Don’t be tricked into being a long-term renter.
Over the last few weeks, I’ve seen a wave of YouTube videos—mostly by Africans in the diaspora and second-gen immigrants—trashing mortgages as a "scam," a financial ball-and-chain, or just plain not worth it because they "trap" you into working non-stop to keep up with payments.
While I get where they’re coming from, this take is dangerously oversimplified. It ignores key nuances that could cost our community serious wealth over time. Let’s debunk this 'renting is better than buying' narrative. First things first: you need to live somewhere
If you don’t own, you rent. Simple.
And in the UK, for most of the last 20–30 years, mortgage payments have often been the same or much lower than rent. That’s right—lower. And rents have been rising at lightning speed. Why? Because the housing stock is barely growing, and demand is rising—not just due to immigration but also because people are moving out of parental homes and needing their own space and staying single for longer. The supposed house-building boom? Nowhere to be seen. Yes, interest rates have risen since 2022, but even at around 5%, they’re still historically reasonable. When does renting make sense?
I’m happy to agree that renting can be the better option in a few scenarios:
1. Short-term living If you’ve just moved to a new city and don’t know the lay of the land, renting gives you flexibility while you explore. That said, if you’re confident and have the deposit, buying can still make sense, even short term, in the UK, I've done it before myself. 2. You’re new to the country Navigating a foreign mortgage system when you’ve just arrived can be overwhelming. Renting is a smart, temporary move while you find your feet. 3. You already own elsewhere If you’ve got other properties and are building equity and rental income, renting your primary residence could be just fine. Just make sure you’ve got a plan to be mortgage- and rent-free by retirement to reduce financial stress. 4. You plan to move around Maybe your job takes you from place to place. In that case, renting makes sense. But if you can afford to, consider buying somewhere stable and renting it out—you’ll lock in today’s prices and start building equity. Why buying in the UK is the better long-term move
Let’s be clear: this perspective is UK-specific. The UK and US might share a language, but their property markets are night and day. Don’t conflate the two.
Here’s why buying wins in the UK:
Let’s take each argument in turn. 
1. You’ll eventually live mortgage- and rent-free
This is a game-changer in retirement.
The UK state pension is around £1,000 a month per person. If you're a couple, that’s £2,000. That can cover all basic bills and even leave room for a holiday--but only if you're not paying rent or a mortgage. If you have other income like a defined benefit pension or strong investments, great—but owning your home gives you serious peace of mind. And even if you retire with a small mortgage, it’s not the end of the world, provided you can manage the payments comfortably and perhaps earn a little income from hobbies. Now, let’s address an argument from Paula Pant of the Afford Anything show: she says most early mortgage payments go to interest, so you’re not building equity. I think that’s the wrong lens. Instead, compare your mortgage interest to what you’d be paying in rent. If the mortgage interest is the same, lower, or just slightly higher, then buying makes complete sense. Example 1: My First Property Purchase (2006)
Instead of buying a 1-bed, I went for a 2-bed so I could rent out the second room—what people now call house hacking. I called it cutting costs and avoiding loneliness. I rented the spare room for £450/month. After adding a £30 increase in utilities, my effective cost was £770—much cheaper than renting the same home for £1,100. I had three lovely flatmates over time—all friends, two of whom are still close to this day. Two years later, rates dropped, and I was paying just £285 in interest. Meanwhile, I was renting the place out and the rental value quickly rose to £1,450/month. Not bad, right? Paula Pant’s rent vs. buy formula says you shouldn't buy if the price/rent ratio is over 15 (250/13.2 = 19 in this case), but I say the maths mathed! For 15 years, I had just one week of vacancy. The key question isn’t whether to rent or buy—it’s how to make a purchase work for you. UK Mortgage Flexibility: A Bonus Mortgages here are fixed for just 2–5 years, not the entire term like in the US. So even if you’re paying mostly interest upfront, you may find yourself refinancing at a lower rate and suddenly repaying much more capital at some point during the mortgage life. Flexibility = opportunity. What About Opportunity Cost? Some argue you should invest your deposit in the stock market instead. Here’s why that doesn’t hold up: a. Leverage works in your favour. My £18,000 upfront cost (deposit + fees + minor refurb) turned into £480,000 in profit—£330k in capital gains (the house sold in March 2025) and £150k in rental profit. Compare that to a projected £108k return if I’d invested in the same £18,000 in the stock market. b. Most Brits don’t invest in equities. Some wouldn't even if their life depended on it. Only 20% do—compared to two-thirds of Americans. Most of that deposit money would have gone into cash ISAs (basically earning nothing) or been spent. c. Deposits often come from parents. A study found that over a third (37%) of first-time buyers received the deposit to buy a home from their parents. And let’s be honest, parents will help you buy a home, not invest in stocks. Use that help wisely. 2. Each payment builds equity
As long as you’re not on an interest-only mortgage, every payment chips away at your loan.
