Younger couples could be better off renting than buying property
November 5, 2007 by admin
Filed under News, News-Mortgages
Industry experts have stated that younger couples on average incomes could be far better off financially renting a property in England and Wales rather than purchasing.
Although there is no investment element in renting a property it is estimated that the cost of renting an average two or three bed house in England and Wales is around two thirds the cost of a 100% mortgage, making it the more affordable option for those on average incomes.
In the past the cost of renting a home was more or less the same as taking out a mortgage to buy one, and therefore purchasing was the more sensible option. However, due to the rising value of property in England and Wales, which has rocketed over recent years, coupled with rising interest rates, which have been hiked up five times since August 2006, mortgage costs are sky high at present, and many couples and families are now turning to rental properties.
One industry professional involved in the research stated: “Not too long ago, there was little difference between the costs of buying and renting. But while house prices tripled in the years since 1994, private sector rents only increased in line with earnings, and the costs of renting have as a result fallen relative to the costs of buying.”
Research shows that the amount of money that first time buyers now need o be earning in order to get a mortgage is higher than ever, making it increasingly difficult for younger couples and families to get onto the property ladder even with the availability of increased income multiples now offered by many mortgage lenders.
Tom Smith
5th November 2007
