To Buy or Not To Buy that is the question! but what is the answer

By the Beresfords Marketing Team - 10th November 2011

Should I Buy or Rent a property? is probably the most frequently asked question alongside How much is my property worth? that an estate agent is asked.

As a regional company handling large volumes of both property sales and lettings, Beresfords are well placed to give a balanced overview of both.

The flexibility of renting makes it an attractive option in a wide range of circumstances. Affordability for first time buyers is an obvious example but in the present economic climate, tighter lending criteria may mean renting rather than buying is a more viable option for many.

In addition, the ability to view a rented property and move in within days can be important if you are starting a new job or perhaps don't want to lose the perfect buyer for your existing property.

Certainly renting when you are relocating can be very helpful. You get a much greater feel of the local area and where you would like (and not like!) to live. But equally important, it's much easier to buy when you are on the doorstep and of course being in rented property without a property to sell, your bargaining position couldn't be better!

If you want the option to move back in the future, you can always rent in the new area and instead of selling, rent out your existing home at the same time. That way you will be insulated against any steep rises in property values compared to the new area.

There's certainly no shortage of tenants seeking properties in this area and this is emphasised in a report released in August 2010 where the Council of Mortgage Lenders (CML) said that the buy-to-let market has continued to grow and concludes "Tenant demand for private rented property will remain strong."

At the same time, the scrapping of HIPs and many first purchasers bringing their plans forward in late 2009 and early 2010 to take advantage of stamp duty concessions has resulted in an excellent choice of properties for sale at present especially in the first time buyer part of the market which is often favoured by investors.

Strong demand from tenants and a lack of rental property to choose from has led to attractive rents being achieved locally. Combine this with a good choice of property for sale and it opens up excellent opportunities for those considering buy-to-lets whether existing landlords or first time investors.

Although lending criteria has tightened, don't think that banks aren't lending. The CML report shows buy-to-let lending in the second quarter of 2010 is up 13% on the first quarter. And whilst you will need to put some capital in, you need to consider what those funds are earning elsewhere with savings bringing such a low return at the moment. Alternatively, many take advantage of current low mortgage rates to release equity from their existing property to go towards a buy-to-let purchase.

John Lineham, who heads up Beresfords Mortgages Division, says that there are some attractive buy-to-let mortgages to choose from at the moment: "Based on buying at £120,000 with a 25% deposit, a £90,000 interest only mortgage over 20 years would cost £303 per month on one of the popular 3 year Trackers available at 4.85%."

The growth in renting certainly hasn't dampened the UK's enthusiasm for owning a property. Long term certainty and security is still seen as important and people recognise the benefit of the medium to long term capital growth and at the same time having somewhere to live. And of course later in life, if your mortgage is paid off you won't be paying rent out of your reduced income as a pensioner.

Once they can, most people will buy. According to property website Zoopla taking out a mortgage is cheaper than paying rent in 75% of British towns as low interest rates have kept down mortgage payments and the shortage of property to let has pushed up rents.

Figures show we aren't building enough houses and our population is growing all the time so demand for property to buy will continue whether it be from investors or people simply wanting to buy a property to live in. After all, every property has to be owned by someone!