Don’t just follow the herd into buying, says agent

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HOME ownership in the UK is often seen as a rite of passage from the innocence of youth to the independence and responsibility of adulthood.

Prospective home-owners see their first purchase as one of the key defining moments in their lives.

If asked to rank it in terms of importance many would put it a close third behind marriage and childbirth.

Yet ask young French or German people the same question and you’re likely to get a different response.

Home-ownership levels in those countries fall below the EU average of 65 per cent of total population. In France it’s 59 per cent and in Germany it’s as low as 46 per cent (source - Eurostat).

The current UK level of 69 per cent is one of the highest in the world and a significant influence on the British psyche.

Inflated house prices, expensive mortgages and high deposits are forcing a generation of Brits onto the long term rental market. Despite falling UK house prices (-2.6 per cent during 2010-11), few have been able to take advantage - with a drop of 8.9 per cent in sales per month being registered between May and June 2011 compared to 2010 (Sept 2011 Land Registry House Price Index).

Rosie said: “Going back over past decades, home ownership is still a fairly recent phenomenon in the UK and many young Britons still believe that if you don’t have one, then you need one.

“However, the recent economic slump has forced many to contemplate the alternative of long term rental and, at Belvoir, we’re seeing an increasing number viewing it as a long term solution.

“Many argue that rent is dead money, money that would otherwise go towards paying off a mortgage.

“But that depends on whether your mortgage is repayment or interest only. In the current uncertain economic climate a large number of home owners are opting for interest only in the belief that, when things get better, they’ll start to repay.

“What many fail to realise is that ‘interest’ is effectively rent and not the investment home ownership is often portrayed to be.

“This is a grey area and an area where Belvoir believes prospective home owners should do their maths before taking the plunge.”

When buying a home there is undoubtedly a benefit from the freedom it brings. That’s the freedom to sculpt a property to your own taste, turning a house into your home.

“But that freedom can easily be taken away if the sums don’t add up and, in today’s market, we are seeing more and more people in this situation.

“You need to do your research,” added Rosie.

“Renting brings its own freedom. A freedom to move and adapt to changing circumstances and, in this world of job uncertainty, mobility is becoming an increasingly important factor.

“You need to think long and hard about your circumstances now and in the future and balance the cost of rent against the cost of paying mortgage interest.

“If it doesn’t add up for you, then long-term rental may be perfect.”