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If you find yourself sincerely asking this question to friends, family, and coworkers off the cuff, they will probably look at you a bit strange and ask if you feel ok. The circumstances that go into considering this question are incredibly nuanced and situationally specific. Hardly the topic of casual conversation, this question should not be taken lightly and deserves a deeper exploration of your options. 

Contrary to popular belief, there are more options available to you than the total of two, and you should explore all of them before making a decision. First, we will look at the world outside of the renting or owning dichotomy. Many alternatives may appeal to you more than either of the traditional options. Depending on your lifestyle and occupation, the alternative options might be the way to go.

Then we will cover some of the benefits of owning a home – beyond the obvious benefits like its value increasing over time and obtaining a sense of permanence and security for you and your family. There are some interesting ways you can turn homeownership into an opportunity for passive income if you can afford the initial investment.

Finally, we are going to cover when renting is more appropriate than purchasing a home. Believe it or not, it is not always beneficial to compare renting and buying a home like they are two equal options that fulfill the same need. Yes, on the surface, both are ways to “reside.” But from a financial perspective, they should be viewed as separate tools for residing.

We will walk through these options impartially and do our best not to compare apples to oranges. Whether one owns, rents or lives through other means is just as much a matter of privilege and access as it is the result of preference and occupation. 

Before we begin, this article will not tell you which is the better option. We are not going to draw any ultimate conclusions because doing so would be ignoring the variables that make up an individual’s circumstances. This post will break down your options so that you can make the best decision for yourself! So, in an attempt to be thorough, let’s first look at housing options that exist beyond the traditional options of renting and owning.

 

Renting vs. Owning: A False Dichotomy?

Renting and homeownership are false dichotomies that do not really represent all the options available to those considering their living situation. With wage stagnation, rising housing costs, and an estimated 21% of UK households renting in 2021, learning about other housing options is crucial for genuinely grasping the opportunities available to you.

 

Letting Agents

For the well-off who own multiple properties across the UK, hiring a steward to manage auxiliary properties is an attractive offer. Often, the agents responsibilities include keeping the tenants happy, property secure and reporting maintenance issues. 

These contracts are not only for residential properties. Owners of unused commercial and industrial lots also hire agents to keep an eye on their facilities. This option has less stability and permanence – properties are bought, sold, and recommissioned all the time. But, for a person who does not need permanence in their life to function well or is engaged in work that is suited to a more chilled lifestyle, these short-term contracts are a good match.

Of course a letting agent comes with a fee. Therefore you must do your maths and ensure the benefits of hiring an agent outweighs the cost

 

Benefits of Homeownership

However, for many UK residents, the previous housing options are too new-age or downright impractical, considering how many dependents are under your care, whether you are married, or if your line of work keeps you in one spot.

There is also the stark benefit that, should you find yourself privileged enough to afford it, property is an investment that will appreciate over time. If your lifestyle and personality favor settling down, planting roots, and building a home, then homeownership is undoubtedly more appealing.

Paying a monthly mortgage toward owning your own home is ultimately more satisfying than paying your landlord’s monthly mortgage. Plus, if you have equity in your home, you can take out a home loan or apply for a home equity line of credit based on the value of your home. 

This expands your access to capital and makes it easier to renovate, upgrade and improve your home over time, which ultimately increases its value if you go to sell it.

Owning a Residential or Commercial Property Can Be a Source of Income

If you are lucky enough to purchase property, you can put that property to work for you. Rural homesteads with a large enough acreage and outbuildings can be rented out. Converting old stables, sheds, storehouses, and spring houses into livable spaces is an investment that can turn into passive income, though passive in this sense does not necessarily mean easy. 

Read about the truth regarding real estate investing for passive income from FNRP, residential and commercial real estate investing experts.

Depending on your location and the surrounding business environment, you could convert some of your property from residential to commercial. This allows you to rent out some of your property to eager businesses or open up your own business and operate it from your property. It is entirely possible to do this if you take the correct legal steps

Drawbacks of Homeownership

The most considerable drawback to buying a home is the amount of money it takes to purchase it. Rising market prices and wage stagnation means the average UK resident cannot afford a home, even on a mortgage. 

For younger people who are just starting in their careers, the downpayment and closing costs involved in the home-buying process appear astronomical. For many living basically paycheck to paycheck, the ability to produce this amount of money for one transaction is a pipe dream.

Also, it is entirely possible that living in one spot for the rest of your life is impractical. People and situations change all the time. Your occupation or lifestyle or other unforeseen circumstances could make buying a home more of a burden than finding an alternative means of living. 

 

When is it Better to Rent?

There is no way around the fact that renting simply costs more over a lifetime than buying property. However, there are times in a person’s life when renting is a better option than buying. 

Renting is ideal for short-term residence in an area. For students attending university far from home, renting off-campus can be cheaper than staying in dormitories and residence halls. If your job requires you to relocate every few years, renting makes way more sense than buying property for short-term stays.

Is “Owning > Renting” a Fair Comparison?

Renting is often maligned as a bad option for people and is seen as somehow a lesser choice compared to owning a home. At first, this might appear to be true. Many people get stuck renting for life and are unable to build the necessary wealth to rid themselves of the costly and complicated world of leases and landlords. There are also certain limits when it comes to renting such as design and construction that you cannot always change.

What is the Bigger Picture?

However, this problem is larger than the institution of renting. Renting is like a tool and should be used appropriately to lease residences for short periods of time when buying a home is simply unnecessary. When it comes to settling down in one spot and building wealth, renting is a poor tool for the job – it is like trying to use a hammer when what you really need is a wrench.

The fact that renting, as a tool, gets used to trap UK residents in cycles of poverty is not so much a criticism of the tool but rather a criticism of the more extensive system employing it. As an informed reader, you should make the distinction now – renting and owning are separate tools that ought not to be compared.

 

Rent-to-Buy?

Is there a middle ground, however? Rent-to-buy leases are an option for people who are unsure if they will be sticking around or for those who cannot reasonably afford the associated costs of buying a home but want to work towards homeownership. 

Many government-subsidized programs help eligible families find homes that they can rent while allocating a portion towards the cost of the property. These programs are ideal for families who know they would like to settle down in one location and build a home; but who might otherwise not be able to get approved for a mortgage or purchase property outright.

 

What is Best For You?

We have just finished a deep dive into all the particulars you need to consider before determining if buying a home is the right choice for you. As you can see, this decision is much weightier than what casual chat with friends or co-workers might reasonably permit.

Though it might seem overwhelming to consider, the main takeaway is that you are not stuck. Depending on your goals, occupation, and lifestyle, there are many alternatives than just the traditional two. Even if renting is more appropriate for you at this point in your life, there are ways to go from renting toward homeownership if that is your ultimate goal. 

If you can purchase a home, doing so might not be in your best interest just yet. Your career goals and family obligations (or lack thereof) might make buying a home an unnecessary expense. All being said, I hope this article helped you decide what your best path forward is!

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