home is that you won’t have to worry about new taxes. Owning a home comes with lots of hefty fees, including property taxes. These fees are often more than homeowners expect to pay and can put a major damper on the homeowning experience. However, you don’t have to worry about such fees when you opt to rent instead.

You could face up to eight taxes in total when it comes to home ownership.

Free Maintenance

Free maintenance is possibly one of the most underrated benefits of renting a home. This is because maintenance fees are solely the responsibility of the homeowner. So, no matter if it involves fixing a broken toilet or repairing a leaky roof, you won’t have to worry about wasting money on these necessities.

This could be considered hassle-free renting.

In fact, some may argue that maintenance bills are the epitome of “dead money.” Although owning a home gives you the ability to collect rent from others, it also comes with a major price tag. Tenants can’t live comfortably in a home when it is in need of maintenance and repairs. Therefore, homeowners must quickly shell out hundreds or even thousands to make repairs unexpectedly. If you are unable to make those repairs, you could end up facing legal ramifications and even lose tenants/income. Nevertheless, paying for these repairs in real-time offers very little in return. You will simply be paying for things that need to be done to continue making the same amount of rental income. Having said this, if you are still living in the home, it might simply be an inconvenience that you can afford to ignore.

In other words, maintaining a property can be costly. Very costly. While you may be able to go months or even years without making costly repairs, at some point, you will be forced to spend money replacing and repairing various aspects of your home. These costs can be astronomical and often occur when you least expect them. Luckily, a renter wouldn’t need to worry about any of this.

You Won’t Get Stuck in a Home Rut

Lastly, many overlook the fact that homeowners are literally stuck in contracts they can’t afford to get out of. In a perfect world, you could purchase a home and never have any issues or regrets.

Unfortunately, this is not how things go. It can be hard to predict your needs and wants 5, 10 or 20 years from now, so many people end up buying homes that become too big, small, inconvenient in the long run. When renting, if your needs change, you can simply search for a place to relocate once your lease is up. With homeowners you’ll be waiting many years for your contract to expire, which leaves you with less options. Rather, you will either have to pay to make upgrades and add things that make your space more liveable, or you may be forced to cancel the mortgage prematurely, which will affect your finances, credit, and even your ability to purchase other properties in the future.

This is especially true in this day and age, where the costs of buying a home are astronomical. Just because you can afford to purchase property doesn’t always mean it will be worth the investment. In fact, it’s entirely possible that you will pay much more than the property is worth and be locked into an expensive mortgage while the value of your home slowly plummets.

The only answer to such issues is ‘negative equity.’ This means if you want to move on from the property, you will either lose the down payment and money you have invested in the property, or you will simply be stuck with a property that you’re unable to sell.

Is Renting a Waste of Money?

Overall, is renting a waste of money? Well, it depends on who you ask. On the one hand, if you are well-established, have tons of money, and don’t care about the rising costs, you may be ready to own a home. On the other hand, however, given the state of the economy, these are sentiments that very few can relate to. Therefore, renting is often a much more viable option for everyone else.

Ultimately, the national dream of homeownership at all costs is becoming antiquated. That line of thinking was created when the economy was thriving, and the average person faced far fewer obstacles in terms of homeownership.

Is it high time to embrace renting for all its worth? Renting allows you more flexibility, lower costs, the chance to gain independence, and the opportunity to try new things and live a variety of lifestyles before settling into the one that’s best for you.

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