Example 2: Our 2021 Home
We set payments slightly above rent to build equity fast. Within three years, rent in the area jumped to £4,000–£5,000. We’d never afford that as renters, but upping payments to this level just means we'll be outright owners sooner rather than later. So, we’ve upped our mortgage payments to match the new rental range—ramping up the equity faster. This 23-year mortgage? It’ll be paid off in just 10 years at this rate. According to Paula Pant’s formula again (1,000/36 = 28), we shouldn’t have bought. But once again, UK conditions make her formula irrelevant here. Is Homeownership More Expensive? People often say owning is pricier than renting because landlords cover repairs. But landlords only fix what’s absolutely necessary, and UK homes are solid—they don’t break down as much as people fear. Here’s what I spent maintaining that £250,000 house over 18 years:
3. You benefit from rising property prices (even if that’s not the goal)
This isn’t the main reason to buy, but it’s a nice bonus.
Still, I’d prefer property prices simply kept up with inflation—making homes affordable for the next generation. But if prices are going to rise, you want to be on the owning side of that equation. Final Thoughts: Let’s Normalise Homeownership Renting long-term in a market like the UK leads to financial insecurity and slower wealth building—especially when:
Only 20% of Black Africans in the UK own their homes, compared to 74% of Indians. We’re the least represented group in property ownership and, unsurprisingly, among the least wealthy. That can change. Let’s talk more. Let’s share knowledge. Let’s normalise property ownership in our communities.
The following books have strongly influenced my thinking on this topic:
1 Comment
To include the State Pension or to ignore the State Pension, that is the question…when you’re retirement planning.
If you’re a millennial (born between 1981 and 1996) or later, I’ve come to a bold conclusion: it’s best to assume you won’t receive a State Pension, when you’re planning how much to save for retirement. Let me explain why… While it's likely that some form of State Pension will persist, I believe there’s a good chance that it will become much less generous or that the state retirement age will increase even further. It is also possible that it will become means-tested so only the least well-off will receive it. Because the UK population is ageing and, as a result, the cost of the State Pension is increasing, one or all of these possibilities is almost inevitable. With an ageing population, a conundrum arises: an increasing number of people require care in their later years, while the workforce available to support them through tax contributions continues to dwindle. And, as State Pensions rely on current tax collections – that is, taxes collected from today’s workers are used to pay today’s pensioners, fewer workers will shoulder the burden of supporting a larger and growing retired population. So pensions will be less generous unless something changes. How has retirement and the State Pension evolved over time? Retirement is still a rather new concept. In the past the average person worked until they physically couldn't anymore; if they were lucky, their family looked after them in old age otherwise they faced serious financial struggles (this is how it still works for many in developing economies). In the UK, the introduction of the means-tested 'Old Age Pension' in 1909 marked a big turning point, providing a modest income to people aged 70+ with an income below £21 a year. The pension payable to a single person of 25p a month is roughly equivalent to about £157/month today (if we account for inflation and the increase in average earnings over time) – very much in line with the current Basic State Pension of £156.20. But...average life expectancy in the UK was about 50 in 1909 so, most people did not reach the state retirement age. This initial State Pension didn’t require any contributions to be made in order to be entitled to it; a contributory State Pension scheme only came about in 1925 for manual workers and others earning £250 a year or less (equivalent to £12,500 in 2023 prices). It wasn’t until after the Second World War, in 1946, when the ‘Welfare State’ was created, that a contributory State Pension applied for all people. From 1946 until 1980 people with higher average earnings enjoyed a higher State Pension, however, linking State Pensions to earnings was abolished in 1980. Personally, I think the new flat rate for all is much fairer. The State Pension has become less generous over time and may need to become less generous still In terms of what the money you receive