If you’re living and working in London, or you aspire to do so in the future, then it’s worth thinking about your living arrangements. The price of accommodation in London, as in other major international cities like New York and Paris, is extremely high compared with the rest of the country. Your money in the capital isn’t going to go quite as far: which makes the decision of whether to rent or buy that much more important.
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What makes London an Expensive City?
According to research from Employment Conditions Abroad, London is the sixth most expensive city to live in worldwide. This is attributed largely to high rental costs in areas that expatriates prefer to settle in. In this respect, London is a third more expensive than Geneva, and more than twice the cost of Paris.
To Buy or to Rent?
If you’re going to buy in London, then you might find it a struggle to get on the ladder in the first place. For many, the capital injection comes from inheritance, or from the ever-reliable Bank of Mum and Dad. If you’ve already built up a significant investment portfolio before you move into London, then buying might be feasible. But is it wise?
Why should I buy?
If you’re going to take a mortgage out on a property, then you’ll have the peace of mind that comes with knowing that your monthly payments will be put toward you eventually owning your property outright, rather than simply lining the pockets of your landlord. Moreover, when you do come to move out of the property, you could make a substantial amount by keeping the difference between the sale price and the balance on your mortgage.
Those of us who own our homes outright have the option of modifying the building more extensively in order to meet the demands of our lifestyle and personal taste. If you want to decorate, then you don’t have to ask for anyone’s permission.
Why should I rent?
If you’re renting, then you’ll have to worry about putting a deposit down. But it won’t be anywhere near the deposit on a mortgage. Plus, you won’t have to worry about interest rates fluctuating in the future. While fixed-rate mortgages are available, they don’t eliminate the risk that the rate will ultimately increase at the end of the spell.
If you’re buying, then you must also accept the risk that the value of your property will fluctuate. In recent times, the trend for this kind of investment has been a resolutely upward one – but that might change. Those who decide to rent are exposed to a little bit of risk when it comes to damage to the furnishings and property – though this can be offset through renter’s insurance.
If you decide to sell, then you’ll also have to go through a fairly protracted process – which can incur costs of its own. Thus, buying tends to be seen as a more permanent option.