The post that compares the costs of owning with renting in London.
The dust has now settled on my home purchase. And I have a clear picture of what it’s going to cost being a sole home owner as compared to living in my previous four-person shared house.
Here’s how my monthly expenses as a home owner compare to when I rented…
|EXPENSE||OWNING||RENTING (MY SHARE)||NOTES|
|Housing||£1,013.96||£480||Owning costs comprise of £1,005.62 mortgage and £8.34 ground rent (paid as £100 per year).|
|Building and/or contents insurance||£35||£12||Obviously when renting I only had to pay for the contents’ insurance.|
|Gas and electric||£71||£14.75||I’m hoping the gas and electric cost will drop once I’ve submitted a few meter readings (believe me, this was the cheapest quote I could get). I cannot fathom how my costs from living alone in a one bed flat can be more than the total cost that four of us paid in a four-bed house.|
|Council tax||£82||£32.50||I get the single person discount on council tax because I live alone.|
|Internet||£27||£10.30||Not sure why we paid for such crazily expensive internet in our shared house. One of my housemates was responsible for sorting it. This is what happens when you trust other people with household expenses.|
|Yoga studio||£50||£50||Might end up cancelling this as since I’ve moved I’m not really near any of the studios and am probably not making enough use of it.|
|London Underground annual travel card||£137.33||£117||I have moved out to Zone 3 from Zone 2, hence the more expensive travel card. I get a season ticket through work and the cost comes directly from my salary.|
|Cleaner||£73.13||£0||Not very frugal of me, but I decided to get a cleaner once a fortnight, and this is what it comes to as a monthly average. I really can’t believe we didn’t get one as a shared house, it would have eased so much tension.|
|Variable expenses||£500||£500||This is how much I give myself to spend monthly on costs that aren’t fixed by a direct debit.|
|TOTAL (ORDINARY MONTHLY EXPENDITURE)||£2,059.39||£1,264.95|
|Frivolity Pot||£200||£200||To explain the “Frivolity Pot”, I transfer £200 per month to a high interest “regular savings” account linked to my current account. When this matures after a year, this then becomes the Frivolity Pot for the next year. This is the pot from which I make purchases that would skewer my ordinary monthly expenditure (e.g. holidays).
“Frivolity Pot” is actually a bit of a misnomer: for example, I paid for my voluntary National Insurance Contributions from it. The purpose is really just to smooth out the fluctuations in expenditure: hence why I consider this £200 an “expense” even though it technically goes into a savings account.
|House maintenance fund||£250||£0||This works in the same way as the Frivolity Pot. The £250 goes into a savings account linked to my current account, which once the account matures after a year becomes a £3,000 pot to top up my £5,000 house emergency fund. Obviously I have no idea yet how much it will take to maintain my flat, but hopefully the £3,000 will be sufficient unless there is some sort of extrardinary expense that requires digging into my wider savings.|
|TOTAL MONTHLY EXPENDITURE||£2,509.39||£1,464.95|
So over £1,000 more per month! But it’s totally worth it. Partly because I feel like the mortgage payments aren’t wasted on rent (even though at this stage it’s mostly interest that I’m paying). But it’s also because I get to live alone which (at the risk of sounding cheesy) is priceless. Check out my post on the joys of living alone.
Also, as I wrote a later post on the worst things about living alone, it occured to me that all of the above are technically additional expenses of living alone rather than being a homeowner per se…