Buy or rent (cost comparison)

“Either way I end up with £235 (saved or invested).”

No, with renting you end up with £235 saved, with buying you end up with £235 invested AND ALSO THE £800 ALSO INVESTED.

And even if property prices drop a bit you’re not likely to lose any more than a maximum of 10% or 20% or 30% so you’ll still be massively quids in whereas with renting you lose all of the £800.

Re price drops I’d be very surprised if in 15 or 25 or 35 years time if property has actually dropped in price from today’s figures. Well, yeah, if a global war has blown us up or a big asteroid has landed and wiped out most of the planet or temperatures have gone up 20C or a worldwide killer plague has broken out everywhere etc then all bets are off but in the absence of global catastrophe then property is likely to continue to do what it’s done for hundreds of years and very much so in the last fifty years and increase in value as time goes by.

“Buying is the clear winner only if you believe property prices will go up, rather than down.”

No, on the contrary, you’re not getting it. Rent is dead money down the drain, buying is accumulating your money. It doesn’t make any difference to this fact whether you spend more or less on either option and, no, it is not connected to whether property prices go up or down. Even if the value of a property goes down, you still end up owning a substantial asset worth lots if you buy it whereas if you spend your money on rent you waste it all and end up with nothing except an endless need to pay yet more rent with never any end in sight, plus the risk of being evicted at any time. Buying beats renting hands down 99% of the time.

The only time buying is a loser is when you get a disaster which is mostly through bad luck or your own bad judgement, such as buying a duff property that’s falling down, or buying a place with subsidence or heave or dry rot etc, or buying a leasehold place and then the council hits you with a £70k Decent Homes bill for bogus work that you don’t need or want, or a lorry drives into it and knocks it down but you failed to do the insurance payments or your insurers refuse to pay out, or if you buy near a proposed new development and the council compulsorily buys you out but won’t give you proper market value, or travellers set up a camp next door and start burgling and mugging and attacking everyone etc. Yes, there are various bad events that afflict homeowners but they’re relatively rare and buying is mostly a win win situation which is why most people do it.

Still not convinced? Ok, look around you at some people in their fifties and sixties and compare their lifestyles, quality of life and quality of properties of those who own with those who rent. You should quickly notice that most of the buyers tend to have relatively nice big places and a new or fairly new car or two parked up while the renters tend to have smaller places and either a cheap car or no car. The homeowners go on holiday twice a year to expensive destinations, the renters can’t afford to go away or if they do it’s to cheap places. Homeowners get a positive psychology of security and independence and being part of the world, renters have an underlying insecurity all the time and relatively speaking are often treated as being second class citizens pushed about from pillar to post.

Still not convinced? Ok, here it is again, in 15 or 25 years time would you prefer to have and own a house worth £200,000 all paid for with no more mortgage to pay or would you prefer to own nothing and still be labouring away to pay £800 a month rent to a landlord for the rest of your life? I know which I’d prefer.