Choosing whether to rent or buy when planning your move to our beautiful borough of Kensington and Chelsea can feel like an overwhelming decision. With a minefield of different internet opinions (and family and friends no less), it’s important to find clarity in the chaos and work through some key financial and lifestyle factors. In this blog, we’d like to walk you through three points that will help streamline your search.
To Buy: The Budget
A testament to the wealth of cultural enrichment and shopping opportunities, top educational facilities and ease in transport links, Kensington and Chelsea boasts some of the most expensive property prices in London. Organising a mortgage can assist in mitigating the up-front cost of buying initially by paying only a percentage of the purchase price yourself in the deposit up-front. If you’re looking to purchase a first home, government Help to Buy schemes can assist you with getting onto the property ladder. With a Lifetime ISA (LISA), you can pay in up to £4,000 each year and the government will add a 45% bonus to these savings, which can be withdrawn when buying your first home if the property costs £450,000 or less. This option, therefore, requires considerable financial pre-planning. London Help to Buy allows first-time buyers or existing homeowners interested in buying a newly built home costing £600,000 or less to borrow 40% of the purchase price interest-free for the first 5 years, if you cover at least 5% of the deposit. However, it is worth noting that the average property price in Kensington and Chelsea supersedes the maximum withdrawal and application limits of a LISA and London Help to Buy. So, if indeed the price of properties you’ve got your eye on are above these scheme maximums, it is prudent to consider other mortgage options without such limits.
Check out our blog, “Getting on the Property Ladder”, for more detailed information on looking for the right mortgage.
You should also think about the status of the local housing market. Over the past 3 and a half years, the UK’s housing market felt the effects of Brexit uncertainty as average housing prices depreciated across London. If you’re looking for a quick saving in the short-term, this may appear opportune initially. But, a drop in your new property’s value also signals a drop in a potential return on your investment in the long-term, as it suggests you’ll likely not get what you paid for when you decide to sell. In the shadow of last year’s general election and the UK’s official accession from the EU this January however, the London housing market is showing signs of market recovery. House prices appear to be stabilising, reaffirming London as a global epicentre of prime property.
All in all, if you’re lucky enough to have the monetary means to buy a beautiful property in Kensington and Chelsea, we see it as not only a great investment opportunity, but a safe bet in terms of location in the long-term. Kensington and Chelsea have long been known as the place to buy in West London, and we’re sure you’ll feel the same!
To Rent: The Budget
Kensington and Chelsea offers-up good value monthly rents in proportion to the higher-end property prices.
Mortgage Insider highlights the average annual rent in our wonderful borough is just 2.63% of the average house price! So, opt to rent if you can’t afford to buy but can’t keep your eye off the area (Why would you!). We’d also advise doing some personal research into prospective average mortgage repayments in comparison to monthly rental prices to see which is more cost-effective. Renting is also a safer option if you’re not 100% sure about your long-term financial situation.
When considering renting you must also consider the additional costs of local council tax, electric and gas service, water rates, telephone services and TV licence as well as your eligibility to clear the application process based on the soundness of your financial history.
Now you’ve reviewed your finances, considering the type of lifestyle you lead is the other most important factor when choosing whether to rent or buy. In our view, this largely comes down to two dimensions – flexibility and security.
Renting is a much more flexible option. If you or your partner are in a job that may require you to pack-up-and-go, renting your property allows you to move with no strings attached. Furthermore, do you maybe have the itch to move to another area or country in the future? If so, renting will make this transition smoother.
Conversely, if you see yourself remaining settled within the area – say, you have or are planning to have children that will need to get settled in local schools or you are nearing your retirement – buying provides you with more long-term property security. Buying also gives the freedom to make your property your own with interior design overhauls or smart home renovations to increase the property’s value, which would not be worth the investment in a rental property.
No matter what stage of the process you are, we’d love to help you with any of your current or future real estate needs, so make sure to give us a call at 0207 937 9777 with any queries!