Should I buy a property in Barnsley or keep renting?

Q I’ve recently finished a graduate scheme and have taken a job in Barnsley that pays £35,000. Since leaving home I have always rented but now want to get on the property ladder.

The issue is that I don’t see this as a long-term stay. So should I buy somewhere here and then sell or let the property if or when I move back down south; buy where I expect to end up eventually and rent it out until I can live there; keep renting while saving a bigger deposit for when I feel ready to commit to one location? DS

A As a general rule, if you don’t plan to stay in the same place for at least two years, you are probably better off renting rather than buying. That’s because over a short period of time, the cost of buying somewhere is likely to exceed that of renting. You need to take into account not just the regular monthly outlay on mortgage payments and buildings insurance (which your lender will insist on), but also the upfront costs associated with a property purchase. including legal fees, survey fees, valuation fees, the Land Registry fee, and possibly mortgage arrangement fees and stamp duty, which is payable if you buy somewhere costing more than £125,000. Later, you may also need to factor in estate agents’ fees on the sale of the property if these aren’t covered by a sufficient rise in the value of the property.

However, having looked at properties for sale and rent on Rightmove, it could be that buying somewhere in Barnsley – even short term – could be a wise move. It all depends on the kind of place you would rent and how much you would pay for a property. If, for example, you chose to rent a room in a shared house in Barnsley, it could cost you around £250 a month. That’s about the same as just the monthly mortgage payment if you were to buy a two-bedroom terraced house for £50,000 with a £5,000 deposit and a 25-year mortgage of £45,000 with an interest rate of 4.15% but no mortgage fee. Taking all the other buying costs into account, which could amount to around £1,200, over a two-year period buying somewhere would work out as £50 a month more expensive. If you paid a £1,000 mortgage fee to secure a more competitive mortgage rate of 2.5%, you would reduce the mortgage payment to around £200 a month, but the overall cost would still be more expensive than the rent on the room.

On the other hand, if you wanted to rent a place of your own rather than live in a shared house, you are looking at paying between £380 and £450 a month for unfurnished properties. For a furnished rental, you can expect to pay as much as £525 a month. Again assuming you bought somewhere for £50,000 – which is perfectly possible in Barnsley – even if you sold up after only 18 months, you would have saved money compared with renting.

As to whether you should buy where you expect to end up, I’m not convinced it’s a good idea. It may also not be feasible as you would need to take out a buy-to-let mortgage and have sufficient cash to put down a deposit of 20% of the cost of a property in the south of England. The fact that the maximum buy-to-let mortgage you can get is typically 80% of the value of a property could also rule out the idea of later renting out a property you bought in Barnsley.