The question whether you should rent or buy a house in London is crucially important to thousands of us living or planning to live in the nation’s capital as we all know that house prices and flat prices are enormous in the capital. If you want to live somewhere in greater London then prices can be reasonable but in the nicest areas prices are through the roof when compared to anywhere else in the country. So the question becomes whether it’s actually better to rent or buy a house in London in terms of your own finances and living in the city. With that in mind let’s look at the arguments!
Your own finances will, of course, have the largest impact on where you can afford to live and also what will end up being a better option; renting or buying. If you’re earning a significant amount of money then buying may seem like a more attractive option as you will end up having your own place and you will be contributing towards long term financial security. However, before you rush out to sign the paperwork there are a number of other factors to consider. Firstly, you will need a substantial deposit on a flat or house anywhere in London – this means at least 10% of the list price plus the fees etc that accompany home purchasing. Secondly, you’ll need to think about your long term financial situation – whether you will be starting a family, moving job, getting a raise etc. It can be too easy to buy a house now only to want to upgrade or move after only a couple of years – thus losing you money in the short run!
As well as you’re finances you will also want to consider where you would currently be able to live and then compare it where you WANT to live. This may seem silly but generally first time buyers in the capital are severely limited as to where they can actually afford to buy. Central London is incredibly expensive so you will undoubtedly end up living in greater London. In this situation you’ll want to consider if you can afford somewhere nice to live and the additional costs you would have to pay in terms of a commute! While it may seem obvious an area that is suitable for you now might not be suitable for when you need to settle down with a family or when your work commitments change!
So should you rent or buy in London?
It really depends on your current situation and your future plans. For many flats, and houses to rent in London will actually prove a more sensible option; yes you won’t be contributing as much to your long term home but you can share with other people and pay a lot less than you would towards a mortgage while still having a larger degree of flexibility! This opportunity to save and be flexible is very tempting for many as living in London as a long term plan is expensive. However, if you have a higher income and plenty of ready capital you can get a mortgage for less than many places offering rental options.