Do I rent or save a whopping £65 a month? (Renting a Home)

Member Name: judithritchie

Product:	Renting a Home
Date:	20/08/01 (1210 review reads)
Rating:

Advantages: often save money in mortgage than renting, have rooms to let - extra income esp useful for students such as myself , you can make the rules ha ha if youre that tight

Disadvantages: you must furnish the whole house, you are taking on one hell of a responsibility, you could lose your home if you dont keep up with payments or are financially in trouble

Last year I learnt that it was cheaper to buy than to rent, when I met a girl at university who owned several houses which she rented out to students in the university town of Salford. I was shocked. I quickly realised the profits my landlord was making off of my rent. I was paying £200 excluding all bills, to live in a popular student area extremely close to all amenities including a bus stop with bus services every 6 minutes and a mere 20 minute walk into the university. This was value for money, but the house had a problem with damp and it cost a lot to heat it, out of necessity more than choice. Without the central heating running, the walls became so damp posters fell off! So once I learned the basics and made a few enquiries, I took a deep breath and jumped into the housing market.

Not many people wanted to hear from me, as I was an impoverished student from a very low income background. However the Halifax was prepared to give me a mortgage on a guarantor status, and my dad agreed to have his financial details scrutinised so they could finally agree on a £30,000 mortgage.
But then what? You have to get an idea of the market you are entering here, and I had no idea where to start, as I didn’t know Sheffield extremely well. It’s a city with a huge suburban area, so visiting the estate agents to look at properties and get an idea of prices didn’t help me much when I couldn’t pinpoint where somewhere was. The estate agent is a great place to start, as you will soon get an idea of what you will be paying for from photos of the property and details of what the property features. Property papers, available from estate agents, are another great source of information, and some estate agents’ websites are useful. However I didn’t find the Halifax online site, www.moveright.co.uk very useful as it did not feature the prices of the property which didn’t help, as you had to go to the estate agents eventually. Great
for someone who is interested in finding out more with a view to purchase but not for those who are browsing to get an idea of the market. It seemed fruitless looking at all these houses but you quickly learn. A mortgage advisor will no doubt give you a guide too, which you should definitely read before you venture out into the market as it will contain key terminology involved in the status of the property, such as freehold (where you buy the land the house is on within the purchase) or leasehold (where you buy the house but pay a small rent to the owner of the land on which the house is built). I would advise you arm yourself with the free weekly property papers, visit the estate agents regularly and check out some of the estate agents’ websites. I would arm yourself with an A-Z of the place where you want to look. I would also suggest looking in good areas where there are chances of renting to others if you move away. For instance my house is 5 minutes walk from the Northern General hospital so student nurses may want to rent it, or people working there such as doctors. You will have to discuss this at the time with your mortgage advisor (it's considered buying to let, and my mortgage states I cannot leave the property deserted for more than 3 months or so, so I'd have to remortgage it with a lender under buy to let rules and interest rates).

