Right, Im being boring again, but last time

the_ash_and_the_oak

Dithering_Dad wrote: »

Nice to see he's enjoying his apartment and his life is moving on. Shame a few people on here are so fixated on squeezing the last pennies out of their purchases that they're prepared to put their lives on hold for years and years.

They know the price of everything and the value of nothing.

agree w sentiment behind this but not really feeling the idea that renting is putting life on hold tbh. guessing you didn't really mean it that way

JayScottGreenspan

Dithering_Dad wrote: »

Nice to see he's enjoying his apartment and his life is moving on. Shame a few people on here are so fixated on squeezing the last pennies out of their purchases that they're prepared to put their lives on hold for years and years.

They know the price of everything and the value of nothing.

Who's putting their life on hold? AFAIK, in this country renters are free to enjoy life, get married if they want to, have kids if they want to, etc etc

What can an OO do that a tenant can't? Sure, they can paint the walls a horrid colour with gay abandon, but big whoop.

Dithering_Dad

JayScottGreenspan wrote: »

Who's putting their life on hold? AFAIK, in this country renters are free to enjoy life, get married if they want to, have kids if they want to, etc etc

What can an OO do that a tenant can't? Sure, they can paint the walls a horrid colour with gay abandon, but big whoop.

Then why buy? If you feel that owning your own house adds nothing to your quality of life (other than being able to slap a bit of paint around) then why on earth are you on this house price forum, taking such an interest in the price of housing?

When I was a student and then a young professional, I had no interest whatsoever in the housing market, I was more than happy renting and enjoying the benefits that gave me (no upkeep, freedom of mobility, etc.) However, when I decided to buy a house, I did so because I decided the benefits of having my own home now heavily outweighed the benefits of renting. Had I sat around for years in rented accomodation waiting for prices to adjust, then I certainly would have felt that my life was on hold.

I don't think renting or ownership are 'right or wrong' for anyone, but I do know that if someone wants to buy a house, then they've obviously made a decision to do so because they feel it will enhance their life in some way - if they then stay in rented they're choosing to put your 'enhanced' life on hold.

JayScottGreenspan

It's got nothing to do with 'life enhancement'. It's got everything to do with outgoings.

Renting for 40 years would, for almost everyone, be a very poor decision, financially.
Buying at the peak of the market has proven to be a very poor decision, financially, for a lot of people.

Why buy now when that would see me about £10k-£20k poorer than the alternative me in some parallel universe who waits for the market to go down another 10-15%?

What benefits am I missing out on? In what way is my life on hold?

Dithering_Dad

JayScottGreenspan wrote: »

It's got nothing to do with 'life enhancement'. It's got everything to do with outgoings.

Renting for 40 years would, for almost everyone, be a very poor decision, financially.
Buying at the peak of the market has proven to be a very poor decision, financially, for a lot of people.

Why buy now when that would see me about £10k-£20k poorer than the alternative me in some parallel universe who waits for the market to go down another 10-15%?

What benefits am I missing out on? In what way is my life on hold?

Any benefits I quote, would only be the benefits that affect me as an individual, not you. As I stated in my post, I have no bais one way or the other - renting was fine for me, right up until it wasn't. However, if the only benefit to you in buying a house is financial, then I would urge you to do the sums again! Especially consider that the average UK homeowner will move every 7 years....

By the time you've factored in the costs of home ownership (buildings insurance, building maintenance, mortgage arrangement fees, possible mortgage redemption fees, estate agent costs, valuation fees, legal fees, the loss of income on deposit, the interest fees on the mortgage) you might find that you're better off renting and investing your money than you are buying.

I always smile when I see people go on about 'when I retire, I'll be rent free'. In reality, they simply have a huge amount of money invested in their house that doesn't earn any interest but does allow them to stay there 'rent free'.

They also cite the renter and say 'you'll still be paying rent when I'm rent free'. In reality, the renter could also have a larger amount of money put away that is not held in equity, but instead held in a portfolio of cash, shares and bonds and is totally covering their housing expenses and perhaps a little more besides.

Have you done the calculations to determine whether placing your money in a single investment (property) gives a better return than investing in a broader range portfolio? I think you'll be surprised by the result if you did. My pension pot has actually gained £10k since the start of the HPC/recession because I moved it into cash funds and safe bonds and then back into equities at the right time. In the same time, my house has lost a significant amount of value because I can't move such an illiquid investment.

If the only factor in your decision to buy a house is financial, then you're doing your sums wrong if you think home ownership is cheaper than renting.

JayScottGreenspan

Dithering_Dad wrote: »

If the only factor in your decision to buy a house is financial, then you're doing your sums wrong if you think home ownership is cheaper than renting.

If I wanted to pay more tax, be exposed to boom and bust in the housing market (owning one house is a hedge, renting=short, BTL=long, IMO) and be exposed to risk in my investments... if I wanted that then I suppose I could go down the investment fund route.

Other than the financial and the banal, I still don't get this 'benefits' of owning thing. Is it just some general feeling of satisfaction?

Dithering_Dad

JayScottGreenspan wrote: »

If I wanted to pay more tax, be exposed to boom and bust in the housing market (owning one house is a hedge, renting=short, BTL=long, IMO) and be exposed to risk in my investments... if I wanted that then I suppose I could go down the investment fund route.

Other than the financial and the banal, I still don't get this 'benefits' of owning thing. Is it just some general feeling of satisfaction?

If you compare being a mortgage-ee to being a rentee... the similarity is that renting a house is identical to having an interest only mortgage, except that mortage-ees have secure tenure but an absent landlord and renters don't have secure tenure but do get problems with the property fixed (and if they don't then they can leave and get a better landlord).

It's what you do with the repayment part of the mortgage that's different. A mortgage-ee obviously 'invests' this into paying off his outstanding mortgage and is therefore investing in a single asset. The renter can invest in a range of equities, bonds, even property funds. You can also protect it from tax by putting it into an ISA. At the end of the 25 year period, the mortgagee owns a house and the renter owns a portfolio. If the mortgage-ee wants to realise any of this wealth, then he has to sell up and downsize (and incur huge costs and stress), while the renter simply rents a smaller place and withdraws some cash from their portfolio.

I agree with your summary about property (short, hedge, long) but within a large investment portfolio, you can have all three at the same time. You can diversify to the point where you invest in UK and foreign equities and bonds, spread your money across various industries, invest in super safe government bonds, even keep some in cash. With your portfolio, the range of investments is staggering with a house, it's a single illiquid investment in a single location and if you get into financial difficulties it can be taken away from you and sold to the highest bidder.

As I said, everyone's reasons for ownership are different (and indeed some may be just satisfaction), but if yours are purely financial then make sure you do the sums.

hethmar

Sorry guys, didnt expect an argument The fact is, son got the flat at 50% off the original price 2 years earlier and he is now able to be among all the things the capital can offer yet come home to his own place. He spent years renting and hated it - as DD says, each to his own. I am the same sort of person, Id rather have a tiny place of my own than rent a mansion from someone else.

Dithering_Dad

hethmar wrote: »

Sorry guys, didnt expect an argument .

I think you mean 'discussion'

Certainly that's what I think it is, and I hope JSG feels the same.

chupov

Dithering_Dad wrote: »

Nice to see he's enjoying his apartment and his life is moving on. Shame a few people on here are so fixated on squeezing the last pennies out of their purchases that they're prepared to put their lives on hold for years and years.

They know the price of everything and the value of nothing.

So much for a 'discussion' ... unless the definition of 'to discuss' is to cast aspersions on other ppl.