Should I rent or buy?

Deciding between renting or buying a property is a really big step, and while we can’t decide for you, we can offer some insights to help you reach a decision.

    Published: 25 Nov 2019

    What are the initial costs of renting vs buying?

    Whether renting or buying you will need money upfront.

    If you decide to rent you’ll need a deposit, which is usually around 4 to 6 weeks rent. If you go through an agent there may be agency fees to pay, and these can vary a lot, so it’s worth asking about this upfront.

    Helpful hint for renters: Don’t have enough for a deposit? Contact your local council to see if they run deposit/rent or bond schemes. Not all landlords accept them, so ask first.

    When you buy a property, there a variety of costs you’ll have to consider.

    The deposit, which is on average between 5-20% of the purchase price is likely to be your biggest cost. There are other costs associated with buying a home you will need to factor in.

        wallpaper being stripped off an empty room

        Upfront costs of buying a new home

        England, Wales and NI

        Valuation, legal and mortgage fees. Figures in this table are from a range of sources and correct as at 27 July 2017.

        England, Wales and NI

        Valuation fee

          Average of £230-£600, though costs can be higher

            Legal fees

              £500-1,500 including VAT at 20%, plus local searches at £250-£300

                Mortgage fee

                  Lender may charge booking fee of £99-£250, product fee up to £2,000

                    Scotland

                    Valuation, legal and mortgage fees. Figures in this table are from a range of sources and correct as at 27 July 2017.

                    Scotland

                    Valuation fee

                      Included in HomeBuyer Report and paid by seller, however some lenders may charge a retype fee. Buyers can commission own survey

                        Legal fees

                          £500-1,500 including VAT at 20%, plus local searches at £250-£300

                            Mortgage fee

                              Lender may charge booking fee of £99-£250, product fee up to £2,000

                                England, Wales and NI

                                Stamp Duty applies to properties over £125,000. Figures in this table are from gov.uk and correct as of April 2018. The rates are as follows:

                                England, Wales and NI

                                0%

                                  Purchase price up to £125,000

                                    2%

                                      £125,001 - £250,000

                                        5%

                                          £250,001 - £925,000

                                            10%

                                              £925,001 - £1,500,000

                                                12%

                                                  Over £1,500,000

                                                    Scotland

                                                    Land and Buildings Transaction Tax applies in Scotland to properties over £145,000. Figures in this table are from gov.uk and correct as at 27 July 2017. The rates are as follows:

                                                    Scotland

                                                    0%

                                                      Purchase price up to £145,000

                                                        2%

                                                          £145,001 - £250,000

                                                            5%

                                                              £250,001 - £325,000

                                                                10%

                                                                  £325,001 - £750,000

                                                                    12%

                                                                      Over £750,000

                                                                        What are the ongoing costs of renting vs buying?

                                                                        However you pay for the roof over your head, you’ll have bills to pay:

                                                                        Utility bills - The price of your utility bills depends on the property. Be sure to ask the vendor or landlord for average monthly bill costs to give you an idea of what to expect.

                                                                        Council tax – whether you rent or buy, the amount of council tax you will pay is the same. Find out more about the council tax band of the area you are looking to live in at gov.uk.

                                                                        Contents insurance - whether you rent or buy, it is worth having contents insurance to protect your belongings.

                                                                        Buildings insurance – If you rent, you don’t need to worry about buildings insurance but if you own your home you are required to have buildings insurance.

                                                                        If you own your own home, there are some additional costs to consider:

                                                                        Factoring – if you live in a factored block, you will need to pay either monthly or quarterly charges to the factor to cover things like gardening, joint repairs and maintenance.

                                                                        Maintenance – owning your home also means that you are responsible for everything in the property. If your boiler, central heating or washing machines breaks, you need to fix it so it is worthwhile setting a sum aside regularly in case of emergencies.

                                                                          Is it cheaper to rent or take out a mortgage?

                                                                          If you take the upfront costs out of the equation and comparing purely the monthly rent vs mortgage payments, then buying could be cheaper over the medium-long term. It isn’t always the case, but rents are continuing to rise across the UK.

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