It pays to rent

LillyJ

PasturesNew wrote: »

If you're given notice to quit and are working full-time, it can be really hard finding the time to view places. Also, rentals aren't all advertised in one main handy place, it's very ad-hoc how/where you find a rental.

Then there are the fees. How many people can lay their hand instantly on, say, £1000 deposit and £200 credit checks, plus £600+ first month's rent up front (as this might be required 2-3 days before they're paid as they need to secure the 2nd place while they've still got the commitment of the 1st place and haven't been paid yet.

Not many.

Precisely. If you're at work all the time that the letting agents are open, then it's pretty hard! You also have moving expenses as well, especially if you have been living in furnished accomodation. As well as the absolute hassle that is moving house, changing the addresses on everything. It's not something I would like to do 3 times in 6 months. And when it involves having to take a day off to move on a weekday then it gets even more complicated. It's not always easy to get specific days off in a lot of jobs.

mircea

carolt wrote: »

http://property.timesonline.co.uk/tol/life_and_style/property/investment/article4954616.ece

It pays to rent a property

The balance of power has shifted as people realise that renting is the way to ride out the credit crisis

In the same way that mortgage borrowers, once overwhelmed with lender largesse, now face rejection, many tenants who formerly had to tolerate flats with tired decor and high rents can now enjoy more style at less cost. This is thanks to an increased supply of rental properties in many areas.

....Jo Eccles, of Sourcing Property, says that not so long ago 80 per cent of her clients were looking to buy. Now the same number are looking to rent, having done their sums. She says: “Renting is currently cheaper. The typical mortgage rate is 6.25 per cent; the typical rental yield - the rent as a percentage of the property value - is 4.5 per cent.”

.....Rents are now starting to fall in the Home Counties - even in locations within an easy commute from London - and Hamptons suspects that these patterns of activity will “ripple out”, rapidly turning into a nationwide trend.

Dream on. Over 25 years it would cost you £180 k to rent a £600/month house. Assuming the same house costs 150k to buy, the interest over 25 years will cost you 150k, at 4% per annum. Add to that the stability and security of owning your home, doing what you want, no landlord visits, no deposits being held on to, being able to change and do whatever you want to your home and I think you must be mad to rent. Or just plain stupid.

IveSeenTheLight

carolt wrote: »

It pays to rent a property

It certainly does for me.
my tenants rent pays for my properties

MissMoneypenny

LillyJ wrote: »

Anyway, she isn't particularly well paid and she has masses of student debt, (but is OK financially) and has been chucked out of 2 houses by rubbish landlords.

Lots of people rent a room out to work colleagues. The advantages of this (as opposed to a rental property) is that the property owner's tend to keep their own house in a high standard and they fix things like broken boilers, quickly too. Could she find one of these on a work notice board/ask around? Or look on some of the rent a room sites?

jamescredmond

I've always said that I'd rather meet a bad teacher than a bad doctor, for obvious reasons.

lilly's post is depressing. (no disrespect).

anyone who has the nous to be a dr. should be lauded/encouraged/supported.

or shall we continue to pay the next russell brand £200k p.a.? or £6m to the next rossy?

we need to get a grip.

neas

As to the person who commented against 'it pays to rent'.

Carolts post wasn't a 'Rent for 25 years' vs 'buy a house over 25 years'... Of course the buy one is better as you own the house afterwards.

But in the short term... it will pay to rent:

Simple example:

House Value 100k Mortgage 100k Interest per month £500
Renting same house: Rental cost per month £500

Note: made it simlpe by keeping rental costs and monthly interest cost of mortgage the same. So paying your mortgage and paying rent are the same...so they can be forgotten about...

Lets just simplify it further... lets assume that over a 2 year period he repays a healthy 3,000 off the mortgage (not getting hung up on interest value decreasing over time etc).

So... after 2 years our house owner owes £97k on his house.

Lets throw into the mix.. a house price crash.

Lets take a moderate 1% drop in price a month.... so over 2 years his house will have dropped by about 20%


So lets summarise the above:

Situation 1: Buy House at 100k... during a declining market... after 2 years you owe 97k on a 80k house!!

Situation 2: Rent 2 years at same rental value as the interest rate above.... then buy Situation 1's house for 80k. You owe 80k on a 80k house.


So your are 17k better off than the fellow in situation 1..... Ergo... renting in the short term during a HPC is if anything a no brainer.

carolt

LillyJ wrote: »

She didn't as I said before (like a lot of medical students nowdays she was a graduate). She was a chemist before on a poor salary.

Anyway, she isn't particularly well paid and she has masses of student debt, (but is OK financially) and has been chucked out of 2 houses by rubbish landlords. All I'm saying is it isn't particularly fun when you work long hours trying to find a new place to live (many times over), having your stuff in storage, and living in a single room at the place where you work with a smelly shared bathroom in a 100 year old hospital building that's falling down. No it isn't the end of the world, but it's not nice either. Just pointing out that renting isn't secure, and no matter how good financial sense it can make, it can still be very disruptive to your life.

