So what exactly is “the rent trap” and why should one aim to avoid it? The rent trap describes a situation where people get stuck in a position where they are continuously renting property, instead of buying their own. The reason why this is particularly relevant for millennial and Gen Z tenants is that this rent trap gets harder and harder to break out of as you get older.
Those who are moving into their first home will face the decision to rent or purchase their first property. The option to purchase will only be available if money has been saved up for a deposit.
Avoid spending all of the budget available to you on rent alone,”
“start young, start small, and build up. Take a long-term view. For example, buy the bachelor flat you can afford now. Live in it while you save hard for a deposit on your next home. You can then sell or rent out the bachelor flat and buy a 1-bedroom flat or cottage. Live in the 1-bedroom and repeat the process: sell and move to a 2-bedroom etc. It’s not easy but success in life takes hard work and discipline. The long-term rewards, the prospect of creating wealth for generations to come, is a phenomenal prospect.”