Homeownership offers good long-term investment potential and stability, whereas renting provides flexibility and smaller upfront costs. We’ll break down the pros and cons of each option in this blog and help you make the best decision for your circumstances.
The advantages of renting in the UK
Firstly, we'll look at the benefits of renting in the UK, which can be the right option if you value flexibility. While owning a home is often a goal for long-term stability, renting can be a more pragmatic option in the short term if you are unsure where you want to settle. Let’s look at the main advantages of renting:
Renting can be more affordable
The biggest advantage of renting is that it can be more affordable in the short term. With house prices continuing to rise in 2025, saving for a deposit can be a major challenge, not to mention the legal fees and stamp duty. The monthly cost of renting can also be cheaper than paying a mortgage, depending on the area and house size.
Short-term commitment
Another advantage of renting vs buying can be the short-term nature of the arrangement. Tenancy agreements often last a year, making it a more flexible option if you often move for work or are not sure where you want to put down roots. Unlike homeowners, renters can move relatively quickly without the hassle of selling a home.
You don’t have to deal with maintenance
You will not have to worry about serious maintenance if you are renting, as it will be the landlord’s responsibility. If the boiler breaks or the roof starts leaking, you will be saved the money and stress of having to deal with it.
The disadvantages of renting
On the other hand, there are numerous disadvantages to renting that make it less appealing in the long run. Unlike homeownership, renting does not build equity, and as a tenant, you will be restricted in what you can do with your living space. Here are some of the main disadvantages of renting:
Paying rent
Perhaps the biggest and most obvious drawback of renting is that your monthly payments go straight to the landlord and don’t contribute to an asset you own. Unfortunately, rent is an expense with no long-term return, unlike mortgage payments. This is why renting often feels like ‘dead money’; it does not help you build wealth.
Uncertainty over tenancy
Renting doesn’t offer the same level of stability as owning a home. Tenants are often at the mercy of their landlord’s decisions and can be asked to leave if the landlord wants to sell or move in themselves. After a 1-year tenancy agreement, you may have to move once the contract ends.
Rent increases
Another issue is that rent prices can increase drastically in the short term and catch you off guard. Landlords have the right to raise rent yearly, which can be significant in high-demand areas like London. If you have a tight budget, then rent increases can cause great strain.
The advantages of buying a house in the UK
Purchasing a house is a major financial commitment, but it comes with huge benefits that renting cannot offer. Here are some of the key benefits of buying a house in the UK:
Investment for the future
The number one advantage of buying a house is that it is usually an intelligent long-term investment. In comparison to renting, which offers no return, mortgage payments increase your ownership of a valuable asset. Property values tend to rise over time and have been doing so in the UK since 2009, meaning homeowners can build equity and make a profit if they sell down the line.
Security and stability
Homeownership provides stability that renting can’t guarantee. Once you own a property, you don’t have to worry about landlords increasing rent or asking you to leave. Having a permanent place gives peace of mind, especially if you have a family and want to settle for the long term.
The freedom of your own home
Another benefit of buying a house vs renting is that owning a house gives you complete control over how you use the space. Unlike renting, where landlords impose restrictions on decorating and renovations, homeowners can modify their property however they like. You will also be able to think about extensions which can add value to your house.
The disadvantages of buying a house in the UK
While buying your own home is often seen as a long-term investment and a dream for many in the UK, it comes with its own challenges. Here are some of the disadvantages:
Paying the deposit
The most significant barrier to buying a house is the deposit required upfront. Typically in the UK, you will need to pay at least 10% of the property’s value, though this varies by lender. It can be hard to save up this much money, especially when renting in an area like London where rents are expensive.
Shared Ownership offers a solution to those who cannot afford a full deposit. When buying a share of a property (e.g. 25%), you will only need a deposit for the mortgage of the share. This will be significantly lower than the deposit needed when buying 100% of a property.
Interest rates
One thing to bear in mind when buying a house is the impact of interest rates on your mortgage payments. Interest rates have risen in the last few years in order to tackle inflation, and the current base rate of 4.5% can affect affordability. When looking for a house to buy, it is important to factor in interest rates so you can accurately budget.
You can use our affordability calculator to work out how interest rates will affect the amount you will have to pay monthly.
Additional fees
Another disadvantage of buying to think about is the additional fees and expenses that come with buying a home. Beyond just saving the deposit, you need to make sure you have the funds for legal fees, survey costs, and valuation fees. Also, you may have to pay stamp duty if your house is above the £300,000 threshold. These fees usually add up to a few thousand pounds.
Is it cheaper to rent or buy a house in the UK?
Whether it’s cheaper to rent or buy in the UK depends on your own circumstances and financial goals. Whilst renting offers flexibility and lower upfront costs in the short term, buying a home is usually more cost-effective in the long term, particularly if the property value increases.
It’s crucial to weigh up the factors listed above when making your decision about buying vs renting and also to consult with independent financial experts.
London Living Rent
If you live in London and are looking to transition from renting to owning, then London Living Rent is a government-backed scheme that can help.
It enables Londoners to rent at a discounted rate compared to renting privately, allowing them to save towards buying a property through Shared Ownership.
You can read all about the scheme in our comprehensive guide to London Living Rent.
Buying a Shared Ownership home in the UK
One way to get onto the housing ladder with lower initial costs is through Shared Ownership. With Shared Ownership, you buy a percentage of the property – typically starting at 25% – and pay rent on the remaining share, which is owned by a housing association or private landlord.
This means your initial deposit and mortgage repayments are lower. Over time, you can ‘staircase’ by purchasing additional shares in the house or flat, with the goal of eventually owning the property outright.
Peabody offers a range of Shared Ownership properties which you can browse today. You can also read our article on Shared Ownership vs renting for information on which is better for you, and our homeowner stories to find out how others have successfully bought through Shared Ownership.
Frequently asked questions about buying or renting
This depends on your personal circumstances. Renting can often be cheaper and allows you more flexibility if you frequently have to move for work. Buying a house is usually a better long-term financial decision as instead of paying money to a landlord, you are investing in owning your own property.
This will depend on your income and the size of the house you want to buy. In the UK, this could take well over 10 years and beyond if you live in London. Some solutions to help people get onto the property ladder are London living rent and Shared Ownership properties, which require smaller deposits.
Owning a home is still seen as a good investment in the UK. House prices continue to rise, so it is likely that you can make a profit if you decide to sell later on. Also, if you complete the mortgage payments and achieve full ownership, your monthly outgoings will significantly decrease.