If she hadn't had hospital accomodation to fall back on then it would have been even more stressful.

The fact that the stingy government has started charging junior doctors rent for rat infested accomodation whilst cutting banding (and therefore pay), is another matter all together.

I absolutely agree with you that the high cost of housing - rented or to to buy - is a shocking disgrace, and that your friend should be able to afford a secure roof over her head.

But comfort yourself with how much worse off she'd be if she'd tried lying-to-buy a couple of years back. She might still be being made homeless by virtue of being repossessed as her payments reset and she couldn't get another mortgage - but she'd have lost not just a maximum of a month's rent in deposit, but potentially be facing a bill for thousands or tens of thousands of pounds from her lender post-repossession.

I completely agree that rental laws should be reformed and/or more council homes provided to ensure that EVERYONE has a secure roof over their head. Whether they 'own' it or not is not important; security of tenure and affordable rent is clearly essential for the millions of people like your friend.

mircea

neas wrote: »

As to the person who commented against 'it pays to rent'.

Carolts post wasn't a 'Rent for 25 years' vs 'buy a house over 25 years'... Of course the buy one is better as you own the house afterwards.

But in the short term... it will pay to rent:

Simple example:

House Value 100k Mortgage 100k Interest per month £500
Renting same house: Rental cost per month £500

Note: made it simlpe by keeping rental costs and monthly interest cost of mortgage the same. So paying your mortgage and paying rent are the same...so they can be forgotten about...

Lets just simplify it further... lets assume that over a 2 year period he repays a healthy 3,000 off the mortgage (not getting hung up on interest value decreasing over time etc).

So... after 2 years our house owner owes £97k on his house.

Lets throw into the mix.. a house price crash.

Lets take a moderate 1% drop in price a month.... so over 2 years his house will have dropped by about 20%


So lets summarise the above:

Situation 1: Buy House at 100k... during a declining market... after 2 years you owe 97k on a 80k house!!

Situation 2: Rent 2 years at same rental value as the interest rate above.... then buy Situation 1's house for 80k. You owe 80k on a 80k house.


So your are 17k better off than the fellow in situation 1..... Ergo... renting in the short term during a HPC is if anything a no brainer.

LOL, you are assuming that you will read the market perfectly and time your purchase at the bottom - a lot of people with various economic degrees and paid millions per annum are unable to do that, but I will take your word that you can do it. If you can't, and house prices continue to drop after you buy or start rising before you buy then all this is just bulls**t speculation and at the end of the day, you are buying your house to have a home not to speculate.

confused31_2

If i had 100,000 pounds to buy a house today, i would leave it in the bank and wait at least a year, and whilst im waiting i would rent.

You can all go on about everyone would be be renting and then buying in 12 months and make a killing, but the simple fact is theres not many people who can do that as they are not in the situation to do so.

I mean if i was a first time buyer and i bought a house today for 100,000 pound and i paid a 10% deposit to the bank on a two year deal, when i come to remortgage in two years tome i would probably be in negative equity and find it very hard to get a decent mortgage.

Carol is right in what shes saying and in the current climate its cheaper to rent, hang on and wait for the prices to bottom out and then buy, when the prices start rising it wont be massive jumps it will be very slow, then you can jump onto the housing ladder.

i feel sorry for some people as they are seeing the headlines house crash and jumping in, when i think house prices are going to fall even more.

confused

lostinrates

mircea wrote: »

LOL, you are assuming that you will read the market perfectly and time your purchase at the bottom - a lot of people with various economic degrees and paid millions per annum are unable to do that, but I will take your word that you can do it. If you can't, and house prices continue to drop after you buy or start rising before you buy then all this is just bulls**t speculation and at the end of the day, you are buying your house to have a home not to speculate.

But one can realistically appraise one's security of employment, income, rental price and house prices in the locality and make a decision as to affordabilty over longterm. Its happned that people who have been cautious in the last few year are now, regretfully safer than people who have been less so.

Friend of mine (a few years younger) is in last year of university studying medecine. He is funded by his parents, lucky thing, but also does a nights bar work a week for spending mony and over his hoildays does mad things he wants sponering for for half th time and works for the other half. I am constantly amazed by the number of people who do no work whatsoever, even two hours a week, for the whole time they are in education, whatever their courses. (not refering to Lilly's frind who I know nothing about, just a gneral point). Education is precious, and medicine vitaly important, literally, to us all, but I still think its a remarkably precious thing, even in its devalued contributory form:rolleyes: , its very discounted to the recipient and I think, not withstanding its faults, pretty undervalued by us.