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Think about the future, some good reasons to make the choice.
In my opinion, if you are young, maybe want to move soon, then rent, if you are older, in an established job with no reason to move then buy.
If you have pots of spare cash to cover all the hidden expenses, then buy.
However If you want a nice home, modern decorations, and all the trappings of a hi tech. life-style, then rent.
Lets look at the real cost of buying a very average flat in Barnet, lets say a two bed, I will use many estimates here but as a rule they will be pretty close.
We start by reading the local press, getting excited, then one ventures into an estate agents, see a few property sheets, pick up on a nice looking flat. Maybe, If you are like me, you may ask for all similar flats, then you see a few more. Now, ‘oh that is beautiful’, ‘yes it needs some work, but we can do that’, and so it is leasehold, but has a seventy five year lease, and can get a mortgage, so it will be alright.
So you go for a viewing, shock horror it needs some major work, and stuff you can’t do yourself.
But after all it is a DREAM, and It is only £180,000 - and it will appreciate, and we will have it for life.
You view many others only to come to the conclusion that the DREAM is the one you want, and you eventually say yes.
Having then found a solicitor, he suggests a meeting, you meet. At this exciting point in the purchase, the hidden expenses start to emerge. Of course you are good, you understand the system, you know that 10% will be asked as a deposit, and that the mortgage company will only give you 90%, you do understand these costs, do you have the £18,000 spare cash to pay the deposit and start the ball rolling.
First, ‘Oh did the agents not tell you about stamp duty’ err ‘well no’ but it is a rock bottom flat’, I’m sorry but you are in the 1% bracket, so we have to give the government 1%, that’s added another £1,800 to the cost.
Second he/she recommends that you get a full survey of the property, as it is in a bit of a state, so maybe some hidden problems, that’s added another £700-£900
Third, well there are his/hers Solicitor’s costs, probably another £600- £900, so if the survey looks bad you’ve spent £700 odd for nothing, and if it looks good you’ve added £3,200 odd into the bargain, then there are the ‘searches’ what for I’ve never really understood. But he/her will say things like, the council is maybe planning to built a motorway though your property etc. He will charge you several hundred pounds to check out the bl**dy obvious, but you are making the biggest purchase in your life, and you want to be safe, so you go along with it.
Fourth, now the bit you probably never even thought about, this purchase is part of a chain, and the seller has not found anywhere yet, even though your offer has been accepted, we can do nothing until they (the seller) does. Until you actually ‘complete’ the property is not yours, therefore you continue to pay rent where you are, lets say another three months, add that into the ‘money wasted pile’, lets say your rent is £150 a week, that equates to another £1800, and it’s already not looking so attractive.
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