Simon Read: Buying a home is no longer a road to easy wealth but renting can free finances

There was grim news for homeowners from the IMF this week after it warned of the danger of an "extended housing market slump". Its analysis suggests that, despite widespread price falls, property values are still 30 per cent above their historical averages compared with people's incomes.

As such, the IMF warned, prices could drop by another 10 to 15 per cent. That wouldn't just hit individuals, of course, but would lead to a further squeeze on consumer spending, extending the length of the current downturn.

But a correction of that magnitude would be good news for first-time buyers, moving more properties to within their grasp. That's provided that there is still an appetite among young people to own their own homes. A survey published earlier this week suggested otherwise.

It showed that almost a half of those people currently renting would be happy to rent long term if there was less pressure in the UK to own a home. OK, the research was conducted by SpareRoom.co.uk, a house-share website.

But as more people are forced into renting over the long term, could we really be approaching a sea-change in our attitude to property ownership?

Why are Brits so obsessed with owning their own home? There are lots of attractions to renting, not least the fact that any problems with the property have to be sorted by the owner, not the renter. With no sudden maintenance costs to meet, renting can actually be a good long-term deal.

It's also worth bearing in mind that renters don't have to pay stamp duty, which now has a top rate of 7 per cent, which buyers must stump up when they purchase their home. Renters also avoid the legal and conveyancing fees that buyers have to meet.

There's also the fact that if you're renting, you have more flexibility in terms of moving home. That should particularly resonate with all those people sitting with negative equity on their property.

The fact that they owe more than the property is worth means very few will be able to take the loss if they want to move homes. In other words, they're trapped.

On the other side of the coin are two fundamental things. First is the fact that, historically, property has been a safe and secure rising asset. People have been able to bank on the fact that their home will improve in value, giving them a valuable financial resource to call on if they need it.

Traditional received wisdom suggests that money paid into a mortgage to buy a home is an investment, while rent is "simply throwing money away". But the world has changed. The housing market has not risen since the crash in 2008 and shows no signs of climbing again. If the IMF is to be believed, the opposite is true.

How long do we have to go before we wake up to the fact that, at present, the traditional view of your home being your most valuable asset doesn't apply any more if you're a potential first-time buyer.

Rather than risking your savings on a massive deposit and the associated property purchase costs, choosing to rent as a long-term decision could actually make sense.

Nick Wooldridge, of Stacks Property Search, says people must change their attitude towards renting. He thinks we should move closer to the European model, where people are happy to rent for years or even decades.

"One of the main reasons people prefer to buy is because renting doesn't allow them to personalise the property," Nick says. "They are reluctant to spend money on something that isn't theirs; and that they may not stay in for long.

"But if tenants viewed a property as a longer-term proposition, they might see the value in making improvements, and customising the property to suit them.

"My advice to tenants would be to realign their perception. Rather than seeing renting as a wilderness period between purchases, see it as a better-value alternative to short-term ownership. Renting can help avoid making costly mistakes."

Long term, most believe that the property market will recover somewhat. But it may never reach the historic levels which turned generations of homeowners into speculators. In other words, the profits we've become used to may have simply gone.

Once you strip out the idea of a home being a financial investment, then you focus on finding the best home. And that could just as easily be a rented one.

s.read@independent.co.uk

News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
sportDidier Drogba returns to Chelsea on one-year deal
News
people
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
PROMOTED VIDEO
Sport
Louis van Gaal would have been impressed with Darren Fletcher’s performance against LA Galaxy during Manchester United’s 7-0 victory
football
Voices
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Sport
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
sport
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
life
Sport
Rhys Williams
commonwealth games
News
Isis fighters travel in a vehicle as they take part in a military parade along the streets of Syria's northern Raqqa province
i100
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Life and Style
fashionLatex dresses hit the catwalk to raise awareness for HIV and Aids
Travel
travel
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
    10 best reed diffusers

    Heaven scent: 10 best reed diffusers

    Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
    Commonwealth Games 2014: Female boxers set to compete for first time

    Female boxers set to compete at Commonwealth Games for first time

    There’s no favourites and with no headguards anything could happen
    Five things we’ve learned so far about Manchester United under Louis van Gaal

    Five things we’ve learned so far about United under Van Gaal

    It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
    Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

    Screwing your way to the top?

    Good for Lana Del Rey for helping kill that myth, says Grace Dent
    Will the young Britons fighting in Syria be allowed to return home and resume their lives?

    Will Britons fighting in Syria be able to resume their lives?

    Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
    Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

    Beyoncé poses as Rosie the Riveter

    The wartime poster girl became the ultimate American symbol of female empowerment
    The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

    The quest to find the perfect pair of earphones

    Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
    US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

    Meet the US Army's shooting star

    Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform