There are many people in Scotland stuck in a rental rut, purely because in comparison it can be a big investment to make that first step onto the property ladder. But is it so terrible to be stuck in “Generation Rent”? We take a look at the pros and cons of renting, as well as offer some advice for moving on from renting, when the time comes.
N.B. The information provided here refers to private rentals, as opposed to mid-market or council rentals.
Pros of Renting
Smaller deposit required
Generally speaking, a landlord will look for a month’s rent upfront, plus around the same amount as a deposit. So for a property that is £700/month in rent, you’re looking at £1,400 upfront, before you get the keys. It’s not exactly spare change but compared to the 10%(+) deposit you need for buying a property, it is certainly more manageable in the short-term for the majority of people; for example, a £140,000 property could require a deposit of £14,000.
In Scotland, the deposit on a rental property will also be held with Safe Deposit Scotland, so you can rest assured your deposit is being looked after.
Maintenance/repairs aren’t your problem
When renting a property, it will usually be the case that any maintenance or repairs are the responsibility of the landlord (although always check your tenancy agreement). With that in mind, it can be reassuring and a lot more affordable to live in a rented flat/house, as you won’t need to put the same amount of money aside month-to-month for any unexpected boiler breakdowns, new carpets, emergency landscaping…
There’s also no need for you to pay buildings insurance, as that will be your Landlord’s responsibility. You will however still need to have Contents-only Insurance.
Easier to move
When it comes the time to move on, it is much easier – not to mention affordable – to end a tenancy agreement than it is to sell a property. Most tenancy agreements in Scotland now work on a month-to-month rolling basis, so you are only required to give 28 days notice before you intend to leave, giving you a flexibility you can’t get when owning a property. And providing you have looked after the property, you will receive your initial deposit payment back too.
You can share a tenancy without being so legally bound to each other
If you are renting with a partner (or even just a friend), and if things don’t work out, a tenancy agreement is much easier to end or get out of than a joint mortgage is.
It’s unlikely you would want to live with someone whom you don’t see a future with but sometimes the unexpected can happen, and renting can provide a trial period before you sign-up to a mortgage together. Trust us when we say, a joint mortgage is not an easy thing to get out of!
Allows you to live somewhere you couldn’t afford to buy in
Renting month-to-month isn’t necessarily cheaper in the long term but it can open up the freedom to allow you to live in areas that you perhaps wouldn’t be able to afford to buy a property in.
Cons of Renting
You don’t own the property
Despite paying to live in a property from month-to-month, you never actually own the property. So compared to a mortgage, renting doesn’t give you any return for your money invested. In fact, in many buy-to-let scenarios, you will literally be paying rent to cover the Landlord’s mortgage on the property.
Limitations to decorating
There are some Landlord’s who will be happy for you to paint walls, hang pictures and lay new flooring… However, most will want you to leave a property in the same condition as you found it, with changes such as redecorating being a firm no-no.
There are lots of ways to get creative in making a rented property feel more like home but you can feel restricted, if you are unable to put your stamp on it with a lick of paint or some photos on the walls.
Renting can be more expensive than a mortgage
Depending on the property market and the desirability for rental properties in an area, as well as current mortgage rates, more often than not renting can be more expensive than paying a mortgage.
It’s a common complaint amongst renters that they can afford to pay double the monthly mortgage payments in the form of rent, but that they are unable to get onto the property ladder due to not having a large enough deposit for a mortgage.
It can be a vicious cycle of paying so much in rent, that it prevents you from being able to actually save enough for a deposit to buy a property. Thankfully, low-deposit mortgages offer some hope in these circumstances.
It’s not always secure
When someone else is the owner of the property you live in, you are at their mercy in terms of them wishing to – or being able to – continue renting to you. There is of course rules a Landlord must follow when giving you Notice to Leave (ie. evict you), including having good reason to do so. With that in mind, it is extremely unlikely you will end up homeless with no warning. But facing eviction is an incredibly stressful reality to be faced with, regardless of how much notice you are given.
Renting can certainly be a great option for those who aren’t yet in a position to buy a home, or those who need the flexibility to move without excessive stress. However if you are at the stage where you want the extra security and financial freedom that buying a property can offer, take a look at our tips on Saving for a Deposit, as well as Questions to ask when viewing a property.
If you are a First Time Buyer and are ready to start your property buying journey, get in touch today for all the help and guidance you will need. Call us on 0131 554 6244, or email email@example.com