Mortgage costs rising and households with the increasing cost of living pressure – the question facing whether to buy property in Stockport or rent is becoming one of the most relevant topics for the average prospective homebuyer. So lets talk renting vs buying….
Ponder the Outcomes
Property prices have seen a surge in the 2020s that resulted in average house prices now being 25% higher than five years prior. However, the shortfall in the rental properties and high tenant demand has been even higher, with the rental price increase of 30% in the same period.
Although mortgage interest rates have risen over the past 6 months, there are still lots of mortgage deals if you have a minimum 5% deposit. With house price inflation forecast to stabilise, is now the best time to rent or buy?
Should I Buy or Should I Rent?
If you look at the upfront costs, it is undoubtedly cheaper to seek advice on renting a house. Deposits have been capped at 5 weeks’ rent since June 2019 and you only need to pay the equivalent of 1 week’s rent to reserve a property.
Buyers have much higher costs which, in addition to finding the 5% deposit which is in the average region of £7,500, you will also have survey and solicitor costs that add up to over £1k. Stamp duty may also factor into the equation. First-time buyers are exempt from this provided they are not purchasing a home over £425,000.
The longer-term benefit of buying property in Stockport is that your mortgage payments gradually build up equity. Those who would have bought their home 5-10 years ago would substantially be better off than if they had gone for renting a property.
Pros and Cons
The pros in renting can be summed up in that the tenants can move within relatively short notice, have lower upfront costs and can rent a home in an area where it otherwise would be out of the question to buy in the price range. The landlords are also responsible for repairs and maintenance, building insurance and any service repair charges.
The cons are that you will not build any equity as you are effectively paying your landlord’s mortgage and not your own, and there is less security as your landlord can raise your rent or request that you leave the property when your lease is up.
The pro in buying property is that you can build equity as you pay your mortgage and there is an opportunity to benefit from rising house prices over time. You also have a lot more freedom in improving your property and altering your living space as you wish.
A con in buying is that there is the risk of negative equity if house prices fall, you have higher upfront costs and less flexibility to move if your circumstances change. You are also responsible for any maintenance required.
For 2023, your decision to either buy or rent comes down to your circumstances, lifestyle and long-term plans. For help finding a solution, call the team at Joules estate agents Stockport for help in finding a property.
