What are the differences between buying and renting a property?


Deciding whether to rent or buy a property is no easy decision. We each come to the question with a different set of circumstances and finances, which means there’s no one size fits all approach here. What can help though is knowing the key differences between renting and buying a property, so that you’re able to make the choice that’s the right one for you. Because that’s all that really matters.  

What are the differences between buying and renting a property?

Whether you’re buying or renting, both will require a regular income. But there are several differences between the two that make owning and renting distinctly different. So, what are the major differences between buying and renting? Let’s take a look.

Buying vs renting: where does your money go? 

When renting a property, the monthly payments go to your landlord, and it’s your landlord who owns the property. Regardless of how long you live in the property and pay rent, this amount will never go towards owning the property. If you always choose to rent a property rather than buy, you will have to pay rent even after you’ve retired. If you choose to buy a property, then your monthly payments will be paid to your lender (for example, the bank or building society you borrowed the money to buy from). However, when you get to the end of your mortgage term, you will own the property outright and will no longer need to pay anything in order to live there. 

Will monthly repayments remain fixed, or can they change?

Whether you choose to rent or buy, changes can occur when it comes to your monthly repayments. Although fixed-rate mortgages do exist for homeowners, rising interest rates can increase your monthly repayments by a substantial amount if you do have a variable rate mortgage. And if you are unable to pay your mortgage and fall behind with payments, there are financial consequences. As mentioned already, renting is not without potential increases in monthly repayments either, and landlords can choose to amend the amount you owe them. The good news is there is legislation in place to prevent landlords from upping the rent owed at the drop of a hat. For example, they must give 2 months notice if they’re looking to increase your rent, and they can only increase the rent once a year. 

Updates and repairs: who pays for what? 

Another major difference between buying and renting links to the costs involved when things need updating or repairing in the property. If you’re a homeowner, then all repairs, renovations and updates are your responsibility to finance. If you instead rent a property, then it will be your landlord’s responsibility to cover the costs involved. 

The flipside of the previous point however is that homeowners have the freedom to make changes and update the property as they see fit, and any improvements which add value to the property will benefit you as the homeowner if you decide to sell further down the line. Those who rent can often find that their landlords have set rules about what can and cannot be done within the property, and they are able to restrict your ability to make changes to the property, as it’s them who own it. And it’s worth noting that even if you do have a landlord that’s willing to allow you to make improvements to the property, it won’t be you who benefits from any increase in the property’s value as a result. 

Flexibility VS stability: it’s all about which one suits you

A benefit of renting is that you have a greater degree of flexibility should you need to relocate. All you need to do is notify your landlord - they typically require 1 or 2 months notice (this information can be found in your tenancy agreement) - pack up your things and move on. Whilst selling a property is certainly not an impossible task, it can take longer if you’re in a lengthy property chain. Again however, there is a flipside to this. If you rent, the decision to move isn’t always one you get to have a say on. Your landlord, if they decide to sell the property for example, can ask you to move and you’d have no choice but to find somewhere else to live regardless of your circumstances and finances. If you own your home however, provided you keep up with your monthly repayments, nobody can ask or force you to move out of the property. 

Is now the time to buy?

Even if you’ve made the decision that you want to buy a property and become a homeowner, there’s another question that springs to mind for many: is now the right time to buy? It can often seem that the path towards owning your own home is a long and winding one, and the media can paint a bleak picture. But if you’re serious about buying a property, then it’s time to look beyond the headlines and get a handle on what your options are because it really isn’t all doom and gloom! 

Why have mortgage rates increased?

The central bank began hiking the base rate in December 2021 in an attempt to lower inflation. The base rate refers to what the central bank will charge building societies and banks for loans. So when the base rate goes up, it’s often the case that banks and building societies will raise the interest rates on mortgages and other types of credit they offer because the cost of borrowing has increased. The central bank raises the base rate in order to try and meet the target of keeping inflation low and stable, which is a target set by the UK government.


So do higher mortgage rates mean it’s all bad news?

Definitely not! Although interest rates have increased, lenders are doing their bit to try and better support first time buyers. For example, they’re offering longer mortgage terms. There was a time when a 25 year mortgage term was all that was available, but now there’s 30, 35 and even 40 year mortgage terms to choose from in order to keep prices competitive.

Builders are also offering incentives, which weren’t available when interest rates were cheaper. For example, a 5% discount on a property was not available a year ago, but is today. And you can also get contributions from the homebuilder towards your deposit too. These incentives offered by home builders in the current market offset the rise in cost that comes with current mortgage rates. 

Green mortgages are also available. Under a green mortgage, a bank or mortgage lender offers a house buyer preferential terms, for example a discount of 0.1-0.2% and are willing to lend more on home with an energy rating of A or B EPC. A home with an energy rating of A or B EPC also means lower utility bills, which can again help to offset rising costs elsewhere. And the really good news is that all Strata homes have an A or B EPC rating, meaning that a Strata home is a real investment.


So whilst at surface level it can seem as though there’s no good news when it comes to trying to get on the property ladder, there’s actually a whole lot more available than there ever was when mortgage rates were lower. So whilst mortgage rates have risen recently, there’s options out there to give you a boost onto the property ladder. So, if becoming a homeowner sounds like it’s the right choice for you, now’s the time to take a look at our collection of spacious and contemporary homes and find the home you’ve been waiting for.