Homeownership is a common financial goal. It represents security and many people want to purchase a home before they think about starting a family and building a life for themselves and their loved ones.
However, as a rugby player, you might be wondering whether buying a house is the right option or if you should rent instead. This is because, as a professional player, you may be more likely to move to different cities or even countries on a regular basis. Your earnings might fluctuate too, and this could mean that the size and location of home that you can afford changes throughout your career.
Read on to learn if it is better to buy or rent during your playing career, and some of the key factors to consider.
The average rent in the UK is currently £93 higher than the average monthly mortgage payment for a first-time buyer
First, you might want to consider the monthly costs of renting and buying to see which is more affordable.
According to MoneyWeek, the average rent in the UK in May 2024 was £93 higher than the average monthly mortgage payment for a first-time buyer. This is based on a 30-year term mortgage with a 20% deposit and an average interest rate of 4.6%.
So, in some cases, the monthly cost of buying a home could be cheaper than renting. However, there are many variables at play, so buying will not necessarily be the more affordable option.
For example, house prices vary across the country and the difference in cost between buying and renting is more pronounced in certain places. In fact, in the east of England, it is still cheaper to rent than buy. Conversely, in Scotland, buying instead of renting could save you an average of £428 a month.
It is also important to consider your own personal circumstances. Your monthly mortgage costs will depend on how much you put down as a deposit, your credit history, the term of the loan, and your current earnings.
That is why you may want to seek professional guidance and understand what your personal mortgage costs are likely to be, and then compare this with rents in your chosen area.
Property owners may need to spend 1% of the value of their home on maintenance each year
There are benefits to owning your own property, but there are also additional costs. When you buy a house, you must pay for maintenance and upkeep while conversely, if you rent, a landlord or property management company will normally pay for home repairs. You may need to consider this when comparing the cost of owning and renting a property.
According to Checkatrade, homeowners should budget around 1% of the value of their home each year for maintenance. This means that if you purchase a £250,000 home, you may want to budget for £2,500 maintenance spending each year.
Additionally, you might exceed this budget if you need to make more expensive repairs such as fixing a roof or replacing a boiler.
These maintenance costs can add up over time and, in some cases, could mean that the overall cost of owning a home might be higher than renting, even if the mortgage is cheaper than paying rent.
You may need to stay in a house for 5 years to recoup the cost of buying it
As well as the ongoing maintenance costs that you may face as a homeowner, you might need to consider the one-off transactional costs of purchasing a home.
According to Zoopla, you could need to pay some or all of the following:
- Solicitor fees (up to £2,000)
- Mortgage arrangement fees (£1,000 to £2,000+)
- Mortgage booking fees (£100 to £200)
- Valuation fees (£150 to £800)
- Property survey (£400 to £1,500)
- Stamp duty (0% to 12% of the property value)
- Removal costs (£150 to £2,000+).
As you can see, the additional costs of buying a house can be very high. Meanwhile, if you rent, you may have certain expenses such as a deposit and removal costs, but it may be a lot cheaper.
The value of the property may increase while you own it, and this might make the transactional costs worthwhile as you recoup the costs and potentially make a profit when you sell your house. However, if you move regularly, as you may be likely to do during your professional playing career, you could end up losing money if you have to buy and sell on a regular basis.
Indeed, according to Experian, homeowners should aim to stay in a property for a minimum of five years to recoup the transactional costs. Yet, depending on the property market and how much your home increases in value, if at all, it might take more than five years to break even.
While some are longer, many professional rugby contracts tend to be around two or three years. So, you could end up losing money if you move to a new team in a different location and sell the property before it has a chance to increase in value.
If you do this several times throughout your playing career, those losses can quickly add up.
Renting could give you more flexibility during your playing career
Flexibility is one of the key advantages of renting. As discussed above, regularly selling a house and purchasing a new one could mean that you lose money to transactional costs.
Additionally, the process of buying a home may be long and you either struggle to sell a property or face delays that are out of your control. This may be a problem if you need to move to a different city or country quickly in time for the start of the playing season.
Conversely, if you rent instead of buying, it may be much easier to move regularly throughout your career. That said, many landlords will require you to sign a rental agreement for a specific period (often 6 to 12 months). There could be penalties for breaking the contract early so some rental properties are more flexible than others.
You may want to consider this when finding a house to rent and look for properties with shorter tenancies, so you can move quickly if you need to.
Buying a property could be a valuable investment for the future
While renting might be more flexible than buying a house, you do not retain the wealth that you spend on rent each month. Conversely, when you pay a mortgage, you potentially build equity in the house. If you later sell the property, you may benefit from this wealth, depending on the value of your home.
Additionally, buying a house gives you an asset that you may be able to use to generate funds in later life. For example, you might decide to rent it out to generate an income after your playing career ends. Alternatively, you could sell the property and use the wealth to fund your lifestyle. Bear in mind that there may be additional costs and taxes associated with property investments.
As such, although buying a house may be less flexible than renting, your home could be a useful asset that may increase in value.
You may want to consider all these factors and reflect on your own financial goals when deciding whether to buy or rent during your playing career.
Get in touch
If you need some guidance about managing your wealth during your playing career and beyond, then please do get in touch with us at DBL Asset Management.
Email enquiries@dbl-am.com or call 01625 529 499 to speak to us today.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
The Financial Conduct Authority does not regulate buy-to-let (pure) and commercial mortgages.
Equity release will reduce the value of your estate and can affect your eligibility for means-tested benefits.
