The Rental Market is Buoyant, But Could Many Be Stuck There Needlessly?
While the rental market is increasingly buoyant, according to new research, the latest statistics also show that the cost of home ownership is far less over a person's lifetime than renting a house.
Increasing numbers of people, especially first-time buyers, could be 'trapped' in the rental market, while their aspiration is to own their own home. Many will also be labouring under the false assumption that owning their own home will cost them far more than simply renting a house. This will mean that many people currently renting will assume that the dream of home ownership is simply that, a pipe dream.
The facts speak for themselves, however. The UK rental market has experienced something of a boom during the first quarter of 2012, as the supply of resale properties declines.
New analysis from Experian shows that the number of properties available to rent has grown by 6.34% between January and March 2012. Conversely, the number of properties for sale dropped by 2.53%, which could mean that home owners are choosing to rent out their homes until resale prices improve in the property market.
The Experian news could signal a rather sluggish medium-term future for the property market, and could also mean that many people continue to be trapped in the rental market.
The news comes at the same time as, as I've mentioned, figures are released showing that the cost of having a mortgage is far cheaper over a person's lifetime than renting a property.
According to a new study by Barclays, the cost of owning your own home rather than renting will save you £194,000 over a lifetime, or a typical 50-year period (based on the average age of people taking out their first mortgage in their early thirties.)
The total costs of mortgage repayments, maintenance and other costs associated with owning the average home would to £429,000 over fifty years, renting would cost £623,000.
While the home buyer must shoulder initial costs such as the deposit, stamp duty and solicitor's fees, as well as the more long-term costs associated with maintenance and insurance of their home, someone renting a house has to deal with inflation of rental prices. Also, those who rent permanently will have to pay their rental costs out of their pension incomes while those who have chosen to buy may well have paid off their mortgages, and will therefore enjoy minimal housing costs.
While the myth persists that renting, while not an investment, is the cheaper option, many people could be renting when they simply do not need to be.
By Martin Williamson, Head of Residential Property, Latimer Hinks Solicitors www.latimerhinks.co.uk.