In the past many people in the UK steered clear of renting property, as most classed renting as dead money and preferred to put their monthly repayments towards the investment value of purchasing a property, since the difference between paying a mortgage and paying rent was minimal. However, over recent years the cost of purchasing a property in the UK, coupled with increased interest rates, has seen the monthly repayment on a mortgage by far exceed the monthly repayments on paying rent.
Many families and couples on average incomes may now find that renting a property is the more affordable option for the short term, despite the fact that there is no investment element involved in renting. For those that want to keep their monthly outgoings down it is advisable not to rush into purchasing a property whilst interest rates are so high, state experts. Instead, non-homeowners may find that the more effective solution is to rent for a while until property prices and interest rates start to fall.
According to one industry professional: “Not too long ago, there was little difference between the costs of buying and renting. But while house prices tripled in the years since 1994, private sector rents only increased in line with earnings, and the costs of renting have as a result fallen relative to the costs of buying.”
Many experts have predicted that house prices will continue to fall in many parts of the UK, with September’s figures already indicating a significant drop in the value of properties. Analysts are also predicting that interest rates will fall before the year is out, and these combined factors could make it well worth while for non-homeowners to stick to renting for now and take a wait and see stance with regards to interest rates and house prices before purchasing.
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