Do you have to own the house you live in?

genki_gardener

Hello all. I have a question i would like to open up to the forum and look forward to your advice :-)
We currently rent a beautiful home, in a wonderful area and surrounding countryside. We rented the house based on the fact we sold up in a different city and wanted to "try before we buy" a new area. Fast forward three years later and we are struggling to be able to afford to buy something we like, let alone anything similar in size and style in the area. Very few properties come on the market, and those that do, tend to go quickly or for over inflated prices as more people bid to buy them.

So, our thought was - should we just continue to rent our home, possibly for another 5-10 years, and in the meantime use our capital towards a mortgage for a different home in a different area, and just rent it out? That way we are still "on the property ladder" and paying towards a mortgage, hopefully receiving enough in rental income to cover our mortgage payments and even contribute towards our rent (or savings).

The one major downside i can see is an emotional one - we love our house and we will never actually own it. We may also be forced to move out if/when our landlord decides.

But in actual fact, is this something that more people do than i am aware? Do you actually have to own the house you live in?

Thoughts and advice please lovely people! :-)

benjus

The main reasons for buying over renting are security of tenure, the ability to make changes to the place without needing permission, and the fact that you are investing in a property that will eventually be yours outright and will provide you with accommodation into retirement.

If you've addressed all these points and are satisfied, there's no reason not to do what you suggest... I doubt it's very common though, as most people prefer to have control of the place they live in.

Getting a BTL mortgage might also be more difficult if you don't own your main residence - have you investigated that?

dinosaur7

If you love the house you are renting, then I personally would be tempted to stick with it. I do appreciate the emotional downside if the landlord gives notice, but I think it is a mistake to think that buying a house protects you from similar risk.

When you buy, you can find that you have difficulties with neighbours, or new developments being built and changing the character of the area (I speak from bitter experience regarding the latter!). If this happens, you can find yourself with all of your assets tied up in a house that no longer feels quite so appealing as a lifetime home, and the very circumstances that are causing you a problem mean that it is harder to sell up and move on. If you were renting in this situation you could just decide to look for somewhere else.

I suspect that most homeowners will say that buying your home is best but, as someone who has always done that, I must confess to a sneaky feeling that we would have had a lot more freedom and been much happier if we had rented. Most of my friends live in homes they have bought but, oddly enough, the one I enjoy visiting most, who has the most wonderful welcoming home (which she never complains about, unlike the rest of us) is...you guessed it...the one who rents her house. It might be coincidence, but the closet renter in me suspects not !

genki_gardener

thanks both for your replies! I had not appreciated the fact it might be more difficult to get a BTL mortgage... so i guess i should keep this in mind too. I also agree that by renting the house we live in, we can easily change/move if the surroundings etc change, and less so if we were trying to sell... so that definigtely makes sense! thank you :-)

GeorgieBuilder

Check also that your current agreement allows this, it's unlikely that it won't, but it can be a common thing with agricultural tenancies in some areas.

princeofpounds

It's only a property ladder when your return (rising prices and rent you don't have to pay) exceed the interest costs.

It feels like it has always been a ladder as we have been in a 20 year unprecedented property boom. This may continue, or it may not. But if you ask someone who bought at the wrong point in the cycle in the early 90s or similar periods, it can be a property snake too. Most people have forgotten though.

Buying with a mortgage is just renting the money rather than renting the property, although it has a few important differences:

- you have an option to *really* buy the property at a fixed nominal price, rather than a real price that inflates over time.
- you have title and so can modify and invest in the property.
- you have security of tenure.

In some countries, renting is actually the norm, as it used to be in the UK. The main difference is that they tend to have security of tenure.

It's really that stability that people crave when they want to buy, not necessarily owning the house itself. Many people live quite happily in long leasehold flats, and they price similar to houses that are bought and sold, even though they are just long-term rental contracts.

uk_american

Life is about trade-offs and priorities, what is important (and affordable) to you? That is all that matters.

I own my flat with rooftop garden, in Essex.

I'd prefer to be closer to the coast or closer to London, but rooftop places are few and far between that equate to mine, in particular at the cost. Having been a renter for many years, I was seeking the stability and benefits (the ability to own a cat and have no mortgage) that I could get from owning my tiny rooftop in Essex. Well, that an all the lettuce, strawberries, garlic, onions, etc. that I could grow.

If you're happy in your area and comfortable with the idea of renting and if financially you can make it work in the long term, then it sounds like a good idea.

lazer

My parents did this for a number of years.

They owned a house which they rented out, and then rented a different one for themselves.

The rent on the house they lived in was a lot less than the rent they charged on the house they owned.

Eventually when I was about 26, the landlord decided to sell up, and my parents evicted their tenants and moved in.

It was actually a perfect situation, they got to live an bring up their children in a lovely farmhouse, sorrounded by fields and plenty of space to play.

They were very apprehensive about moving and we were all heartbroken about leaving our family home (so much so that even 3 years later I considered buying it when it went up for sale again).

They are now living in an estate in a smaller house, walking distance to the town, which is I suppose perfect for them as they get older.

The house they rented may not have been theirs, but the landlord practically give them free reign over it, we painted how we liked etc.

LittleMrsThrifty

I am very interested in this as I am considering doing the same. OH and I rent a house which we love however we want to remain fairly footloose for the time being so that we can focus on our careers. Buying a house would tie us down geographically but I am concerned that we may not be able to afford a house in a few years time, whereas now we have a large deposit.