Is it better to rent or buy?

If you’re wondering ‘should I buy or rent?’, you’re not alone. The answer can depend on your financial situation and future priorities. To help, this guide compares renting vs buying, so you can see if either route might suit you.

Key takeaways

  • Renting may cost less each month in the short term, depending on where you live, and a rental deposit is usually smaller than a mortgage deposit.
  • Buying a home could help you invest in your financial future, known as ‘building equity’. It can also come with paying a deposit, legal fees and financial responsibility.
  • If you’re deciding between renting or buying a house, the right choice can depend on your budget, plans for the future and how much flexibility you want.

In this guide

Is it cheaper to rent or buy a home?

Renting pros and cons

Buying pros and cons

Frequently asked questions

Is it cheaper to rent or buy a home?

When you compare renting vs buying a house, renting can cost less each month in the short term, depending on where you live and your lifestyle. A rental deposit is usually smaller than a mortgage deposit, too, so it may be quicker to save towards.

Over the longer-term, things can look different. Rent goes to your landlord and doesn’t build you equity, which is the share of the home you own.

On the other hand, if you buy a house, your equity could grow as you repay your mortgage or if your home’s value rises. But it’s worth remembering that values can fall too, and you’d still need to pay your mortgage.

Comparing your potential rent vs mortgage payments is just one part of the picture. You can see what else you may need to budget for in our guide to first time buyer mortgage costs.

Work out how much rent you could afford

There is no single amount that works for everyone. Look at the rent alongside council tax, household bills, travel, debts and the amount you want to save.

What rent can I afford?

Work out what a mortgage could cost

You can use our mortgage calculator to see what your monthly mortgage payments could look like. You can then compare them with your rent and consider them alongside the other costs that come with buying a home. 

Mortgage calculator

Renting pros and cons

Many people wonder if renting or buying is better. But the answer depends on what matters to you. To help you along the way, here are some of the benefits of renting and some drawbacks to consider.

Advantages of renting a home

  • Repairs are usually your landlord’s job. If the boiler breaks, your landlord usually arranges the repair. If you own your home, this repair bill could be yours.
  • It can be flexible. In England, most private homes now have rolling contracts, and you usually give 2 months’ notice to leave. Rules can differ in Scotland, Wales and Northern Ireland. See GOV.UK for the latest guidance.
  • Costs can be easier to plan. Your rent is set out in your tenancy agreement, and you usually don’t pay for repairs or replacements.
  • You may get a better location. It’s often possible to rent in an area where buying might be out of reach.
  • Fewer upfront costs. When you rent, you usually pay a deposit, but not costs like legal fees or stamp duty, which can come with buying a home.

Drawbacks of renting a home

  • You don’t build equity. Your rent goes to your landlord, who may even use it to pay their own mortgage, so it doesn’t go towards you owning the property.
  • Your rent may go up. In England, landlords can usually increase rent once a year with notice. You may be able to challenge an increase if you think it’s too high.
  • Your tenancy could end. In England, landlords need a legal reason to end a tenancy, like selling or if they decide to move in, but it could still mean you have to move, too.
  • Repairs can take time. Getting any faults fixed may take longer than you’d like, and you usually need your landlord’s permission to sort things yourself.
  • Pets and decorating may need permission. In England, you can ask to keep a pet and your landlord can’t unreasonably say no. Changes like redecorating usually need their permission, too.
  • Extra checks and costs. Landlords or letting agents may ask you for references, a credit check, or a guarantor. You may also pay council tax, bills, and other items like home contents insurance.

Buying pros and cons

Now let’s look at the buying side of things. Buying could give you more control over your home and the chance to build equity, but can bring extra costs and risks, too.

This guide looks at the pros and cons of buying a home to live in. If you’re looking at buying a property to rent out to tenants, different costs and tax rules, like capital gains tax, may apply.

Advantages of buying instead of renting

  • You could own your home outright. Once your mortgage is paid off, all of your home’s equity is yours.
  • You can decorate how you like. Fancy a feature wall? When you own your home, you don’t need a landlord’s permission to redecorate.
  • You could have a pet. There’s no landlord to ask about this, though you might want to check your lease first if you buy a leasehold property, as some can restrict pets.
  • Your home’s value could rise. If it does, you could make a profit when you sell it. Values can fall, too, so this isn’t guaranteed.
  • You can fix your mortgage payments. A fixed rate mortgage keeps your rate the same for a set period, often 2 to 10 years. You can review your options when the deal ends.

Drawbacks of buying instead of renting

  • Less flexibility: Moving is harder when you own your home, as you usually have to wait for your property to sell.
  • You usually need a larger deposit. A deposit is usually at least 5% of the property’s price. Our budgeting tips could help you get started.
  • You pay for repairs. When something breaks or goes wrong, like your washing machine, it’s down to you as the homeowner to fix it. Big jobs, like getting a new roof or boiler, can come with a bigger bill.
  • Your home’s value could fall. If prices drop, your home may be worth less than you paid, which could leave you in negative equity.
  • Extra buying costs. On top of your home’s deposit, you could pay stamp duty, legal fees and survey costs.

Find a rental home with Lloyds Living

Lloyds Living, part of the Lloyds Banking Group, offers professionally managed, energy-efficient homes to rent across the UK. Pick a development, arrange a viewing, and the team can guide you through referencing and your tenancy agreement. 

Find a rental property

Looking to buy instead?

If your ‘rent vs buy’ research points towards buying, we can help you understand your options. Find out what to expect when buying your first home, from saving for a deposit to picking a mortgage.

Buying your first home

Let’s look at the details

  • A mortgage deposit can be a lot to save, and there are often extra costs to factor in, too, like solicitor fees, stamp duty, buildings insurance and monthly repayments. If that feels out of reach now, renting for a while longer could be an option. Budgeting and saving might put you in a stronger position down the line.

  • It can be, month to month, depending on where you live and your lifestyle. Rent and a smaller deposit may cost less at first than a mortgage and the costs of buying. In some areas, though, the gap between rent and mortgage payments may be small.

  • This depends on your individual situation. Renting may suit you if you’d like flexibility and lower upfront costs. Buying might suit you if you’d like a home to make your own and the chance to build equity. Your decision to buy or rent can also depend on your budget and future plans.

  • Lenders tend to look at your income, general spending, credit history and what size deposit you can put down, whatever your age. Although, some do have a maximum age at the end of the mortgage term, which might affect how long a term you can choose.

  • Yes, renters can apply for a mortgage. Lenders tend to assess your income, general spending, credit history and deposit amount. If saving for a large deposit feels tricky, our £5K Deposit mortgage lets first-time buyers apply with a deposit of £5,000. Conditions apply. Current eligibility includes property value and type restrictions, affordability checks and a non-gifted £5,000 minimum deposit. Lending often depends on your individual circumstances and an assessment of your finances.

  • Our mortgage calculator can help you estimate what your monthly mortgage repayments could be. You can then compare this figure with your current rent to get an initial idea of how the monthly costs may differ. 

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Budget calculator

Use our budget calculator to get a more exact estimate of how you can split your income with the 50, 30, 20 rule.

Work out your budget

Renting made easy

Our practical renting tips and advice can help with your next move, whether you are moving into your own place or a shared home.

Get renting help and support

Renting made easy

Our practical renting tips and advice can help with your next move, whether you are moving into your own place or a shared home.

Get renting help and support

Important legal information

Lloyds and Lloyds Bank are trading names of Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.