Should I buy or rent?
Q I am 29 and want to buy a flat in London. I have a £10,000 deposit and could therefore afford a 50% share of a new-build one-bed flat in a decent area for about £110,000-£130,000 (I would prefer this to buying a flat outright in need of work that was further away from the centre). I am expecting to stay in London in the long term, but there is a reasonable chance my salary could increase considerably in the next couple of years, meaning I could save a larger deposit and possibly buy a place outright depending on the housing market. Would it be worth buying a shared-ownership property now to build up some equity, or should I keep renting in order to increase my deposit with a view to buying in a few years? SD
A Assuming property prices rise in the next few years it would be worth looking into the shared-ownership option. Although you would start off owning only 50% of the flat – and paying rent on the other half – as your salary increases you will be able to buy a larger percentage share. If your salary increases mean you manage to buy the second 50%, eventually you will end up owning the flat outright. So any money you “invest” in the flat by increasing your percentage share will act as a deposit if you decide to sell and move to a bigger property after a few years.
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