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I’ve started my first job and want to get my own place. My parents are telling me that if I rent somewhere then it’s money down the drain but I am afraid to buy. The newspapers say that the housing market has crashed. My parents say that maybe now is a good time to buy. I don’t have much savings but my parents will help me with the deposit. I’m so confused by the whole thing. What should I do? Please help.

It’s quite usual for us to aspire to home-ownership. It’s part of the British culture, but I won’t go into the political reasons for that right now. But buying isn’t necessarily right for everyone. As a home owner, you would have sole responsibility for maintenance and repairs – and you can never predict what might happen or what might go wrong and how much it might cost to put things right. You will have far fewer responsibilities if you rent somewhere. However, as your parents have said, “it’s money down the drain” – in other words you are paying to contribute to someone else’s investment, not your own. There are pros and cons of both renting and buying a place to stay, so let’s have a look at them.

Advantages of renting

• The landlord, not you, has responsibility for repairs and maintenance.
• You don’t need such a large deposit – usually one month’s rent.
• Renting isn’t such a long-term financial commitment as buying.
• You can move more quickly if you change jobs or decide to move away for whatever reason.

Disadvantages of renting

• You have no financial investment in the property – the rent you pay is just a monthly expense like any other.
• The landlord may ask you to leave when your lease ends or other statutory period of notice*.
• You can’t usually make any major improvements. Even if you do, with permission, it’s the landlord not you who benefits from any increase in value to the property.

Similarly there are pros and cons of buying your own place.

Advantages of buying

• Money you put into your own home is an investment – but in the current economic climate you may well find that the value of your property could decrease. In the 1980s and 90s it was almost guaranteed that it would increase – not so now.
• Buying may give you more choice of types of property – old, new, perhaps even something that needs doing up.
• Security of tenure. You own it so there’s no landlord who can come along and tell you to move out.
• As a general tendency, you will have more choice of properties to buy rather than rent.
• Subject to planning permission, you can do what you like to your own home. Paint the place red!

Disadvantages of buying

• Buying a home is an expensive process. You will need to pay all sorts of fees to lawyers, and other professionals.
• You can’t predict how the mortgage rates may change and if mortgage rates rise, so will your monthly payments (unless you have a fixed rate mortgage for a number of years).
• If you got a job in another area, it would be much quicker to move if you were renting somewhere. If you own the house you would have to go through the lengthy and expensive process of selling it.
• You are responsible for repairs and maintenance of your property.

As you can see, home-ownership is an expensive business and not one to be entered into lightly without weighing up all the pros and cons. It’s difficult for me to advise on any specific situation, given that I don’t know all your circumstances. In your shoes, I would try renting for a few months, perhaps sharing with friends or colleagues. Get a better feel for living away from the parental home. Then a few months down the track you may have a better idea of what’s right for you. Good luck!

* Things aren’t always that simple, as our Trashed House story explains. We were legally entitled to get our home back but we had to go to court and get the bailiffs in to enforce that right. The law often seems to take the tenant’s side, unfairly in many cases.

Renting a room and being a lodger

The Government’s Rent-A-Room Scheme allows homeowners to rent out one room in their home free of tax provided the rent is not more than £4,250 pa. The advantage for tenants is that because the owner lives in the property it will generally be well furnished and maintained. It is a relatively cheap option for students, single people or couples; however, you must not mind sharing areas used in common, like the bathroom or kitchen, with the owner of the property or other tenants.

Sharing a flat or house

Sharing a flat or house with friends is a great option as long as you all agree the split of bills and rent beforehand. It is also useful to agree a rota for emptying bins, dishes and cooking. Be warned that many a friendship has ended through sharing a house!

Shorthold Assured Tenancy

When renting a house or flat most landlords will offer a Shorthold Assured Tenancy. A shorthold tenancy typically runs for a fixed period, after which it may be renewable.

The renewal of the tenancy will depend on the landlord’s view of you as a tenant. Did you pay rent on time? Have you looked after the landlord’s property well? Have you been constantly complaining about minor or trivial problems in the flat?

Longhold Tenancy

Longhold tenancies are quite rare and are for those requiring more security over where they live and remain.

Most landlords prefer the shorthold tenancy as it allows them greater flexibility in managing their property.

Furnished or unfurnished?

This question is often resolved by your own circumstances and how much furniture you already own. Furnished property is likely to be the cheapest and easiest if you do not own any furniture.

Fire regulations were introduced to ensure that landlords no longer furnish homes with furniture that presents a hazard. They have to equip the rented home with furniture and furnishings that conform to fire and safety regulations.

Budgeting

When renting you will on average need a deposit of one month’s rent plus an additional month’s rent. This is the landlord’s guarantee against damage, theft or non-payment of rent. The deposit money will be returned to you at the end of your stay, less any deductions for damage or breakages. The landlord cannot subtract damage from your deposit if it is demonstrably attributable to fair wear and tear.

You can request that the deposit be held by a third party, often just the letting agent. They cannot release the deposit to either party unless both parties are in agreement.

Be aware that there will also be additional costs after you’ve moved in. These are:

• Council tax
• TV licence
• Gas, electricity and phone bills
• Contents insurance for your belongings
• Water rates
• Service charges

Finding the right property

You must first establish your budget and have a feel for the type and location of the place you want to live. Once you have established this then you need to start a search. The best places to find rented accommodation are:

• Internet
• Local letting agents/estate agents
• Property press
• University accommodation offices
• Local authorities
• Advertisements in local shops
• Notice boards in hospitals, companies, colleges and universities
• Housing associations

Your landlord

This is a very difficult area. You can make some judgments on the landlord by viewing the property he or she is letting. We suggest that you:

• Ask for proof of ownership
• Look at the condition of their property
• See how the rents compare with others you have seen

Managing and letting agents

Managing agents are responsible for managing all aspects of the tenancy on behalf of the landlord. Like many professionals, some managing agents are conscientious and others may be poor.

Before you commit, ask existing tenants to establish how good the managing agents and landlord are.

Questions you should ask

You should assemble as much information as you can; we have a checklist below to assist.

• Is the property properly heated and how does the system work?
• Do the fixtures and fitting work?
• Is the wiring safe? The wiring should be checked regularly – when was it last done?
• Where are the smoke alarms and fire exits?
• What condition is the furniture in?
• Have the gas appliances got a safety certificate?
• Can I put up pictures or redecorate?
• Who are the neighbours?
• Where are the local transport facilities and shops?

Your tenancy agreement

The tenancy agreement offers protection to both landlord and tenant. The agreement should clearly state what is required from both parties as well as stating the amount of rent, length of tenancy etc.

Read the tenancy agreement thoroughly before you sign it. The landlord must give you two full months’ notice to terminate the agreement.

Your new landlord will need address details and references from previous landlords, bank, employer or accountant (if you are self employed), as well as a character reference from someone who has known you for a significant period of time.

If you are from overseas you may need a guarantor.

The inventory

It may pay dividends to check through the inventory list before signing the tenancy agreement.

An inefficient or lazy landlord may have simply reproduced the last inventory and it may not allow for breakages or wear and tear. It may be time consuming, but making notes, checking exact details on each item, or taking photographs will minimise arguments when it comes to leaving and could save your deposit.

Safety comes first

Always try to go to your appointments accompanied or give at least one person details of where you’re going and whom you are meeting.

Be security conscious; make sure the property is equipped with door chains, spy holes, window locks and suitable door locks. If not, ask your landlord to make these changes before you move in.