Renting - Dead money ?

FaTB

Seems its not always !!

And maybe not now in some areas of the country, bearing in mind how many people have massive I.O. mortgages, with all of the disadvantages of buying and non of the advantages of renting.

Here's something to think about.

http://money.uk.msn.com/Mortgages/firsttimebuyer/article.aspx?cp-documentid=443352

Would also appreciate Martins view on this.

*shiny*

I move around so much (every 2-3 years) that I think it would be a waste of money buying and selling every time.

Of course renting can be seen as dead money, but the advantages are flexibility to move, no responsibilities for repairs/decorating/buying furniture...

Renting can be cheap and it's allowed me to save lots - when the time does come for me to buy I'll be able to put down a much larger deposit than I would have done if I'd bought earlier. This will mean a big reduction on the amount of interest I'll have to pay on my mortgage - and if interest isn't dead money then I don't know what is!

bunking_off

Renting is dead money.

However, for property ownership

- transaction fees to move house (stamp duty, estate agent fees, solicitors fees) and
- mortgage interest (nb interest...not the repayment part)

...are similarly dead money.

The difference between rental and ownership is that with the latter you're gambling on house prices. If house prices were absolutely level, and you had an interest only mortgage, then defacto you'd be renting off the bank. House prices have tended to rise so owners have benefited from the increase in value.

Will house prices continue to rise? That's another debate. Long term, almost certainly. Short term, who knows.

F_T_Buyer

Buying a cup of hot tea is also dead money. I mean, what have you got to show after you have drank it?

Daft_Monkey

F_T_Buyer wrote:

Buying a cup of hot tea is also dead money. I mean, what have you got to show after you have drank it?

Stained teeth?

Dan29

*shiny* wrote:

I move around so much (every 2-3 years) that I think it would be a waste of money buying and selling every time.

Yes, unless property prices are rising by more than enough to offset these costs (as they were from approximately 1996 to 2004, but probably not at the moment).

chriz1000

F_T_Buyer wrote:

Buying a cup of hot tea is also dead money. I mean, what have you got to show after you have drank it?

A re-hydrated body

aloiseb

What about the interest on your money from selling your house? I suppose if you had a very big house, and were ready to downsize but not sure of the area, you could sell it and pay your rent (for a smaller place) from the interest on the capital while you waited for the right proplerty to come along

yeslek

fair enough you have more easy freedom - but at least with buying you always have something to show for it.

the way i see it is that renting is only ok short term, ie 6-18months kinda thing, as a mortage repayment can be the same amount as renting.
buying is like saving your rent where as renting is just giving money away

odLott

Calling renting dead money is ludicrous and insulting for people who rent as a choice.

When renting, you are buying a service, when buying a house, an asset.

Where I live, renting is "cheaper" than buying a house, that is the total amount of money you need to pay monthly is less, so you have a surplus of money when renting, which often is close to the amount you would repay on the mortgage.

If you decide to invest this surplus is another asset class, then you would be pretty much doing the same thing as buying a house. Most likely, you wouldn't be stuck with all your money in just one asset class.

I believe both renting and buying are valid options depending on your circumstances. People calling renting dead money probably just bought an overpriced property they can hardly afford and try to convince themselves it was worth it.

alared

What you have to do is is to calculate what you could buy in your area for the amount of rent you pay in a month.
In other words if you`re paying £500 a month rent what could you buy for that amount on a mortgage?
In some areas not a lot,maybe a shed.
The rule is,if it`s cheaper to rent than buy

---

then rent.
I can`t see how it`s dead money,no repair bills,no real responsibility,give a month`s notice and cheerio.
Why put a millstone round your neck for 25 years,chances are property prices will fall anyway.
Remember 89/90 negative equity.