WORDON THESTREET

Why bother to buy your own home when you can rent and save?

The Daily Telegraph - Property - - Marketplace - Ed­mund Con­way

Of all the sa­cred cows that in­habit the world of prop­erty, few are big­ger and more im­mov­able than the emo­tive is­sue of home-own­er­ship. Get­ting more fam­i­lies to own their own home has been a pri­or­ity of gov­ern­ment af­ter gov­ern­ment. Should we be alarmed, then, by the fact that the level of owne­roc­cu­pancy has dropped be­neath the 70 per cent mark for the first time in al­most a decade?

No. In fact, the num­ber of peo­ple who own is likely, if any­thing, to fall fur­ther in the com­ing months. This may well be a cause for em­bar­rass­ment in White­hall, but it should not con­cern the rest of us. It is ac­tu­ally ex­tremely healthy for our coun­try to have a good chunk of renters as well as owner-oc­cu­piers.

While we are on the sub­ject, let’s lay to rest a few myths. The first is that Bri­tain has a high level of home-own­er­ship while the ma­jor­ity of our Euro­pean neigh­bours are con­tent to rent. Al­most 80 per cent of house­holds in Spain and Italy own their prop­erty. The shares in France and Ger­many are hardly low at about 63 per cent and 43 per cent re­spec­tively.

The sec­ond is that buy­ing al­ways makes more sense eco­nom­i­cally than rent­ing. In many parts of the coun­try, it is cheaper to rent than to buy, cer­tainly over a two- to five-year pe­riod. Sim­ply put, it is quite easy to find a prop­erty where the monthly rent is less than the mort­gage in­ter­est. Un­less you ex­pect a mas­sive in­crease in house prices over the next two or three years (don’t), or are des­per­ate to buy and will hold the house for longer, it would be bet­ter to rent.

Con­grat­u­la­tions! You, along with a few mil­lion oth­ers, are now the proud owner of a bank. Fol­low­ing the first ma­jor na­tion­al­i­sa­tion in decades, we are now in con­trol (kind of) of one of the coun­try’s big­gest mort­gage lenders. Though you may be bored stiff of the story, here, nev­er­the­less, are three im­por­tant prac­ti­cal tips.

Put some money into a North­ern Rock sav­ings ac­count. The com­pany is still of­fer­ing ex­tremely at­trac­tive sav­ings deals — backed by the Gov­ern­ment. It is like buy­ing a gilt-edged se­cu­rity but with a far bet­ter re­turn. Move fast.

North­ern Rock mort­gage­hold­ers should pre­pare to move mort­gages when their cur­rent deal ex­pires. Since its near-col­lapse, the mort­gages of­fered by the Rock have been dread­ful. You can find far bet­ter deals else­where — and that’s the idea. The com­pany is at­tempt­ing to drive its cus­tomers else­where, thus re­duc­ing the size of its debts. Now the com­pany is na­tion­alised, the pres­sure to shrink will in­crease.

If you are un­for­tu­nate enough to have your home re­pos­sessed, make some noise. For the first time in liv­ing me­mory, the Gov­ern­ment faces hav­ing to turf home­own­ers out of their prop­er­ties for miss­ing mort­gage pay­ments. You prob­a­bly won’t be able to save your home, but you will cer­tainly raise the pres­sure on the Gov­ern­ment to com­pen­sate you.

ed­mund.con­way@tele­graph.co.uk Ed­mund Con­way is Eco­nomics Ed­i­tor of the Daily Tele­graph

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