And soon you will develop an idea of the prices and the areas in which you can afford to buy. This may be the factor that puts you off buying. It nearly did to me. If an area is made attractive and important for some reason, it will cost a lot more to live there. This is the case with rent, but even more with mortgages as you are borrowing a huge amount of money to buy so the amount you will pay will be a lot more. For example, Crookes is a popular student area in Sheffield, where I was renting before I bought. It is very close to the university and has lots of local amenities - supermarkets, shops se
lling everything, churches, regular bus services, the lot. The houses in the area are typically terraced, and a 3 or 4 bedroom terraced house will cost from £58,000 upwards, nearing £70,000 in the most central areas of Crookes nearest to those shops and bus routes. Crookes was the first area I looked to buy, and learning it cost so much made sense but depressed me a great deal. As I gained an idea of the market, it soon became clear the houses I could afford were further out of the town centre, even further from the university and often in rather rough areas. The houses were also mostly leasehold. Typically leasehold houses are cheaper than freeholds, but there are things to be considered here such as how long is left on the lease. The land is usually leased for hundreds of years, but you have to check. There is no point buying a house which has 40 years left on the lease, as the landowner could turf you out and knock down your house, and you would not be able to sell it on. It is undesirable to start the purchase and pay good money to a solicitor only to find out there are only a few decades left on the lease, but I imagine this is the only way you will find out unless you know the sellers and you can get them to produce details of the lease.
I was actually ready to give up on looking, and had started to spend the money I had saved from my gruelling Christmas job towards the deposit and fees when someone I knew was selling the property I eventually bought. As a builder he had bought the house and renovated it, and as I knew him I got a good deal - £21,000 for a house with new carpets and a burglar alarm, and even money towards solicitors’ fees as he had saved money from bypassing the expense of advertising in an estate agents. If it had been otherwise, I don’t reckon I would have bought as I was ready to give up looking. However, there are a few disadvantages. It only has 2 bedrooms, it is about 5 miles away from the university and the stairs are e
xtremely steep! However I pay around £135 a month excluding the necessary buildings, contents and life insurance policies which amount to an extra £30 or so. But I see this as an investment. I am going to be at university for another 6 years, and at that amount of time I pay £2400 a year to my previous landlord, amouting to £14,400. Buying, I pay £1620, totalling £9720, saving me £4680 which I would have borrowed in student loans to pay for. I have a spare room where a friend from university is going to live next year, and I’m even thinking of converting the front room into another room if things get desperate. If I charge £40 a week to include bills to my mate then I cover my mortgage costs, leaving me to concentrate on bills and the huge debts I have already accrued over the last 3 years at university. So in this way, buying will save me a great deal of money, But there is a lot of risk. Previously, if I ran into big financial difficulties and I couldn’t afford to pay any bills then I could consider the option of declaring myself bankrupt. When a friend of mine hit bad times and he declared himself bankrupt, his personal possessions were not considered part of his “estate” so he didn’t lose possessions, such as his computer. However if I hit with problems, I would lose my house particularly with bankruptcy, severely bruising my credit record. I also leave myself open to liability as a landlord, so I have to insure myself against potential litigation. Say if my mate as a tenant decided she wasn’t my mate anymore if she fell down my steep stairs and she decided to sue me for not making it safe enough, or as a property owner if a slate falls off my roof and hits someone passing the house, I could easily get sued for it in the new litigation-mad culture we live in. If something goes wrong with the house, I must pay for it rather than calling on the landlord if I was still renting. These things will be sure to put some people off the
very idea of buying. But there is usually an answer to everything, and a mortgage advisor may be able to help you with your queries (mine at the Halifax was extremely helpful). For example, my insurance can include so many thousands towards legal representation if I get sued, and I even have insurance if I have problems with something such as the water tank and I need to call an emergency plumber. I ring the Halifax Homecare line and they pay £150 towards call out charges and send out a contracted local plumber to see to my difficulties.
Another problem with buying is that you are usually buying an empty house, so you subsequently have to fill it with furniture which adds extra expense. When on a low budget as most first time buyers are this can easily be done through second hand shops, selling magazines and friends. I have had spates of good luck when I started looking for second hand furniture. Through friends I managed to buy a washer dryer, double bed, fridge, table, 4 chairs and television for £118, and from a local second hand shop a 3 piece suite comprising of 2 2-seater sofas and a chair all matching in a lovely pastel pink for £260 including professional cleaning amongst other great deals. I have furnished my house with the basics for under £500, from essentials such as beds for each room to the useful utilities such as bathroom sets, curtains and new curtain rails (I hate plastic curtain rails).

Considering renting rather than buying, I see why people will prefer it. You are less tied down, and have fewer responsibilities. You can move whenever with much less hassle than all that is involved in the buying and selling circus, so you wouldn’t want to buy if you were only in an area for a few months. If there are any problems with the property you don’t have to deal with it, and the most you are responsible for would be damages you cause on the property but you simply lose a deposit for this. This would suit people a lot more. In ad
dition to this, you will normally be renting a furnished place particularly at university so you don’t have to buy it all and you are guaranteed it has to be fire proof and fault proof, all gas appliances checked etc. things you don’t have to worry about. However, if you have a spare room you can often not sublet as it breaches your contract, an option that is available if you own a house, the revenue from which will often pay for the mortgage so you can afford any other expenses.

Buying compared to renting is a scary option to take, and you do feel you are taking a great deal of risk but it is worth it in the end if you are in one place for a long time, such as me with another 6 years of university. It is expensive (I had to pay my solicitors off of my credit card) but in the long term you definitely save money. It is definitely an option worth discussing with a mortgage advisor before you dismiss it completely.

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