Molly Dutton has enough money saved to put down a deposit to buy her first home, but the 23-year-old is choosing to wait and rent for now instead.
Molly currently rents a one-bedroom flat just outside Leeds city centre and pays £900 per month to do so. She recently started exploring properties to buy, but had decided against committing to this for now.
“I felt that staying in a rental would allow me to put some money into an ISA and save what I could each month, putting it towards a better deposit and more freedom to purchase furniture and decor,” she says.
She says she initially felt “super eager” to buy as soon as she could but this changed over time.
“I realised I was placing all of this stress on myself, when I could take my time and rent before settling on a final location,” she explains.
“For me, it’s all about finding a rental at a good price and exploring towns before I find my home.”
She also says that a lack of steep price growth in recent months contributed to her decision.
“I haven’t personally seen any rapid increases, which has alleviated some of that initial pressure,” the communications assistant says.
In the coming months, Molly plans to leave her city centre flat and rent out of the city in order to explore new areas she might want to buy in.
This will also reduce her rent, allowing her to save more.
She’s aiming to buy at somewhere between £140,000 and £160,000 and although she does not want to share the exact deposit she has saved, she says it would currently be enough to buy at this price range.
But a bigger deposit would allow her to have a cheaper mortgage when she does buy, with her aim being to purchase with monthly costs of between £400 and £500.
Having a big deposit not only means buyers borrow less, but also means they get access to preferential mortgage rates, as lenders give lower interest to those who can pay for more of their home upfront, which is known as having low loan-to-value (LTV).
Property experts say that Molly’s decision is becoming more common.
With property prices not increasing at rates seen in years gone by, the equation between renting and buying is not as straightforward as it once was.
Richard Donnell, executive director at property portal Zoopla, says price growth of 1 to 2 per cent is likely this year, which is well below inflation and lower than savers can get with a good cash ISA or investing.
Some properties, like flats, are actually falling in price, meaning the rush to buy is even less urgent.
“There is a permanent ‘competition’ between buying or renting but it only ever really makes sense buying if you are certain that property prices are rising,” says Patrick Bullick, managing director at Stanley Property, an estate agent in London.
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Property consultant Alex Goldstein, who is based in Yorkshire, says he is seeing this play out among potential buyers.
He says: “Flats give poor returns and first and second time buyers know this, especially in the light of fleecehold [a derogatory term for leasehold homes with high service charges and ground rents] and Grenfell Tower.
“It makes logical sense to hold on slightly longer, skipping a few rungs on the property ladder and go for something that will prove to be a more advantageous overall investment and a buyer can secure more preferential rates with a larger deposit.”
“This is a property trend that is certainly here to stay for the foreseeable future.”
For now, Molly is taking her time and is looking to rent in one of the towns or villages outside Leeds to see if she likes the area, before buying.
She thinks getting a two-bedroom flat for £650 a month in rent could be possible while she decides.
Buying there will also be cheaper.
“In the villages I have looked in, the house prices and size for money is significantly lower than the city centre,” she explains.
Another reason that people have been put off renting in the past is the lack of security of tenure involved.
But recent reforms have gone some way to addressing this.
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From 1 May, when the Renters’ Rights Act comes into play, landlords can no longer use Section 21 notices to evict without a reason. To regain possession, they must prove a specific legal reason.
Others reforms include stipulations that rent can only be increased once a year, and landlords must provide at least two months’ notice.
“Renting is no longer seen as the pariah in the property sector, providing a useful option to upsize an onward purchase,” explains Goldstein.
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