can purchase, the State Pension seems to have not changed too much since 1909 - it’s just as generous or not so generous, depending on your view, as it ever was. What has changed since the introduction of the Welfare State is the bar you need to meet in order to get a State Pension. Whereas women used to start receiving their State Pension at 60 and men at 65, now, both men and women get it at 65 for the older generation and that’s rising to 68 for my generation. In addition, while someone used to need just 30 qualifying years of National Insurance contributions or credits to get the full basic State Pension, a total of 35 years is now needed and, to get anything at all, at least 10 years of National Insurance contributions or credits is required. These changes reflect the challenges governments face in balancing the needs of retirees with the available resources. To maintain the purchasing power of pensioners, the Government has maintained a 'triple lock' since 2010; under this mechanism the basic State Pension is increased each year by either average wage increases, average price increases (i.e. inflation) or 2.5%, whichever is higher. Despite all this, to continue to be able to take care of those that need it most, more may need to be done. There is only so much that can be done to raise the qualifying age or the number of years of contributions; at some point, it may become necessary to start cutting out those that don’t really need the State Pension given their other sources of income. And if I’m honest, I wouldn’t be upset if this is where we end up because if the government can balance its books it can stop progressively increasing taxes (including through fiscal drag). What does the State Pension currently cost? Consider this: in the 2023-24 fiscal year, an estimated £124.3 billion (10.5% of public spending) is projected to be spent on State Pensions. This figure, equivalent to approximately £4,400 per household, highlights the scale of financial commitment required, particularly when you realise that UK median household disposable income (that’s income after tax) is only about £32,300. Just to give you an idea of how mind-blowing this statistic is, in my native Malawi, the government's budget for the whole year for absolutely everything is £450 per household (UK: £42,000). And, the average Malawian household is 4.3 people compared to just 2.4 people in the UK. And what’s going on with population projections? Without an increase in immigration, the UK’s natural population is projected to start declining by 2025 … that’s in two years; a lot sooner than was expected based on estimates made in 2018; at that point we didn’t expect the natural population to start declining until 2043. So, what’s the long and short of it? There’s no two ways about it, to sustain the current generosity of State Pension in the context of an ageing population, some difficult decisions will have to be made. Sustaining the system will require adjustments such as raising the retirement age further (it’s difficult to imagine, I know) or reassessing eligibility criteria. In the short-term increased immigration may help to boost tax receipts but it’s unlikely to be a long-term solution. Some thorny questions will need to be addressed on how to balance fairness and affordability when it comes to State Pensions. Having enjoyed a sneak peak into the state of our public finances, it seems sensible that if you’re planning how much to save for retirement, as we did last week, especially if you’d like to retire early, then the best approach is to view the State Pension as a bonus. It will be awesome to get it but if you find that you’re not entitled to it, then by saving as though it won’t be there, the retirement you would like to have won’t be scuppered. References How much would the original old age pension be worth today? Basic state pension rates, Royal London Why should I pay national insurance once I've paid enough for a state pension? Steve Webb (former pensions minister) A brief guide to the public finances, OBR Average household income, UK: financial year ending 2022, ONS UK natural population set to start to decline by 2025, FT Government expenditure on state pension in the United Kingdom from 1948/49+, Statista 
You can listen to this episode on YouTube.
Retirement is a dream shared by many of us, but achieving it requires careful planning and early action. In this article, we’ll delve into the world of retirement savings and reveal exactly how much you need to save each month to retire comfortably. So, if you're aiming for financial independence but are possibly thinking it’s a pipe dream, buckle up and discover the key to retiring early!
