While home ownership remains a distant dream for many, it may be that Generation Rent are actually at a financial advantage when typical rental costs over an average mortgage period are taken into account. Generally viewed as an unequivocal positive, owning a home undoubtedly comes with substantial expenses over time; and living in a period property – Brits' favourite property type – significantly increases those expenses, particularly where it comes to both routine and emergency repairs.
Combining ONS data analysis and a poll of 2,000 people by lending experts Ocean Finance, the cost of home maintenance comes out as the top issue to put home owners at a financial disadvantage. Indeed, 75 per cent of UK residents confront at least one house maintenance issue a year, forking out an average of £380 to get it fixed. Home insurance may seem like an appropriate way to offset these costs, particularly for landlords, but this still results in significant spending, with Brits spending on average £2,805.83 on buildings insurance over a 25-year period, and an additional £9,500 on maintenance costs outside of insurance cover.
One of the biggest drawbacks of living in rental accommodation sited by UK renters is the lack of freedom to redecorate; however, the ability to do so tends to result in regular redecorating – and associated expenses. The average UK home owner spends £1,068.43 on home decoration each year.
With so many ongoing costs coming as part of the home ownership package, it’s perhaps unsurprising that one in 10 UK homeowners state they regret purchasing their current home. Almost 45 per cent of homeowners who regretted buying their home said that spiralling costs relating to maintaining their home made them regret entering into a mortgage.
The data also suggests that those who jump into the housing market early have the biggest chance of regretting their decision, with 35 per cent of 18 to 34-year-old homeowners wishing they hadn't taken out a mortgage.
This is not to say that the drawbacks negate the obvious benefit of equity ownership that comes with buying your own home. Ian Williams, Director of Communications at Ocean Finance, comments, 'With the financial gap between renting and buying becoming closer than ever in terms of monthly payments, and Generation Rent seemingly further away from entering the property market than ever before, many are facing a difficult decision when it comes to financial planning for their housing future.
'While there are hefty savings to be made by staying in a rental agreement rather than stepping on to the property ladder, the money saved would need to be invested wisely to match the equity gained on a mortgage over 25 years.
'What is clear from the research is that more care and attention is needed before entering into a mortgage agreement, in order to better plan for unexpected costs and minimise the chance of regretting your financial obligations to a single property.'