Buying Cheaper Than Renting Everywhere except London

IveSeenTheLight

the_ash_and_the_oak wrote: »

Its not a guarantee. But then we are back to the argument about houseprice direction - rather than whether renting is cheaper or not than buying. Like i say - if I thought prices were heading up over the next few years then I'd be tempted to buy anyway regardless of which was cheaper.

As for the differing periods - well thats thrown in the minute someone tossed in 25 yrs rent vs mortgage - but when I decide to rent a place realistically I'm only looking at the next 12 months (I'm throwing out the other options because after those 12 months are up a million different options are available - but a rent vs buy which is cheaper comparison should really only focus on NOW - or the next year anyway)

Fair enough, and as shown there are many areas where buying is cheaper than renting. Others renting is cheaper than buying.
Do your own specific calcs instead of throwing in a load of hypotheticals, because in reality, you don't know where house prices or rents will be in a years time

IveSeenTheLight

Entertainer wrote: »

Cherry picking a few BTL yield hotspots in the regions does not disguise the fact that the majority of the country by population e.g greater London, South, South West, East of England and going into the Midlands are on 6% rental yields. These are for conventional properties bought on the open market, not the wrecks/ short leases/multiple occupancy nightmares you get in auction. You show me where you can find 10% rental yields in the South of England.

And I don't know where on earth they get 8% from for London and the South East in that graph.

It's not cherry picking a few hotspots, it's backing up the thread title showing that buying is cheaper than renting.

I'm not going to show you where you can get 10% rental yields in the South East as I do not do market research in that area.
I can show you a recent place outside of London that would give a 9% return (Actually, I would spend a little modernising before letting so would only get an 8% return)

Gorgeous_George

They are not comparing apples with apples.

Rent replaces much more than just a mortgage. It pays for some insurances, risk of non-payment, a landlord's time and energy. Most rentals come with some furnishings and ongoing repairs and refurbishment.

On the other hand, a mortgage will usually have an end date whereas renting is for life.


There are those who rent and prefer it that way. There are those who are buying (or have bought) and prefer that. There are some owners who would be happier renting and some renters who aspire to buy a home. Life's like that. Lots of different people with different needs and desires.

For me, buying is better because I tend to stay in one place for many years. And I have been lucky.

GG

carolt

stonethrower wrote: »

just had a look in rigthmove very few flats over 1000 and as you say these are 3 bedroom flats which would cost way more than £220k

nollag is lying again - this quote from October 2007 explains both his method and why he's scared shitless at house price falls:

http://forums.moneysavingexpert.com/showpost.html?p=6473637&postcount=5

nollag2006 wrote: »

Its always been thus. I've been renting out houses since the mid-90's and very few of them get rents high enough to cover the mortgage payments for the first few years.

After a while, it comes good though, as rents start to eclipse the mortgage payments

Basically, he's subsidising his tenants. What a fool.

Still, a fool and his money are easily parted.

Explains why he hates tenants so much, though - subbing their rent every month must hurt.

julieq

The thread was about whether or not it's better to rent than buy, not to discuss various strategies for making money from property rental. And George's point is the key: renting is for life, you have to sustain rental prices for 40-50 years+, whereas a purchase will be paid off in 25 usually. You have to save a hell of a lot to pay rental into retirement, so there's a double cost there.

You could actually lose 100% of a house's value by the time the mortgage was paid off and still be better off, because you will have a place to live into retirement, which otherwise would be costing you a grand a month or so increasing by inflation, you need about 300K saved up to generate that sort of amount even without taking inflation into account, ON TOP of the rental costs. Bear in mind also that rental will tend to increase at the rate of inflation whereas the amount paid in mortgage servicing will tend to reduce in real terms.

On the other hand there are some advantages in renting, particularly that you can move around relatively easily, get some level of service from your landlord, and so on. You pays your money and you takes your choice essentially.

silvercar

I can see the advantage of rentals during your working life - ease of moving around, no responsiblity for maintenance at a time when you have the great expense of kids etc, but the thought of renting in retirement is just scarey.

Moving home at say 2 months notice is a pain, in terms of the physical hassle and the cost and having to to so in someone else timescales not your own.

Renting in retirement is just scarey. Only two options really, either fund yourself from pensions/ savings (but who knows how long you will need to fund) or have no savings and have to live in properties that are within the benefit scales. Being forced to move home often in retirement is not something I would relish.

silvercar

mewbie wrote: »

..., drop a few k's here and there and sniff out some nice little earners. Reckon if I turn enough tricks between now and January I should be looking at retiring in a couple more years. Spend the rest of my life living on Snow mountain with a couple of Brazilian imports.

We talking houses or drugs?

mewbie_2

silvercar wrote: »

We talking houses or drugs?

I was dreaming. Fills up the hours between pension collection days.

HAMISH_MCTAVISH

carolt wrote: »

Basically, he's subsidising his tenants. What a fool.

Still, a fool and his money are easily parted.

Explains why he hates tenants so much, though - subbing their rent every month must hurt.

Carol, just out of curiosity, if I offered you a 200K house for 20K would you buy it?

Because that's effectively the situation Nolag, or anyone else with tenants whose rent doesn't quite cover the mortgage is in.

And of course whilst they may be subsidisng it now, as time passes and rent increases they won't be...

And at the end of 25 years, they will have an asset which they have only paid 10% or 20% of the value for, even if it doesn't appreciate at all.

In fact, it could lose 30% of it's value, and they could subsidise it by 10%, and they would STILL end up ahead in the deal.

It's virtually impossible to lose money in BTL over 25 years. So subsidising tenants in the short term is hardly foolish.....

mewbie_2

HAMISH_MCTAVISH wrote: »

It's virtually impossible to lose money in BTL over 25 years. So subsidising tenants in the short term is hardly foolish.....

What a pity you weren't available to advise Grant Bovey.