Understanding the two pension types – DC and DB pensions Before we jump into the numbers, let's familiarize ourselves with the two primary types of pensions: Nowadays, most people have "defined contribution" (or DC) pensions, where the amount you and your employer contribute determines your retirement income. The risk lies with you, because your return, i.e. the pot of cash you’ll have at retirement, depends on the performance of the stock market. Previously, "defined benefit" (or DB) pensions were more common, guaranteeing a pension until death based on your final or average salary and the years of service. However, DB schemes have mostly been phased out and won’t be covered in this article. If you have a DC pension, if the stock market performs poorly you’ll either have to work longer or plan for a leaner retirement. Defined contribution schemes are sometimes called ‘money purchase’ schemes or self-invested personal pensions (SIPPs). They are similar to what Americans call 401K plans. How do you calculate your retirement "pot"? To estimate the size of the retirement fund you'll need, we can employ a simple rule of thumb. Multiply your desired annual retirement income by 25, and voila! You have worked out roughly how much you should aim to accumulate. But why 25? This is based on the ‘4% rule’ – a widely accepted guideline that suggests that withdrawing 4% of your invested pot annually, ensures your money lasts. Research has shown that even after three decades, your investments tend to grow due to average growth rates of a diversified investment fund surpassing the 4% withdrawal rate. {If the nerd in you wants to get into the maths: 4% = 4/100 and 100/4 = 25; … you don’t need to understand the maths, though, just use the rule} Estimating your retirement expenses – how much will you need to spend in retirement? Now, let's discuss the various lifestyle options and corresponding expenses you might encounter during retirement: according to research conducted by Loughborough University and the Pensions and Lifetime Savings Association, we can categorise retirement lifestyles into three levels: minimum living standard, moderate lifestyle, and comfortable lifestyle. To account for inflation experienced since these studies were done, I’ve increased the figures by 20%. To maintain a minimum living standard, a single retiree requires an annual income of £12,240, while a couple would need £18,840. For a moderate lifestyle, the figures rise to £24,240 for a single person and £34,920 for a couple. Lastly, to enjoy a comfortable retirement, aim for an income of £39,600 if you're single or £57,000 for a couple.
(source: moneyfacts.co.uk; and increased by 20%)
What are these different lifestyles assuming? A minimum living standard assumes a single retiree spends £46 per week on a food shop, has a one-week holiday and a long weekend in the UK each year, does not own a car and spends £555 a year on clothing and footwear. With a moderate lifestyle, our single retiree spends £55 on food each week, enjoys two weeks in Europe and a long weekend in the UK each year, and spends £900 on clothing and footwear each year. With a comfortable lifestyle, the single retiree spends £67 per week on their food shop, enjoys three weeks in Europe every year and spends £1,200-£1,800 on clothing and footwear each year. Calculating your investment targets Using the 4% rule and these lifestyle figures, we can estimate the amount you need to save for retirement. Here's a breakdown based on your desired lifestyle and whether you're single or part of a couple:
I know that these numbers look huge. But keep listening, I’ll show you that you can achieve them much more easily than you think.
Getting started: how much to save each month Now, let's explore the exciting part—how much you need to save each month to reach your retirement goals. Assuming you're a basic rate taxpayer, investing in a global passive fund with an average annual growth rate of 7% (we’ll discuss whether this is a reasonable assumption in a future post), aiming for the ‘comfortable’ lifestyle (i.e. £990k if single; £1.425m for couples) and ignoring the state pension (I’ll explain why in the next article) and employer contributions these are the monthly amounts you need to put into a pension account based on your starting age (rounded to the nearest 5): Each month until you’re 68 you need to save:
What the table shows is that the younger you start saving and the longer you save for, the less you need to set aside each month.
Factors that can offset the numbers Don't worry if these saving targets seem daunting because there are several factors that can actually work in your favour, offsetting even the larger amounts you need to save if you start late. Let's take a look at these positive factors:
In conclusion, securing a comfortable retirement requires forward thinking. If you didn't have this information when you started working, don't worry—now you do! There's no time like the present to start saving for your future. And here's a bonus: you can share this valuable knowledge with your children, ensuring they don't make the same mistake that many others do—starting too late. With the right strategies and a proactive approach, you can pave the way for a financially secure and fulfilling retirement. Your future is in your hands. References What Is the 4% Rule for Withdrawals in Retirement and How Much Can You Spend? Q&A: How much do I need to save for a comfortable retirement? Pensioners need a £33,000 a year income to enjoy a comfortable retirement Fidelity Retirement calculator How to get the £260,000 pension pot needed for a comfortable retirement - and why it might not be as hard as it sounds Dave Ramsey investment calculator (ignore the $sign) Fidelity.co.uk retirement calculator
.I always say that if you get nothing else right in your financial life, at least own where you live outright by the time you hit retirement and ideally much earlier. Well that’s not quite right, the other thing you need to make sure of, is that you qualify for the full UK state pension.
