Similar situation and I rent with my gf.
Pros of renting at the moment:
- lots of properties to choose from is keeping rents low. Even more so now, as people who own houses but don't want to live in them (relocation, moving in with partner, etc) are renting them out instead of selling.
- as property is still overvalued for the most part, rents (mine at least for the last 4+ years) are usually below the cost of the interest on the mortgage if you bought the place.
- no unexpected bills. A boiler replacement can be £2k+, even an appliance failing can be hundreds to fix or replace - if you rent it's your landlord's problem.
- you get flexibility. Find a dream job elsewhere? Want to drop everything and see the world for a year? Neighbours from hell move in? Just give your notice and leave. If you own it you're either stuck until you sell it or you'll be forced to be a landlord yourself with all the liabilities that involves.
- houses are not much of an investment right now. Pretty much the best case scenario is that they stay pretty flat for the next few years. Unemployment and defaulting are only going in one direction right now, lending criteria are strict, wage rises very small if they happen at all, while the cost of everything goes up. Interest rates will have to rise eventually too making it worse. Last time round in the 90s the big fall was early in the decade but it took until 1996 before the gentle decline after the crash reversed and prices started rising again. You've got plenty of time to rent, accumulate a big deposit and buy when the time is right.
- let's say your life continues on the same trajectory, you stay together, get married, have kids. You're not going to stay in the little flat that you can afford right now - you'll need more space. You'll have to move. If you own a place, that's a load of estate agents fees, stamp duty, mortgage arrangement fees, etc on top of the cost of moving.
And more specific to your situation:
- you've never lived together before. The kind of financial commitment involved in buying a place together needs firmer foundations than that IMO - ideally marriage.
- you don't have enough of a deposit to get a decent mortgage deal. 100% mortgages are history, 95% is tricky to get and at high rates. Step back for a while and SAVE. If you can't afford your rent and putting a substantial amount away each month, you really need to consider whether you could afford a repayment mortage at all.
Pros of buying:
- you can paint the walls whatever colour you like.
- you don't have to deal with rental agencies.
- you don't have to think about risking your deposit when you change brake fluid over the dining room carpet.
- you can stay there as long as you like (well, assuming you can pay the mortgage).
- an investment - but ONLY in market conditions where prices are rising.
Personally, I want to buy when I am fully settled, both in my relationship and my job/career, and we are able to afford a place that we can live in (with space for kids and all that) for at least 10+ years. Buying a pokey flat now just to "get on the ladder" makes no sense at all to me.
starter homes will always sell easily.
