Buying Cheaper Than Renting Everywhere except London

System

tek-monkey wrote: »

Its still not cheaper though, as in right now.

Probably not, but why should it be? If you get 100's of thousands of pounds worth of asset back at the end rather than nowt, then it should damn well be more expensive. If it IS possible to get a mortgage for cheaper than rent right now then lucky for those people!

The only way the rent argument works, if is the money you save in rent/maintenance each month over the same period adds up to the same sum of the asset at the end of the mortgage. Good luck with that.

System

silvercar wrote: »

But can you put a cost on being forced to live with nothing but magnolia ( & shabby magnolia) for years on end.

Some might see being able to decorate as you please a benefit worth paying for.

the_ash_and_the_oak

Joeskeppi wrote: »

I'm lost, why does it matter? Surely it takes a special kind of idiot to base their decision on whatever's cheaper? If rent is £500 and a repayment mortgage is £510, does that make renting better? Aside from all the reasons Cleaver has mentioned, that extra £10 a month seems money well spent when you end up with an asset that's doubled in value at the end.

I'll answer this post in a minute but in the meantime can we agree to compare rent with interest on a mortgage and not rent with full repayment figure? Otherwise theres really no debate to be had, I'm not taking (and never have taken) a position that 500 rent is better than 510 repayment imo

the_ash_and_the_oak

Joeskeppi wrote: »

I'm lost, why does it matter? Surely it takes a special kind of idiot to base their decision on whatever's cheaper? If rent is £500 and a repayment mortgage is £510, does that make renting better? Aside from all the reasons Cleaver has mentioned, that extra £10 a month seems money well spent when you end up with an asset that's doubled in value at the end.

It doesn't necessarily matter but it certainly can matter. The OP states that renting is cheaper than buying (mortgage interest). imo this figure shouldn't include future HPI (down or up). Or if it does - what we're really saying is "buying is actually more expensive right now in the short term but we're pretty sure HPI over the next 25 years means that overall its a better bet" - I have no issue with that - but it does rely on HPI. which means we;re talking about that.

For example a counter position might be to buy in 4 years time (I know I keep coming back to this). Now this is a situation where renting could be cheaper for 4 years (this could be less it could be more) and then a mortgage happens for either a period of 21 years (or 25 if you like). This takes a similar bet on HPI but that it will occur slightly later.

It isn't that any of these positions are necessarily right (and I'd like to throw in here that they all end up with a mortgage-free house - unless HPI occurs too early for a delaying buyer) - it is to say that a period renting neither necessarily prevents nor delays full ownership and can in fact hasten it

I think you can easily take the argument that "buying is cheaper than renting over the long course" but this really makes a presumption on when the buying is occurring and how long the mortgage timeframe is. Any saving made on renting can either be thrown into buying later on

the_ash_and_the_oak

Joeskeppi wrote: »

The only way the rent argument works, if is the money you save in rent/maintenance each month over the same period adds up to the same sum of the asset at the end of the mortgage. Good luck with that.

Or at the buying point.

If i decide to buy in 2013, then for renting to work I must save more money (rent vs mortgage interest+maintenance) than HPI increases (and change in borrowing costs). The period 2009-2013 is what counts here, not the period 2009-2034

The buyer may get it wrong but in this case the 09-13 period is where the win or loss is made, not the rest

mewbie_2

silvercar wrote: »

But can you put a cost on being forced to live with nothing but magnolia ( & shabby magnolia) for years on end.

Good point. It's easily worth 50k. 2k a year redecorating and maintenance costs, including stuff like boiler, kitchen, windows, roofing, plumbing, electrics, etc. for 25 years.

System

the_ash_and_the_oak wrote: »

I'll answer this post in a minute but in the meantime can we agree to compare rent with interest on a mortgage and not rent with full repayment figure? Otherwise theres really no debate to be had, I'm not taking (and never have taken) a position that 500 rent is better than 510 repayment imo

Ahh right with ya, well yeah, if it's interest only vs. rent then I guess it depends on everything Cleaver was on about.

PasturesNew

To buy where I am renting right now, interest only at 5% would be about £200.
Rent is £350

nollag2006

PasturesNew wrote: »

To buy where I am renting right now, interest only at 5% would be about £200.
Rent is £350

I bought a couple of flats in Ealing for just over £220k each in May (hopefully worth a little more now), and get a smidgen over a grand a month for each of them.


:beer:

Its been a nice little earner thus far.

:j

Assuming one could borrow at 5%, the cost of capital would be about £920 a month on this, which is about 10% less than the cost of renting.

I’ve always considered renting a mugs game.

:rolleyes:

My counsel to everyone and anyone is, no matter how small the place is – get something to call your own so you have a little nest egg and are protected from the whims of a landlord chucking you out or upping the rent when you least expect it.

And irrespective of what happens to the market, you've got a place to call home.

Yes - you might lose it if the worst happens and you lose your job, but the same thing applies if you are renting.

Cleaver

nollag2006 wrote: »

I bought a couple of flats in Ealing for just over £220k each in May (hopefully worth a little more now), and get a smidgen over a grand a month for each of them.

Its been a nice little earner thus far.

Assuming one could borrow at 5%, the cost of capital would be about £920 a month on this, which is about 10% less than the cost of renting.

I’ve always considered renting a mugs game.

...protected from the whims of a landlord chucking you out or upping the rent when you least expect it

It's weird to see a business owner introduce his business and insult his customers in one fell swoop.

What level of equity do you have in each flat just out of interest?