Homeownership usually has more benefits than renting, especially in the long term, but this doesn’t mean it’s always the right move. In fact, some millennials have started embracing renting, claiming it works for them right now. This has come after the Covid-19 pandemic forced many into a new normal. Let’s find out why renting is currently looking more attractive.
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What is the average house price in the UK?
According to Rightmove, the average house price in January 2022 is £341,019, but a first-time buyer can get a better deal at £214,176.
As house prices continue to increase, it’s getting more challenging for Brits to get onto the property ladder. The increasing inflation rate isn’t making the situation any better. Not only do aspiring buyers have to contend with increasing house prices but they have to do so while struggling to keep up with the rising cost of living.
What is the average cost of renting in the UK?
According to Rightmove, the average rent outside of London is £1,068, which is 9.9% higher than in January 2021. In London, rents have also risen above pre-pandemic levels, averaging at £2,142 per month.
This shows that it’s more expensive to rent in the UK now than it was last year. So why are some millennials still preferring to rent rather than buying their own home?
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Why are millennials renting instead of buying?
There are two key reasons why many millennials have put buying on the back burner for now.
1. Avoiding getting tied down to a particular locality
The Covid-19 pandemic was so unexpected that many were caught out. Some Brits had even started saving up to buy their first home but were forced to shelf their plans. Though this was a hard pill to swallow, millennials are coming to realise the importance of flexibility and not being tied down to one place.
By renting, they can move to another area if circumstances call for it rather than being tied down by homeownership.
2. Delaying the financial baggage of a mortgage
Taking on a mortgage is not for everyone. In fact, experts advise that it’s only recommended for those whose finances and individual circumstances put them in a strong position to do so.
Evidently, a large percentage of 25 to 32-year-old millennials may not be quite financially ready to own a home. This is because the costs involved in taking out a mortgage are not limited to the deposit required and the asking price. With inflation also rising, and expected to reach 7%, mortgages have simply become too expensive.
For these reasons, many millennials have embraced renting – and some are even finding that it’s more financially beneficial. They have realised that they can:
- Get a roommate to reduce bills and rental costs without having to worry about breaching a mortgage agreement
- Make liquid investments with funds that are easily accessible if needed, unlike funds tied up in property
- Avoid costs like home insurance and repairs, meaning they only have to concentrate on bills and rent alongside their personal costs