Currently, when I am 68, for so long as I have 35 qualifying years, I will get £185/week in state pension until my dying day. That’s about £800/month or £9,620/year. This is not an insignificant amount and if you live with someone, i.e. your partner, a sibling or friend, it’s double that as you would each qualify separately. My calculations suggest that if you’re living on your own, that amount of state pension would at least cover all basic utilities (water, energy, council tax) and food. You can check how many qualifying years you have and whether you can boost them at gov.uk/check-state-pension. If you’re self-employed, to qualify for the full state pension later on, make sure you’re signed up to pay Class 2 national insurance and if there are any gaps in your national insurance record, pay for them asap as you can only fill gaps going back 6 years: gov.uk/national-insurance/national-insurance-classes As the state pension is unlikely to be enough, it’s helpful to contribute towards a personal pension (aka a self-invested personal pension or SIPP) as pension contributions get tax relief such taht every £240/month contribution equates to £300/month into your pension pot. Based on a 7% gross growth rate of your pension pot (and keeping in mind the historic average return of the S&P 500 is 10%)
If you want to play around with how much you should expect to spend in retirement, here are a few other helpful blogs:
If you’re looking for ideas on how you and your partner can split the household bills without arguing about it, I have a few ideas for you.
Obviously what you ultimately go for depends on your own specific circumstances, e.g. whether you’re married or in a civil partnership or not in either, employment status, differences in income and personal beliefs, however, you can either: 1.Split bills fairly – this can mean equally, i.e. 50-50; or in proportion to your incomes. 2.Approach finances with unity – i.e. all money earned belongs to the household regardless of who earned it and is managed in a unified way. This can work whether your salaries are paid into personal accounts or a single joint account. This is all food for thought, not advice, if you want advice based on your own circumstances, speak to a personal financial advisor. Ask me a question...
Hey heather, thanks for your podcast, I find it incredibly useful because it's UK specific and everything else I find seems to be geared towards the US.
Anyhow, my name's Dee, I'm in my 50s and have been a military stay-at-home mum all my adult life although I went to university. Being a military wife has exposed me to so many countries and cultures which I love but you do sometimes encounter traumatic things so it's nice to settle in the UK. My family currently rents and all our adult children live at home including one that is dependent. We'd like to get on the property ladder but have been struggling with when and whether to do it. In the past I've left all the money stuff to my husband but now that the children are older I'd also like to start earning an income and I've been considering investment property. I want to gain some financial independence and I'd love to be able to help the children out financially. I am so ready to make up for the time I spent raising children. I don't know if it was stupid not to use my degree sooner but I guess better late than never. Keep helping with your posts! Thanks. 
Hi D,
Thank you for this question that covers a very wide range of things. I am also very sorry that you have experienced something traumatic. Your life choices are not stupid, many women find themselves in circumstances that mean they have to stay at home with the kids for whatever reason so your question may well resonate with lots of other mums. Being in my mid to late 30s, you will forgive me for providing what might sound like a slightly optimistic review of your situation. Your question as it is framed requires me to speak to: 1.Providing for your children particularly the dependent child with medical needs; 2.Buying property as a home; 3.Buying property as an investment; 4.Earning an income for yourself; PROVIDING FOR YOUR CHILDREN By letting your adult children to stay at home rent free you are doing plenty. That alone should allow them to save for their own property deposits and is a financial boost many people including myself did not have. If I could have lived at home rent, free, that would have had me on the property ladder a lot sooner. The other thing you could do is direct them to read the type of personal finance books that will give them ideas for how they can be financially responsible so that you don’t need to worry about them. I recommend The Richest Man in Babylon and The Millionaire Next Door as good starting points. Does your child with medical needs financial support from you as well as general support for all their living? I won’t touch too much upon this except to say that make sure that you are accessing all the state benefits you can for the child’s support including the carer’s allowance if it is applicable. BUYING A HOME Firstly, as far as the UK is concerned I always advise that, if you get nothing else right, at least buy your own home. From your message, it’s not clear whether or not you and your husband discuss finances but I am guessing that this may not be the case. Firstly, I would try to get the two of you on the same page. Working as a team when it comes to building wealth can really supercharge your financial health. The UK property market is completely different to the US property market in so many ways so I’d be a little careful before taking advice on property from US authors and podcasters (lots of property advice on the internet tends to be US-focused that’s why I bring this up). To begin with the population density of the UK is 281 per Km2 (727 people per mi2); population density in the United States is 36 per Km2 (94 people per mi2). What does this mean? It means that UK property in many areas doesn’t see price crashes (too many people, too little land) and there is a propensity for house prices to be sticky upwards. In addition, because US mortgages are fixed for the full term of 25 years whereas UK fixed terms are only for 3, 5, 7 or 10 years, interest rates are much lower in the UK compared to the US (almost half). The result of this is that very often the interest you pay on your mortgage is much much lower than rent. As an example, I live on a street where the rents range from £1,200 to £1,500, however, the interest we pay on our mortgage is just £350 (it was a 25% deposit mortgage). The full monthly mortgage payment is almost £1,000 but everything above the interest of £350 is money that will come back to us if we sell our home. So, provided you can get a good deposit together, you will save a lot of money by buying a home rather than renting. In the long run owning where you live will give you a lot of security including the psychological comfort it provides. At 50-something, you are not too old to get a mortgage and may even be able to get a mortgage of 20+ years, however, if you owned property abroad and sold it when you left then it’s worth buying the home outright. State pension Another thing to consider with regard to your financial security is that even the full UK state pension only pays £175/week per person (about £759/month) this would be double for a couple. If you live in a home that’s been completely paid off, no mortgage, then you can survive on the state pension relatively comfortably. However, as you have lived abroad for many years you need to contact HMRC to see how many qualifying years you have. Your UK State Pension will be based on your UK National Insurance record. You need 10 years of UK National Insurance contributions to be eligible for any amount of the new State Pension and for people my age 35 years of credit are needed to get the full entitlement, you may be in the generation that only needs 30 years of credit. You may be able to use time spent abroad to make up the 10 qualifying years. This is most likely if you’ve lived or worked in:
I would contact HMRC as soon as possible (link above) and ask what you need to do or pay to increase your entitlement to the UK state pension. You may get National Insurance credits if you cannot work - for example because of illness or disability, or if you’re a carer or you’re unemployed. You might also be able to pay voluntary National Insurance contributions if you’re not in one of these groups but want to increase your State Pension amount. BUYING AN INVESTMENT PROPERTY I recently read David Tarn’s “The Complete No-Nonsense Guide to Becoming a UK Property Investor: The 1-2-3 on Property Investing” and found it useful on the topic. The author is based in the North of England where property is much cheaper. He is into buying property and letting out the whole house to a single group like a family – so, standard single let properties. In addition, I would recommend The Inside Property Investing podcast. There are over 300 episodes, if you binge listen to the episodes that appear interesting, you will move up the knowledge curve rapidly. The ‘Inside Property Investing’ podcasters are themselves heavily into High Multiple Occupancy properties (this is when you let a single property out to 3 or more unrelated people like students or professionals). However, the beauty of the podcast is that they regularly interview people on the show that follow a variety of different property investment strategies. Don’t pay for any overly expensive property course before you’ve gained all the knowledge that is available for free or almost free – a friend of mine recently paid £24,000 for a property course, she went 50-50 with her daughter and even had to put some of the cost on a credit card! You’ve been warned. For the basics on property investing I have a course up on Udemy for under £50. This will give you all the basic knowledge you need about the property buying process in the UK. EARNING There are many jobs out there. If you just want to boost your confidence and get some money rolling in there are plenty of jobs out there provided you are not too picky about the pay as long as you get your foot in the door. If you want to build a work life for yourself have a look on jobs boards at what’s going and start applying. If you want to build a career within a specific field related to your field of study consider taking a course to freshen up your skills. I have no idea what your salary expectations are but median UK income for 2020 is 30,800 according to the ONS. After tax that would bring home just over £2,000/month; if due to covid etc you secured a job with a salary of £24,000/year, that’s still £1,600/month which definitely isn’t shabby especially if your husband earns too. A GQ article gives an interesting breakdown on age, occupation and the covid-19 pandemic’s impact on earnings. I hope this helps. Far from thinking you are too old. I am feeling soooo excited for you. This is a fresh start and even over a 15 year period you can build an amazing life and financial cushion. Good luck. |
Heather on WealthI enjoy helping people think through their personal finances and blog about that here. Join my personal finance community at The Money Spot™. Categories
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