We are being told all the time that millennials (people born between 1981 and 1996) are not into house buying for “lifestyle reasons”. Is that even true? If it is, those millennials are being seriously reckless about their future.
The argument is that today’s gig economy makes it desirable not to be tied down by things like houses and to be flexible to move from job to job anywhere in the country, or indeed the world – as and when required.
Further, it is said that young people of today don’t want to spend their money on things – like pricey houses or flats – but prefer instead to spend it on an array of amazing and memorable life-fulfilling experiences.
The answer to that “philosophy” is easy…What is going to happen to all those skint thrill seekers when the music stops and the lights go on… when they are knocking on retirement and don’t have enough money to look after themselves or their family?
That’s right – it’s not going to be pretty!
Choosing to be a tenant for life does not seem logical given the scary future for tenants.
With a bit of thinking, it is easy to see why everybody should say no to being a tenant forever.
If you have the mindset that being a tenant beats being an owner-occupier hands down, here are 7 practical, basic, bread and butter reasons for you to think again…
Being an homeowner gives you stability – you have a home where you can reside as long as you like.
As a private tenant, your landlord can ask you to leave at any point when your tenancy ends at the end of the term, which can be as short as 6 months. You could be compelled to live in many places over a relatively short period.
That could spell havoc for any children you have in terms of having to change schools, losing friends and having to put down new roots.
The emotional, educational and psychological impact on children of having to move frequently should not be under-estimated.
There is also the wasted time and inconvenience of frequently moving.
Each move will be a hassle…having to inform 101 people about your new address; possibly changing your GP; and signing up again for the Electoral Roll, Council Tax, TV licence, TV services and utility providers.
Another practical drawback is the expense – the loss of money. Every time you move there will be removal/moving costs.
Letting agents may demand exorbitant fees from you for the privilege of renting somewhere to live (although the government has signalled that it will ban such fees, it is not clear how far the ban will go and whether it will be effective).
4. Dead money
Rent is “dead money”. It gives you accommodation but home ownership gives you accommodation which is also an asset – and which will increase in value over the years.
In many parts of the UK property prices have doubled every 10 years since the 1960s, and there is every indication this trend will continue.
It is clear that home owners are investors. The mortgage on their home is a serious financial responsibility. However, with a repayment mortgage the debt reduces over time to leave a valuable mortgage-free asset at the end of the mortgage term.
If you are a social tenant with a long term tenancy, you may not have to worry about moving home on a regular basis; however, you will still be a tenant and will not own a valuable property asset.
5. Mortgage free home
Becoming a homeowner and paying down the mortgage each year, or making arrangements to pay it down at the end of the mortgage term, will leave you with a mortgage-free property.
You will be able to live in the property as long as you like, without having to pay a mortgage or rent.
With your pension and any other income, you should have a stress free, happy retirement or pre-retirement.
6. Financial wealth
With your mortgage paid off, your home will be pure equity and if for instance it’s worth £1m, that will be the fabulous amount of money available to you – along with any savings, pensions or other assets.
You will be able to look forward to an affluent, comfortable future.
Had you remained a tenant, you would still be paying dead money to your landlord with nothing to show for it.
7. Options in retirement
The money in your home will give you a wide range of uplifting and rewarding options when your mortgage is paid off. You can downsize to a smaller home and free up capital to do as you wish.
You can release equity by an equity release scheme
Upon releasing funds you can:
- Help your children or other family members to get on the property ladder
- Make gifts or loans to your children or other family members
- Support or start a business or activity
- Enjoy plenty of recreation and holidays
- Boost your pension
- Invest in property, shares or other assets
- Pass on your wealth by your will, leaving a legacy to your loved one
- Benefit charities or good causes of your choice.
Be wary of the idea that you can rent for a few years and then turn to buying later, at will. Escalating prices, changes in your financial circumstances, changes in the economy, or personal or other reasons may conspire against you – leaving you in the tenant position indefinitely.
In the choice between renting and owning, where do you stand – and why? Please leave your comments below.
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Rebel Property Coach
My website is: www.rebelpropertycoach.com