A guide to buying the house you rent

It’s nice to have a place you can call your own, and home ownership offers greater security than renting. Let’s take a look.

It’s nice to have a place you can call your own, and home ownership offers greater security than renting. Let’s take a look.

Mark Gordon
From the Mortgages team
3
minute read
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Posted 26 JULY 2021

Please note: The information in this article was correct at the time of publication on 22 July 2020 but, because of the impact of COVID-19, things are changing rapidly. We aim to keep this page updated, but please check with GOV.UK to confirm any details. 

Is it better to own or to rent?

Having a mortgage can lead to you owning your home, whereas rent is often seen as ‘dead’ money. On the other hand, some people enjoy the flexibility of not being tied to a long-term mortgage. Here are the key points if you’re thinking of buying your home from your landlord.

1. Understand the costs of owning a property

Owning a home means you’re responsible for its maintenance and any repairs – when you’re renting, these costs are covered by a rental agency or private landlord.

Plus, there are costs involved in getting a mortgage. These include:

  • Deposit - as a minimum, you should aim to save 5% of the value of the property you want to buy, or better still, 10%.
  • Stamp duty - this applies if you’re buying a home in England or Northern Ireland that costs more than £125,000 (or £300,000, if you’re a first-time buyer). However, the government has temporarily cut stamp duty in response to the coronavirus crisis. From 1 July 2021 until 30 September 2021, the stamp duty threshold will be set at £250,000. From 1 October 2021 onwards, stamp duty will return to the old £125,000 threshold. In Scotland, you might need to pay Land and Buildings Transaction Tax, while in Wales it’s the Land Transaction Tax. 
  • Mortgage lender fees - these can cost anything up to £2,000.
  • Legal fees - payable to a solicitor (or conveyancer) for a range of legal services.

2. Speak with your landlord

Once you’re sure you can afford the costs of owning the property you’re renting, get in touch with your landlord. If you have a private landlord, simply ask if they have any future plans to sell the property and express your interest in buying if they do.

If the house you rent is managed by a company, you might want to ask for a face-to-face meeting. If you get a positive response, it may be time to explore your options on the mortgages market. Your next step could then be to secure a decision in principle on a mortgage.

3. Take your first steps towards a mortgage

At Compare the Market, we have a range of options to help you find a great-value mortgage. You could start by trying our mortgage  calculator. Once you’ve established a savings target, you could then work out a budget.

Finally, you could start a mortgages comparison and find out the interest rates and terms you might be offered.

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