A common dream for the average UK resident is to rent for a period of time long enough to build up for a deposit big enough to step onto the property ladder, where they hope to remain for the rest of their lives. Perhaps they’ll move to a bigger home, perhaps they’ll relocate to a smaller one, or maybe they’ll just stay where they are.
Sometimes, however, life doesn’t turn out that way. Sometimes you have to make difficult decisions, ones that will influence the direction of the rest of your life. Sometimes you have to give up your home.
It might seem crushing at the time to give up on the security that you worked hard for, but it isn’t all necessarily bad news if you make a conscious decision to sell up and rent instead. Indeed, there are some definite advantages.
Firstly, there are obvious immediate financial benefits. Online estate agents will take a far smaller percentage of the proceeds than high street agents, meaning that you’ll get back much of the money you’ve ploughed in (minus interest payments, of course). The value of that sum will obviously depend on the time you’ve spent in the home, but think back to the deposit you saved up of 10, 15 or 20 thousand pounds. That will now be cash in your pocket.
There are a huge number of other payments that you won’t have to make any more. Mortgage protection insurance has gone and most of the repairs you previously shelled out for will now be taken on by your landlord. House insurance is unnecessary, and you might even be lucky enough to get a landlord who takes care of utility bills and council tax.
Renters have flexibility. Have you ever turned down a job or opportunity simply because it would have meant selling a house? That bind does not exist with a rental property. After the initial 6-12 month contract you will probably only need to give a month’s notice before packing up and leaving.
There’s also potentially more choice in terms of properties that you can take on, allied to the fact that you’ll obviously have the rental deposit in hand from the sale of your house. This Telegraph piece reveals the story of the Betts, who sold a property and invested the money into a new business before renting a property that was in a far more convenient location for that business to work.
Another advantage is that you won’t be directly affected by interest rate rises.
The current Bank of England interest rate of 0.5% has been in situ since 2009, with widespread speculation that this will rise in early 2016, affecting millions of homeowners with variable rate mortgages across the UK.
Yes, it’s possible that it could affect your landlord and the cost might be passed on to you in increased rent, but it’s also possible that the owner doesn’t even have a mortgage for the property. The actual month-to-month costs of renting and buying are closer than they were – indeed, in some areas it might actually be cheaper to rent per month – but any seismic shifts in interest rates would not affect the renter in the same way as an owner.